LONG-RUN EFFECTS FROM CONSUMER REACTION TO THE SPREAD OF FOODBORNE PATHOGENS: THE CASE OF E. COLI CONTAMINATION OF BEEF AT JACK IN THE BOX RESTAURANTS

Using news coverage of food safety as an indicator of public attention to food pathogen issues in meat products, we found the 1993 E. coli O157:H7 contamination of hamburgers likely permanently changed consumers' perception of beef safety. A food consumption model with rational habit persistence is developed to examine whether consumers make forward-looking consumption decisions accounting for expectations of future food safety. We document clear evidence of forward-looking consumption behavior, which suggests that government regulations implemented subsequent to the 1993 event to protect consumers from ignorance or cognitive defects may be ineffective