Consumer Welfare and the Loss Induced by Withheld Information: The Case of BSE in Italy

The paper develops a measure of consumer welfare losses associated with withheld information about BSE linkage with vCJD. food safety. The Cost of Ignorance (COI) is measured by comparing the utility of the informed choice with the utility of the uninformed one, under condition of improved information. Unlike previous work, based on a single equation demand model, the measure is obtained retrieving a cost function from a dynamic Almost Ideal Demand System. The results indicate that Italian consumers bore a significant loss because of the delayed release of information.