A Latent-Variable Approach to Modelling Multiple and Resurgent Meat Scares in Italy

This paper aims to measure the time pattern of multiple and resurgent food scares and their direct and cross-product impacts on consumer response. The Almost Ideal Demand System (AIDS) is augmented by a flexible stochastic framework which has no need for additional explanatory variables such as a media index. Italian aggregate household data on meat demand is used to assess the time-varying impact of a resurgent BSE crisis (1996 and 2000) and the 1999 Dioxin crisis. The impact of the first BSE crisis on preferences seems to be reabsorbed after a few months. The second wave of the scare at the end of 2000 had a much stronger effect on preferences and the positive shift in chicken demand continued to persist after the onset of the crisis. Empirical results show little relevance of the Dioxin crisis in terms of preference shift, whilst not excluding the more relevant price effect.