BSE and the Dynamics of Beef Consumption: Influences of Habit and Trust

This study relates habit persistence and trust to recurring food safety incidents in the context of a series of three BSE incidents in Canada. We examined the dynamics of monthly beef expenditure shares of a sample of Canadian households for monthly time periods during year 2002 through 2005 using micro level panel data which followed meat expenditures by Canadian households before and after the first three BSE cases which were discovered in 2003 and 2005. Our results suggest that households’ reactions to the first three BSE events followed a similar general pattern: households reduced beef purchase expenditures following the discovery of BSE but these expenditures subsequently recovered, suggesting that concern diminished over time. Following the first BSE event, we identified an immediate negative impact on beef expenditures. However, in the case of the second and third BSE events, this negative impact was not evident until two months after these BSE announcements. In each of the three cases, the negative impact of BSE on beef purchase expenditures was limited to no more than four months. Assessment of how habit persistence affected beef expenditures indicates that this influence limited households reductions of beef purchases following the BSE events, but the effects of habit diminished subsequent to the initial event. Regarding the role of trust in shaping households’ reactions to BSE, we found that households’ respondents whose answers to standardized questions suggest that they are not “trusting” individuals were more sensitive to the food risks identified by the BSE events