The economic consequences of stigmatization of private and public goods can be very large. Famous examples of private goods that have been stigmatized include the injection of cyanide in Tylenol bottles and mad cow disease with beef. Fear of food contamination has gone so far as to eliminate the market for some foods (including 93% decreases of sales of some meats in countries like Australia). Many public goods have been stigmatized as well. For example, the public water supply for Woburn, Massachusetts, was contaminated by hazardous wastes, the story of the resulting lawsuit entitled "A Civil Action" went on to become a best-selling book and movie. In this and other toxic waste cleanups, stigma caused quasi-permanent losses in nearby property values even after extensive cleanup costing upwards of $600 million dollars. This apparent failure of some public and private goods to recover from stigma provides the societal motivation for this proposed experimental research. Given the potentially large economic consequences of stigma, an experimental-behavioral economics examination (with co-PIs from both consumer psychology and economics) is warranted that focuses on methodologies to mitigate stigma. The research motivation arises from the experimental psychology literature on stigma, which is imaginative and compelling. The proposed research will examine how the value of both private and public goods changes when they are stigmatized and attempt to find methods to restore those values. Strategies to reduce stigma, including prevention of contamination, testing to demonstrate safety, and decontamination will be explored in an experimental setting for biological, chemical, nuclear, and accidental sources of risk. Building on preliminary findings, experiments will also be conducted which help to determine the psychological process behind the valuation of goods. The experiments will be designed to satisfy the standards for basic research in both experimental economics and in psychology. The results of the research will be of use both to private companies and public agencies that face stigmatization from contamination, design flaws, disease, random events, or terrorism.
