NIFK14027U CANCELLED: Consumer Economics and Food Policy

The aim of the course is to give an understanding of economic incentives and rationales in the area of food consumption, production and policy on the basis of microeconomic theory. This enables the student to give a theoretically founded answer to questions like: How is  the price of organic apples affected if major levels of pesticide residues suddenly are found in conventional apples? Why may a traffic light food label not be able to reduce obesity? Is monopoly in the soft drink industry ever beneficial for the consumers? Why do Danish municipalities request more than one supplier of meal service to the elderly? In addition, aims and arguments for regulation in relation to public food policy will be covered.

The course consists of three main parts:

1. The economic part.
This part of the course focuses on consumer and producer behavior in relation to consumption and production of food. The underlying assumptions about the consumers’ decision making are discussed, including the concepts of utility maximization, demand functions, prices and income. The firms’ production decisions are also addressed and concepts such as profit maximization and the equimarginal principle are introduced. In order to obtain a comprehensive picture of how different markets work we use real world examples throughout the course to discuss consumer and producer choices at markets characterized by perfect competition, monopoly or oligopoly. Relevant cases concerning topics as food safety, obesity, organic food, animal welfare will thereby be discussed. 

2. The policy part.

The welfare economic rationale for policy regulation is discussed and some of the mostly used policy instruments are examined. Changes in prices through taxes or subsidies are examples of such instruments to change consumers’ dietary habits, where e.g. tax on sugar and fat may induce people to eat less unhealthy products. Information is another type of policy instrument which may affect the behavior of consumers, such as whole grain labels or campaigns about the health benefit of eating fruits and vegetables. Other instruments such as direct regulation, public support and public control will also be discussed. Relevant cases will be used to discuss the optimal choice of policy instrument.

3. Term paper.

The course includes a term paper on a predefined topic addressing a current societal challenge within the food area. The term paper gives the students an excellent opportunity to apply the theory on a relevant topic and thereby get a deeper understanding of the curriculum.