NIFK14027U CANCELLED: Consumer Economics and Food Policy

The aim of the course is to give an understanding of the choices consumers make about purchases and consumption of food products every day, and how these choices interact with the production and marketing of the products. This enables the students to address important aspects of the behavior of the different actors on the food market.

Consumer acceptance is central to the success of marketing of new innovative food products. It is therefore essential to reveal main drivers of consumers’ demand for new differentiated products. Danish consumers in general consider food products as safe to eat. But what happens when consumers have to choose between food safety and other product attributes such as taste or convenience? Is consumer demand enough to ensure high levels of food safety, or is it necessary for politicians to implement some regulation in order to secure sufficient levels? Does the market structure ensure sufficient incentives for producers to supply the high quality food products that the consumers demand, and at a price they are willing to pay? The course will go into a deeper understanding of such questions and their implications for food production, marketing, innovation and policy.

Economics of consumer behavior

The course in based on economic theory and the main part focuses on consumers’ food choices. The underlying assumptions about the consumers’ decision making are discussed, including the concepts of demand functions, preferences, indifference curves, and budget constraints. These economic concepts are put into a broader perspective on consumer behavior. Different methods to identify (and influence) consumers’ preferences for product attributes are introduced. This includes methods to uncover consumers’ revealed preferences based on data on observed behavior, as well and identification of preferences based on stated behavior methods, such as choice experiments. In addition, the mechanisms in different approaches to product marketing are discussed.  

Production, market structure and regulation

Basic theory concerning producer behavior in relation to food production is introduced. This includes behavior related to firms’ profit maximization, cost minimization and other motivations underlying production behavior. The role of market structure (competition, monopoly, oligopoly, etc.) for price formation, product quality, product diversity etc. is addressed. Market failures, such as environmental or public health externalities, public goods or information failures – and policy tools to remedy such market failures, will be discussed. Taxes, subsidies or labelling schemes are examples of such policy tools. Information campaigns is another type of policy instrument which may affect the behavior of consumers, such as whole grain labels or campaigns about the health benefits of eating fruits and vegetables.

Case studies

In order to obtain a comprehensive picture of how choices are made by the different actors on the food market we use real world examples throughout the course – in exercises as well as in project work. Cases concern relevant topics such as innovation, food safety, organic food and obesity. The students will have the opportunity to propose their own subjects for case studies.