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Category_ID - 21
Doc_Title - Absolute versus Relative Risk Perception: An Application to Seafood Safety
Doc_Author - Ju-Chin Huang, Timothy C. Haab, John C. Whitehead
Doc_Number - AEDE-WP-0007-01
Doc_Start_Date - 06/13/2001
Doc_End_Date - 06/13/2002
Doc_URL_AddLocal - C:\WINNT\ACF1544.tmp
Tag_Functional - AED Econ Working Paper
Tag_SubUnit - Environmental Economics
Tag_Program - NULL
Tag_Industry - Food
Tag_Misc - Food Safety
Tag_Resources - NULL
Tag_Practice - Consumer Behavior,Consumption Economics,Food,Health,Risk Management

We examine the impact of perceived absolute and relative risks on consumption of goods with substitutes and complements. We provide a possible analytical explanation of the importance of relative risks on the consumption of a risky good. And, we discard the common yet unrealistic assumption of fixed baseline risk and elicit the individual subjective baseline risk from each survey respondent. Revealed and stated data are combined to trace out demand changes in response to absolute and relative risk reductions. Seafood consumption in eastern North Carolina is studied. Our results show that seafood consumption is affected by the perceived absolute risk and by the relative risk to poultry, which confirms that individuals react to the multiple risks in a nonlinear way--as predicted by our analytical model. Key words: Absolute and Relative Risks, Risk Substitutes, Revealed and Stated Data, Food Borne Risk