Consumers’ reaction to radiation contamination 2013/3/19-2110
A questionnaire survey on consumers’ responses to radiation-contaminated food 2013/3/19-2111 Inquiring about a response to radiation-contaminated milk for 7,600 adults living in the Tokyo metropolitan area in August, 2011 Assume that milk without any contamination is traded at 200 yen per liter. Then, what if it is contaminated? Still purchases at 200 yen per liter, Purchases, but discounts it below 200 yen per liter, or Never purchases. The government required contamination level to be below 200Bq/liter: 10 Bq/liter? 50 Bq/liter? 100 Bq/liter? 200 Bq/kiter?
Those who purchase, discount, or never purchase 2013/3/19-2112
Surprising results! 2013/3/19-21 14 More than a half of the respondents never purchased contaminated milk even if it was only slightly contaminated. Even those who discounted contaminated milk never discounted it heavily. A choice may be between discounting slightly and not purchasing. However, a careful look at the results leads us to: Yong women with small children refused to purchase it. A fraction of the respondents still chose to purchase it with or without discounting. Why do we observe such heterogeneity?
Some interpretations by the prospect theory 2013/3/19-2115
Application of the prospect theory as a behavioral hypothesis 2013/3/19-2116 A consumer may over- or under-estimate a probability that an unfavorable event takes places. Such a bias in risk assessments may trigger a seemingly irrational behavior.
Objective risk Subjective risk 45 degree line A coincidence between objective and subjective risks 2013/3/19-2117
Underestimation of a tiny reduction in risk 2013/3/19-2120
Positive assessment of avoiding risk completely, or zero risk 2013/3/19-2121
Hesitation to move from status quo in any direction 2013/3/19-2122
Coming back to the questionnaire survey… 2013/3/19-2123 Avoiding radiation-contaminated milk results in only a slight reduction in cancer risk, or a death probability by death. Conversely, taking radiation-contaminated milk leads to only a slight increase in cancer risk Thus, a response to radiation to radiation-contaminated milk may differ between: Those who perceive own cancer risk to be quite low may be rather averse to even tiny risk, and prefer for zero risk. Those who perceive own cancer risk to be relatively high may be insensitive to a tiny increase in cancer risk. The questionnaire survey asked the respondents about own lifetime cancer risk: No cancer risk: 8.3% Lower than the national average of lifetime cancer risk (30%): 18.3% Close to the national average: 36.8% Above the national average: 16.3% Unable to judge: 19.9% No answer: 0.4%
Estimation results and their implications 2013/3/19-2124 Who are extremely averse to radiation contamination risk? Those who perceive own cancer risk to be rather low. Evidence for strong preference for zero risk Those who are young with small children. Who are less averse to radiation contamination risk? Those who perceive own cancer risk to be relatively high, including the old, heavy smokers, and chronic drinkers. Policy should take into consideration heterogeneous responses to radiation-contaminated milk.
On the importance of relativity and time-consistency in risk assessment 2013/3/19-2125
A relative risk assessment: Risk-risk analysis 2013/3/19-2126 Not only radiation contamination, but also other factors are responsible for cancer risk. Cost effectiveness in reduction of a unit of cancer risk differs substantially among different factors responsible for cancer risk. Large-scale radiation cleanup may not be cost-effective. A reduction in a particular risk may result in an increase in another type of risk.
Time-consistency in risk assessment 2013/3/19-2127 Time-consistency between ex-ante and ex-post risk assessment Prior to an unfavorable event, a safety standard tends to be extremely conservative, but it is often relaxed afterwards. Ordinary citizens may understand that a safety standard is relaxed arbitrarily at the sacrifice of health and safety. May be better to set a safety standard to be not extremely conservative, but reasonable from the beginning, and keep it even after unfavorable events. Allowing for heterogeneous responses among consumers beyond a safety standard, which is set reasonably. Respecting differences in judgments and decisions by each other.
Conclusions 2013/3/19-2128 Consider possible catastrophic cases in a reasonable manner even during normal periods. Understand on-going situations in an objective manner during crisis periods with due consideration for biases in recognition. Making reasonable judgments: Compare a particular risk with possible risks. Keep consistency in assessments between before a crisis and after.