This research examines how the economic value of risk is affected by alternative reduction strategies and two different elicitation mechanisms-experimental auction markets and contingent valuation surveys. The results will help clarify fundamental methodological issues in valuation which is central to environmental policy. The approach is illustrated through the specific example of the value of reduced risk from Escherichia coli 0157:H7 and Salmonella from beef consumption, a particularly salient commodity given risk can be reduced privately by home preparation or collectively with irradiation treatments or improved production methods. The project employs a four phase design: (1) mental models interviews to determine how subjects assess the risk of food-borne pathogens and how best to communicate food safety risks, and to guide the design of the valuation studies; (2) a contingent valuation survey that includes both in-person and mail interviews; (3) experimental auction markets that use real food, real money and repeat market experience; and (4) an internal and external validation procedure where the internal check will use cooked meat samples, and the external check will use survey results from a commercial store that sells irradiated products. The project will explore: (a) how to best communicate risks of food-borne illness; (b) whether people have general preferences for food safety rather than pathogen-specific preferences; how preferences for risk reduction vary with the severity of the risk; how "who" is at risk-children vs. adults-influences preferences; (c) relative preferences for alternative combinations of collective action (safe handling labels, irradiation, Hazard Analysis at Critical Control Points (HACCP)) and private protection (home preparation-rare, medium, and well-done hamburgers); (d) and if there is a systematic difference in revealed values from the hypothetical contingent valuation survey and the non-hypothetical contingent valuation survey and the non-hypothetical experimental auction markets. This research is supported under the Joint NSF/Private Sector Research Initiative and the cooperating organization is the American Meat Institute.
