Economic

Research

Report

Number 65

August 2008

United States 

Department 

of Agriculture

Economic 

Research 

Service

Robert H. Beach, Fred Kuchler, 

Ephraim Leibtag, and Chen Zhen

The Effects of Avian Influenza 

News on Consumer Purchasing 

Behavior

A Case Study of Italian Consumers’

Retail Purchases
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The effects of avian influenza news on consumer purchasing 

behavior: a case study of Italian consumers’ retail purchases.

(Economic research report (United States. Dept. of Agriculture. 

Economic Research Service); no. 65)

1. Poultry industry—Italy.

2. Avian influenza—Press coverage. 

3. Consumer behavior—Italy—Case studies.

4. Consumer behavior—United States—Forecasting. 

I. Beach, Robert H. 

II. United States. Dept. of Agriculture. Economic Research 

Service. 

III. Title.

HD9437.I22
United States

Department

of Agriculture

www.ers.usda.gov

A Report from the Economic Research Service

Abstract

To better understand how information about potential health hazards infl uences food 

demand, this case study examines consumers’ responses to newspaper articles on avian 

infl uenza, informally referred to as bird fl u. The focus here is on the response to bird 

fl u information in Italy as news about highly pathogenic H5N1 avian infl uenza (HPAI 

H5N1) unfolded in the period October 2004 through October 2006, beginning after 

reports of the fi rst outbreaks in Southeast Asia and extending beyond the point at which 

outbreaks were reported in Western Europe. Estimated poultry demand, as infl uenced by 

the volume of newspaper reports on bird fl u, reveals the magnitude and duration of newspaper articles’ impacts on consumers’ food choices. Larger numbers of bird fl u news 

reports led to larger reductions in poultry purchases. Most impacts were of limited duration, and all began to diminish within 5 weeks. 

Keywords: Avian infl uenza, bird fl u, consumer behavior, food safety, poultry sales and 

consumption, risk perception and response

Acknowledgments

The authors thank Elise Golan, David Harvey, Greg Pompelli, and Jay Variyam (USDA, 

Economic Research Service), Helen Jensen (Iowa State University), Thomas Marsh 

(Washington State University), and Gay Miller (University of Illinois) for their review 

comments. Thanks also to David Swayne and Steven Kappes (USDA, Agricultural 

Research Service), Randy Crom (USDA, Animal and Plant Health Inspection Service), 

and Angela Harless (USDA, Offi ce of Communications). Thanks to John Weber and 

Wynnice Pointer-Napper for editorial and design contributions.

Robert H. Beach, Fred Kuchler, Ephraim Leibtag, 

and Chen Zhen

The Effects of Avian Infl uenza 

News on Consumer Purchasing 

Behavior

A Case Study of Italian Consumers’ 

Retail Purchases

Economic

Research

Report

Number 65

August 2008
ii

The Effects of Avian Infl uenza News on Consumer Purchasing Behavior / ERR-65

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Recommended citation format for this publication:

Beach, Robert H., Fred Kuchler, Ephraim Leibtag, and Chen Zhen. The 

Effects of Avian Infl uenza News on Consumer Purchasing Behavior: A Case 

Study of Italian Consumers’ Retail Purchases. ERR-65, U.S. Dept. of Agri., 

Econ. Res. Serv. August 2008.

Contents

Summary. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . iii

Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

Estimating How Long Consumers Remember the News . . . . . . . . . . . . . 8

Estimating News Impacts on Poultry Demands . . . . . . . . . . . . . . . . . . . 11

Simulating Results of Bird Flu News on Poultry Demand. . . . . . . . . . . 13

Conclusion: Interpreting These Results—How Different Should 

 We Expect a U.S. Experience With Bird Flu To Be? . . . . . . . . . . . . . 19

References. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
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The Effects of Avian Infl uenza News on Consumer Purchasing Behavior / ERR-65 

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Summary

To better understand how information about potential health hazards infl uences food demand, this case study examines consumers’ responses to 

newspaper articles on avian infl uenza, informally referred to as bird fl u. The 

focus here is on the response to bird fl u information in Italy as news about 

highly pathogenic H5N1 avian infl uenza (HPAI H5N1) unfolded in the 

period October 2004 through October 2006, beginning after reports of the 

fi rst outbreaks in Southeast Asia, and extending beyond the point at which 

outbreaks were reported in Western Europe. Estimated poultry demand, 

as infl uenced by the volume of newspaper reports on bird fl u, reveals the 

magnitude and duration of newspaper articles’ impacts on consumers’ food 

choices. Larger numbers of bird fl u news reports led to larger reductions in 

poultry purchases. Most impacts were of limited duration, and all began to 

diminish within 5 weeks.

What Is the Issue?

Claims that outbreaks of HPAI H5N1 sharply reduced poultry purchases 

have accompanied the discovery of the disease in Asia, Africa, and Europe. 

However, there has been little empirical analysis of consumer response to 

these outbreaks. Measuring how bird fl u has affected consumer demand 

for poultry is challenging because consumers’ risk perceptions were likely 

infl uenced by numerous pieces of information: reports indicating the occurrence of disease among wild birds, domesticated poultry, and humans. These 

events occurred at different times and in different countries.

Consumer reaction to HPAI H5N1 could have as large an impact on the 

poultry industry as the disease itself. Yet, for countries with large-scale 

commercial poultry production that have reported outbreaks, claims that 

poultry purchases declined signifi cantly following discovery of HPAI 

H5N1 in wild birds or in isolated cases on farms are a bit puzzling. In these 

countries, poultry raised indoors under tightly controlled environments are 

unlikely to contact wild birds or other sources of the disease, and farmers 

have a strong fi nancial incentive to eradicate the disease if it were found in 

their commercial fl ocks. In addition, policymakers have strong incentives 

to ensure prevention and control of HPAI H5N1 to ensure public health and 

to maintain domestic and export markets for poultry. In effect, the health 

risk consumers face from consuming poultry products may be very small, in 

which case the large reported sales losses appear out of proportion to the risk 

faced by consumers.

Although there have been three instances of HPAI outbreaks in the United 

States, none were of the HPAI H5N1 strain. Thus, there is no systematic 

basis for forecasting how U.S. consumers might react to domestic detection 

of this particular strain that has resulted in huge losses to the poultry sector in 

other regions, killed over 200 people in Asia and Africa, and raised concerns 

of a potential human pandemic. Studying consumer response to bird fl u news 

outside the United States is informative conditional on recognizing why those 

consumers and U.S. consumers might respond differently to news about 

health risks. This case study examines the responses of consumers in Italy to 

media reports on bird fl u. Findings could benefi t the design of food policy.
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What Did the Study Find?

Over the sample period August 2004 through October 2006, European 

newspapers averaged 324.4 bird fl u articles per week that did not mention 

Italy and 24.7 that did. The number of European newspaper articles on bird 

fl u surged to 2,455 articles in the week ending October 23, 2005, following 

reports that the virus had been found in Turkey, Romania, and Croatia. 

Additional spikes followed in January through April 2006 as HPAI H5N1 

was identifi ed in Turkey, Romania, and Croatia, and later in Austria, France, 

Germany, Italy, Sweden, and Switzerland. The weekly number of newspaper 

articles on bird fl u that mentioned Italy was relatively fl at but spiked in the 

week ending February 19, 2006, with the discovery of the H5N1 subtype of 

HPAI in dead wild swans in southern Italy.

During the same period, newspaper articles on bird fl u had a statistically 

signifi cant effect on sales of poultry products in Italy, both fresh and frozen. 

At the margin, each additional newspaper article reduced purchases, and did 

so over time. Results include the following:

• For fresh poultry, historical sales were, on average, 79.8 percent of what 

they would have been if there had been no news about bird fl u.

• Non-Italy-specifi c news about bird fl u reduced fresh poultry sales by an 

average of 13.5 percent, and Italy-specifi c news was responsible for a 

further 6.7-percent drop.

• Non-Italy-specifi c news and Italy-specifi c news reduced purchases of 

frozen and processed poultry by 4.1 percent and 14.6 percent, respectively.

On average, each additional newspaper report about bird fl u reduced 

consumption, but the reductions were not permanent and eventually diminished. For fresh poultry consumption, the largest decline occurred in the 

second week after the newspaper report was published. For frozen and 

processed poultry sales, the response to news that was not Italy-specifi c was 

largest in the same week the news was reported and declined to about a third 

of the initial response in the second week. By the fi fth week, the response had 

become negligible. The response to Italy-specifi c news increased, fell, and 

increased again before diminishing.

How Was the Study Conducted?

For most countries in which HPAI H5N1 has been detected, there is little 

publicly available data suitable for quantitative evaluation of the effects on 

meat consumption. However, Nielsen reported weekly data on quantities 

purchased and expenditures for 24 categories of poultry, beef, pork, and fi sh 

and seafood products in Italy, capturing a large share of the total market for 

meats. The weekly frequency of the Italian data made it suitable for investigating the temporal behavior of consumer response to the westward-trending 

bird fl u reports as previous research and attributes of bird fl u both pointed to 

short-lived responses. Two separate demand equations were estimated—one 

for fresh poultry and one for frozen and processed poultry. Each related 

the quantity demanded to the price of fresh poultry, the price of frozen and 

processed poultry, prices of beef, pork, and fi sh and seafood, and indices of 
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bird fl u news. Analysts used the estimated equations to simulate quantities of 

poultry purchased at retail with and without news reports about avian infl uenza.

Researchers constructed weekly counts of newspaper articles to address 

whether changes in consumption were likely related to bird fl u versus other 

explanations. The news index was built from a LexisNexis Academic search 

of European news articles on bird fl u. Splitting the counts into Italy-specifi c 

news and non-Italy-specifi c news partially accounts for different types of risk 

information in news. Italy-specifi c news ought to be of greater risk salience 

to Italians than more general news about bird fl u. The non-Italy-specifi c 

news, although always greater in volume than Italy-specifi c news, points to 

Italian consumers’ exposure to information about the situation in the rest of 

the world.
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Introduction

More than 200 million birds worldwide have died or been culled because of 

highly pathogenic avian infl uenza subtype H5N1 (HPAI H5N1) since 2003 

(FAO, 2006). This has severely impacted the poultry sectors in several countries, primarily in Southeast Asia. In addition, the World Health Organization 

reports that as of June 19, 2008, there have been 385 confi rmed human cases 

of avian infl uenza (H5N1) worldwide (WHO, 2008). Of these, 243 resulted 

in death, implying a fatality rate of 63 percent. Few illnesses have such high 

rates. Even though many other illnesses may sicken larger shares of the 

population and cause larger numbers of deaths, this particular virus is seen as 

a serious public health concern. It is possible that the pathogen might mutate 

and be easily transmitted among humans while retaining its fatality rate 

(WHO, 2007).

In countries that have reported fi nding HPAI H5N1, impacts on commodity 

markets have varied; in Southeast Asian countries, the disease has sometimes had large negative effects on productivity, supply chains, and Gross 

Domestic Product (GDP). Many factors help account for variation in supplyside effects of disease discoveries. Disease pressure has varied geographically. Most HPAI H5N1 reports in Europe have been limited to intermittent 

discoveries of a few wild birds. In Southeast Asia, some outbreaks have 

persisted, with infections common in both wild and commercial birds.

Poultry production practices vary signifi cantly across countries and even 

within a country, which also affects the degree to which outbreaks affect 

a market. Outbreaks have been more frequent where the conditions under 

which poultry is raised are not tightly controlled. Where poultry is housed 

in enclosed buildings and farmers exercise careful control over feed and 

environmental conditions, outbreaks have been relatively rare and eradication has generally been quick. In the outbreaks of 2003 and 2004, veterinary 

services in Southeast Asia were not prepared to mitigate impacts of HPAI 

H5N1 outbreaks. Direct losses were highest in Vietnam (44 million birds, 

amounting to approximately 17.5 percent of the poultry population) and 

Thailand (29 million birds, 14.5 percent of the poultry population) (McLeod 

et al., 2005).

Incentives to eradicate the disease are not uniform across countries. Some 

countries have left responses to outbreaks to individual farmers, and others 

have required the slaughter of millions of birds, with widely varying levels of 

compensation.1 For small-scale operations, eradication may be economically 

infeasible. In Southeast Asia, farm biosecurity—enclosing birds—accounts 

for most of the investment cost (McLeod et al., 2005).

In addition, the way in which countries’ trading partners respond to outbreaks 

can have an effect on economic impacts of the disease. Some countries that 

supplied poultry in international markets lost export markets following reports 

of outbreaks.2 Importing nations have sometimes accepted exporters’ actions as 

being suffi cient to control bird fl u, but others have shut down imports.

But, as in the analysis of markets for almost any good or service, understanding the structure of the supply side does not provide enough infor-

 1Production losses have taken two 

forms: birds have died from contracting 

bird fl u, and birds have been culled to 

prevent spread of the disease.

 1Production losses have taken two 

forms: birds have died from contracting 

bird fl u, and birds have been culled to 

prevent spread of the disease.

 2Bird fl u outbreaks in Thailand and 

China disrupted their exports as some 

importing countries stopped importing 

(Blayney et al., 2006).

 2Bird fl u outbreaks in Thailand and 

China disrupted their exports as some 

importing countries stopped importing 

(Blayney et al., 2006).
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mation to forecast impacts of changed market conditions. The potential 

threat to human life makes HPAI H5N1 more than a productivity concern. 

Conceivably, consumers could largely ignore bird fl u outbreaks.3 If 

consumers felt that bird fl u posed little to no risk to their own health, 

they may not substantially alter their meat and poultry expenditures in 

response to news about outbreaks. In that case, productivity losses and/or 

additional disease prevention and control expenses may actually result in 

increased market prices for poultry. On the other hand, if outbreak reports 

led consumers to signifi cantly change their perceptions of health risks 

from consuming poultry, large numbers of consumers could reduce poultry 

consumption or even stop eating poultry products on news of an outbreak. In 

that case, aggregate demand may fall along with the reduced supply, prices 

may fall, and direct production losses might account for only a small part 

of the reduction in poultry sales. Market outcomes may differ, depending 

on the conditions associated with an individual outbreak. The NPD Group 

noted that the third bird fl u case found in a chicken fl ock in Japan provoked a 

particularly large negative consumer reaction because media reports claimed 

the affected farmer disguised the fact that an infection occurred in his fl ock 

and continued to distribute chickens and eggs (NPD Group, 2006b).

If analysts were completely uncertain about how consumers might respond 

to an outbreak, they would have no ability to predict market outcomes. 

Even armed with subtle and detailed knowledge of the current structure of 

the poultry industry, its supply chain, and the conditions under which international trading occurs, analysts would be unable to offer much insight on 

retail-consumer market impacts.

Currently, the effects of HPAI H5N1 on demand for poultry products are 

unknown and, so far, largely unexplored. Many analysts have examined 

poultry consumption statistics before and after outbreaks and have attributed 

observed differences to the outbreaks. For example, NPD Group described 

the situation in Germany as follows:

 Bird fl u appeared in October 2005 for the fi rst time in Europe and 

was massively discussed in the German media. Chicken consumption during the time interval from October 2005 to March 2006 

declined by -2.0 percent compared to the previous year (NPD 

Group, 2006a).

While these types of comparisons may be carefully constructed, they are 

potentially confounded with systematic movements in poultry demand: 

chicken demand may have been falling even without bird fl u discussions in 

the media. The comparisons do not account for the principal factors likely to 

infl uence poultry consumption, such as the price of chicken and the prices of 

other meats.

In estimating the impacts of outbreaks of avian infl uenza on poultry demand, 

this report fi rst accounts for the typical factors that infl uence food choices, 

including relative prices of poultry and other meats as well as established 

trends and seasonality in poultry consumption. It then accounts for remaining 

changes in consumption based on the degree to which consumers’ fears of 

a new food safety risk—HPAI H5N1—rise and fall. This analysis examines 

three questions about bird fl u-induced reductions in poultry demand:

 3USDA’s long-term projections report formally assumes bird fl u will not 

signifi cantly affect overall consumer 

demand for poultry (USDA, OCE, 

WAOB, 2007). McLeod et al. (2005) 

make the same assumption.

 3USDA’s long-term projections report formally assumes bird fl u will not 

signifi cantly affect overall consumer 

demand for poultry (USDA, OCE, 

WAOB, 2007). McLeod et al. (2005) 

make the same assumption.
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• How fast does news about bird fl u raise consumers’ risk perceptions and 

reduce poultry purchases?

• How large is the reduction?

• How long does the reduction last?

Data on media coverage were used to construct indices representing the 

amount of information on bird fl u being presented to consumers each week. 

This methodology was used to conduct a case study using data on purchase 

patterns in Italy.

Knowing how consumers responded to these announcements and, more 

generally, to news about the safety of the food supply, is important for the 

design of food policy. Public information programs that effectively communicate risk information could prevent consumers from responding out of 

proportion to the risks they face. Consumers and food suppliers both might 

gain if consumers do not avoid foods that are safe. When consumers make 

informed risk decisions, they create incentives for food suppliers to take 

cost-effective safety precautions. Also, accurate assessments of consumer 

responses to food safety risk information will help the public sector gauge 

the need for industry relief. 

In the private sector, understanding how consumers worldwide react to food 

safety news is important from a marketing perspective. Exports of U.S. 

poultry may be buffeted by food safety news overseas if consumers at export 

destinations worry about the safety of poultry products. 

Data

This research fi rst accounts for systematic and routine movements in poultry 

purchases stemming from changes in retail prices, ongoing longrun consumption trends, and seasonal purchase patterns. It then examines the quantity 

and timing of bird fl u news coverage to help explain remaining variation in 

purchases. Thus, data focus on prices and quantities of poultry purchased at 

retail, and quantity of bird fl u newspaper reports at different times.

Retail Purchase Data

Publicly available data for quantitative evaluation of the effects of bird fl u 

concerns on meat sales are limited. The Nielsen Company provided data on meat 

purchases for 14 foreign countries that have experienced bird fl u outbreaks. 

This study focuses on Italy because the currently available Nielsen sales 

data for Italy are the most complete and consistent series in the international dataset. Italian data start from the week ending October 10, 2004, 

and end in the week ending October 1, 2006, yielding a total of 104 weekly 

observations. According to Nielsen, the data comprise audited scanner data 

that cover the following types of outlets in Italy: self-service, grocery, and 

discount for beef, pork, and turkey; and hypermarkets, supermarkets, selfservice, grocery, and discount for chicken, fi sh, and seafood. Moreover, the 

dataset reports expenditures and volumes for 24 categories of poultry, beef, 

pork, and fi sh and seafood products. These products include fi ve categories 

of beef (fresh fi xed-weight products, frozen fi xed-weight products, frozen 
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ready-to-eat meals based on beef, beef lunch meat, and beef hot dogs), four 

categories of pork (fresh fi xed-weight products, frozen fi xed-weight products, 

frozen ready-to-eat meals based on pork, and pork hot dogs), three categories 

of turkey (fresh fi xed-weight products, frozen ready-to-eat meals based on 

turkey, and turkey hot dogs), four categories of chicken (fresh fi xed-weight 

products, frozen fi xed-weight products, frozen ready-to-eat meals based on 

chicken, and chicken hot dogs), four categories of fi sh (fresh fi xed-weight 

products, frozen fi xed-weight products, frozen ready-to-eat meals based 

on fi sh, and canned and preserved fi sh), and seafood (fresh fi xed-weight 

products, frozen fi xed-weight products, frozen ready-to-eat meals based 

on seafood, and canned and preserved seafood). Nielsen data capture a 

large percentage of the markets for these products, estimated by Nielsen 

at between 85 and 93 percent of each market for products with reported 

coverage estimates.4 A caveat is that the data do not include fresh randomweight products and do not report coverage estimates for fresh meats.

The time period covered by the Italian data provides a unique opportunity 

for examining how consumers’ risk perceptions evolve due to changes in 

information, as consumers were repeatedly presented with information that 

might suggest increased risk from food. Data cover the period in which HPAI 

H5N1 was reported across Asia, followed by reports in the Middle East, 

Eastern Europe, and fi nally Western Europe, including the fi rst reports of 

HPAI H5N1 in wild birds in Italy. In early February 2006, Italian authorities 

announced that lab tests confi rmed HPAI H5N1 in dead wild swans found 

in southern Italy. This news validated forecasts made by scientists several 

months earlier that the virus would move into Western Europe (WHO, 2006).

The frequency of the Italian data—weekly, as opposed to quarterly or annually—was critical to this project because at the outset the duration of HPAI 

H5N1 impacts on poultry demand was unknown. The study team hypothesized that news reports about bird fl u might reduce poultry consumption 

and have some lasting effects but not persist indefi nitely. If advertising is 

expected to have protracted effects on consumer demand, it is not unreasonable to expect food safety information to have lasting effects on demand as 

well. But, previous studies have suggested that consumers respond quickly 

to news that microbial organisms or chemicals have contaminated particular 

foods. Consumers may fully adjust their food choices to news indicating 

safety has been compromised and to news that food is again safe all within 

a matter of weeks (Dahlgran and Fairchild, 2002). This rapid adjustment 

is in contrast to consumer responses to news relating particular diet and 

lifestyle choices to negative long-term health outcomes, such as linkages 

between saturated fat consumption and cardiovascular disease. If news about 

such linkages did infl uence, for example, red meat consumption, changes in 

demand would only be discernable over a period of years.

If consumers make food choices based on health risks posed by foods, 

consumers would presumably purchase less chicken if news reports about 

bird fl u made them believe risks had increased.5 Namely, news coverage 

of AI might lead consumers to believe the likelihood of contracting bird fl u 

was higher than before or that disease outcomes were worse than previously 

thought. There is good reason to think that, in Italy, such impacts would have 

been temporary: there had not been a human illness in Italy to confi rm the 

heightened risk of human HPAI H5N1 infection that consumers could draw 

 4The main limitation to drawing 

inferences from retail purchase data is 

that not all food is purchased from grocery stores to be eaten at home. Some 

food is purchased at restaurants, and 

behavior toward prepared food conceivably could differ from behavior toward 

food eaten at home. Euromonitor data 

(2000-05) indicates food-away-fromhome expenditures were 33-35 percent 

of all food spending in Italy, compared 

with 43-44 percent in the United States.

 4The main limitation to drawing 

inferences from retail purchase data is 

that not all food is purchased from grocery stores to be eaten at home. Some 

food is purchased at restaurants, and 

behavior toward prepared food conceivably could differ from behavior toward 

food eaten at home. Euromonitor data 

(2000-05) indicates food-away-fromhome expenditures were 33-35 percent 

of all food spending in Italy, compared 

with 43-44 percent in the United States.

5News is not necessarily all infl ammatory or all pointing to increased food 

safety risk. NPD Group (2006a) highlighted the balance with which German 

media reported on bird fl u:

The media continued to confi rm 

that there was no risk of the infection transmitted to humans, if the 

poultry is properly cooked.

Still, the only reason for such balance 

to appear in newspaper reports is that 

they fi rst report increasingly westward 

outbreaks among wild birds and domesticated poultry, and human illnesses. 

Thus, it can be assumed that consumers 

interpret newspaper reports as pointing 

to increased risks. A potential followup to this study would categorize news 

reports as positive or negative or even by 

degree of how positive or negative they 

are when developing media indices.

5News is not necessarily all infl ammatory or all pointing to increased food 

safety risk. NPD Group (2006a) highlighted the balance with which German 

media reported on bird fl u:

The media continued to confi rm 

that there was no risk of the infection transmitted to humans, if the 

poultry is properly cooked.

Still, the only reason for such balance 

to appear in newspaper reports is that 

they fi rst report increasingly westward 

outbreaks among wild birds and domesticated poultry, and human illnesses. 

Thus, it can be assumed that consumers 

interpret newspaper reports as pointing 

to increased risks. A potential followup to this study would categorize news 

reports as positive or negative or even by 

degree of how positive or negative they 

are when developing media indices.
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from news reports; also, HPAI H5N1 had not been found in domesticated 

birds, so Italian consumers might eventually infer that HPAI H5N1 was 

unlikely to enter their food supply and that the risk had passed.6

Both the poultry industry and policymakers have strong incentives to keep 

consumers safe from exposure to HPAI. As long as these protective measures 

are effective, even in the event of HPAI H5N1 outbreaks in birds there would 

not be human deaths or illnesses that would confi rm consumers’ worst fears. 

Private fi nancial incentives to keep consumers safe arise partially from the ease 

with which bird fl u illnesses might be traced. So far, each human case has been 

newsworthy worldwide. Symptoms and outcomes are generally distinct and 

clearly linked to exposure to infected birds or to other people who had been 

directly exposed to infected birds (WHO, 2006). The rapid onset of the disease 

means that if the source of exposure were food, the food and the retailer from 

which it was purchased would be easily identifi ed. No retailer wants to be 

identifi ed with a product that makes customers sick. That identifi cation could 

instantly destroy the value of a brand name, potentially rendering any investment in brand or good will worthless. Public sector incentives to prevent and 

control HPAI H5N1 arise from the need for government agencies to protect 

public health as well as avoid potentially major economic losses.

Entirely different fi ndings would likely result from a study based on data 

from a country in which human cases of bird fl u have been reported. So far, 

human cases of bird fl u have been confi rmed in Asia, the Middle East, and 

Africa (WHO, 2008). Available data, however, are not suffi cient to conduct a 

retrospective study quantifying consumer purchase responses to news reports 

of disease outbreaks in those countries.

Counts of Newspaper Articles About Bird Flu

The study team constructed weekly counts of newspaper articles about bird 

fl u to examine whether changes in poultry purchases were likely related 

to heightened consumer awareness of bird fl u. The LexisNexis Academic 

search engine was used to search for news stories related to bird fl u. Because 

the focus was on the impacts of news reports in Italy, the team limited the 

scope of the search to European newspapers and constructed two data series: 

an Italy-specifi c index and an index pertinent to the rest of the world (here 

denoted as non-Italy-specifi c news). While the weekly counts of Italyspecifi c newspaper reports are intended to capture information on bird fl u that 

is related to Italy, the weekly counts of non-Italy-specifi c news are designed 

to refl ect Italian consumers’ exposure to information about outbreaks in the 

rest of the world as reported by European news sources.

Italian consumers do not read all European newspapers. But they do receive 

news through a variety of channels, and media coverage of avian infl uenza 

in major European newspapers is expected to be correlated with the exposure 

of Italian consumers to AI news. Limiting the search to the relatively small 

sample of Italian newspapers would likely not be as effective at revealing the 

timing and relative volume of news from all sources as would searching the 

entire gamut of European newspapers.

The keywords searched in LexisNexis were avian fl u or avian infl uenza or bird 

fl u and not Italy for non-Italy-specifi c news, and avian fl u or avian infl uenza or 

 6U.S. consumers are further removed 

from H5N1, the strain of highly pathogenic avian infl uenza that is currently 

circulating in Asia and Europe. H5N1 

has not been found in the United States. 

Historically, there have been three 

instances of highly pathogenic avian 

infl uenza found in the United States. 

In 1924, HPAI H7 was in east coast 

live bird markets; and HPAI H5N2 was 

found in chickens in Pennsylvania, 

Maryland, and Virginia in 1983-84, and 

in Texas in 2004.

 6U.S. consumers are further removed 

from H5N1, the strain of highly pathogenic avian infl uenza that is currently 

circulating in Asia and Europe. H5N1 

has not been found in the United States. 

Historically, there have been three 

instances of highly pathogenic avian 

infl uenza found in the United States. 

In 1924, HPAI H7 was in east coast 

live bird markets; and HPAI H5N2 was 

found in chickens in Pennsylvania, 

Maryland, and Virginia in 1983-84, and 

in Texas in 2004.
6

The Effects of Avian Infl uenza News on Consumer Purchasing Behavior / ERR-65

Economic Research Service/USDA

bird fl u and Italy for Italy-specifi c news.7 Not surprisingly, the weekly average 

number of European news articles about bird fl u that do not specifi cally mention 

Italy (324.4) is far greater than those that do refer to Italy (24.7) (fi g. 1).

The fi rst wave of concern in the European media started in late July 2005, 

when HPAI H5N1 moved northwesterly from its origins in Southeast Asia to 

 7The searches used English keywords. News referring to these keywords is expected to be correlated with 

news referring to AI keywords in other 

languages.

 7The searches used English keywords. News referring to these keywords is expected to be correlated with 

news referring to AI keywords in other 

languages.

Figure 1

Weekly number of European newspaper reports about bird flu

Number of Italy-specific reports

0

100

200

300

400

500

600

2005M01 2005M07 2006M01 2006M07

0

500

1,000

1,500

2,000

2,500

2005M01 2005M07 2006M01 2006M07

Number of non-Italy-specific reports

Reported in

Russia and

Kazakhstan

Reported in

German poultry

Reported in

Bulgaria, Greece,

and Italy

Turkey reports

human cases

Reported in

Turkey, Romania,

and Croatia

Source: USDA, ERS using data from LexisNexis academic search engine.
7

The Effects of Avian Infl uenza News on Consumer Purchasing Behavior / ERR-65 

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the Russian Federation and adjacent parts of Kazakhstan, affecting domestic 

and migratory birds. European media coverage of the disease intensifi ed 

in October 2005 following reports of outbreaks in Turkey, Romania, and 

Croatia. This resulted in a high of 2,455 articles in the week ending October 

23, 2005. Counts revealed additional, but smaller, spikes in media attention in January through April 2006, as Turkey reported its fi rst two human 

cases as well as poultry outbreaks, and HPAI H5N1 was identifi ed in additional countries in Europe (e.g., Austria, France, Germany, Italy, Sweden, 

Switzerland) and elsewhere.

The number of articles trended strongly downward from early April 2006 

through the end of the sample period. Across the entire sample, weekly 

counts of Italy-specifi c newspaper reports were generally relatively fl at, with 

several articles per week. The exception was a spike of 539 articles in the 

week ending February 19, 2006, corresponding to the discovery of HPAI 

H5N1 in dead wild swans in southern Italy.
8

The Effects of Avian Infl uenza News on Consumer Purchasing Behavior / ERR-65

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Estimating How Long Consumers 

Remember the News

Information on food safety is expected to have effects that persist over time. 

Therefore, an empirical issue for studies of the effects of food safety on 

demand is determining the appropriate length and shape of the distributed lag 

structure for variables expected to infl uence consumers’ risk perceptions. In 

previous studies, authors have followed several alternative strategies. Burton 

and Young (1996) used contemporary and cumulative numbers of bovine 

spongiform encephalopathy (BSE) articles as the demand shifters for transitory and permanent quality shocks, respectively. This practice appears to 

be appropriate for their case, because the study’s sample ended in the third 

quarter of 1993, when BSE in Great Britain showed no sign of relenting. 

There was no reason to expect the components of permanent shocks to decay, 

and, with quarterly data, transitory shocks might run their course within each 

period. But, for other food safety incidences, it is likely that the effect of 

media coverage on consumption might decay over time.

Smith et al. (1988) constrained their milk media index to follow a second-order 

Almon polynomial. Dahlgran and Fairchild (2002) specifi ed a geometric decay 

for their media index. The advantage of this approach is that it reduces the 

multicollinearity among lagged indices. A potential drawback is that it imposes 

a specifi c structure on the distributed lag, which may lead to inconsistent 

parameter estimates if the imposed structure is incorrect (Judge et al., 1988).

Alternatively, Marsh et al. (2004) and Piggott and Marsh (2004) did not 

impose any functional structure on the distributed lags of media indices. 

Instead, these studies started with a relatively large number of lags and 

sequentially reduced the number of lags, selecting the preferred model as 

the one with the best statistical fi t. Although this approach is free from the 

danger of imposing incorrect functional structure, it may be plagued by 

multicollinearity of the lagged media indices.

This analysis uses an alternative approach to investigate the lag structure of 

media indices. This lag structure, which was originally proposed by Mitchell 

and Speaker (1986), is known as the polynomial inverse lag (PIL). The PIL 

has several advantages over other commonly used lag structures such as the 

Almon (1965) lag. First, the researcher does not need to specify a priori the 

lag length or impose an endpoint restriction because the PIL has an infi nite 

distributed lag structure. Second, the PIL is linear in the transformed exogenous variables (i.e., the weekly count of newspaper articles on bird fl u). As 

explained in the paragraph that follows, this latter property makes it convenient to test for the best specifi cation for the lag structure.

Consider the following regression equation:

 (1)

where Yt is poultry sales in period t, Xτ is the weekly count of newspaper 

articles in period τ with τ ≤ t, b is a collection of other explanatory variables 

(e.g., meat prices, seasonal dummy variables) and their associated coeffi cients, 

t

i

t i t i Y  b £w X  e

c






0
9

The Effects of Avian Infl uenza News on Consumer Purchasing Behavior / ERR-65 

Economic Research Service/USDA

and et is the regression residual. Although the empirical demand model may 

take a more sophisticated form, equation (1) can be used to provide a simple 

illustrative example of how the PIL works. This equation cannot be estimated directly as written due to the infi nite lag distribution for X. To derive 

an estimable form of equation (1), Mitchell and Speaker (1986) propose the 

following transformation:

 (2)

where £







   

1

0

, 2,..., , ( 1)

t

i

j

t i

jt j n

i

X

Z , 2 ( 1) ££

c






 

n

j t i

j

j t i

t i

a X

R and n is the 

degree of polynomial for the PIL structure, which has to be determined 

empirically. With the sample t=1,2,...,T, data are available to calculate Zjt, 

but the remainder term Rt

 cannot be calculated from the data because it 

includes infi nite lags. Mitchell and Speaker showed that with t greater than 

eight, Rt

 becomes negligible. Therefore, a practical solution to the unobserved Rt

 problem is to exclude the fi rst eight data points and conduct econometric analysis on the remaining data without the Rt

 term.8

After dropping the fi rst eight data points, the Zjt, (t=9,10,11,...,T) are 

computed as follows:

For j = 2:

For j = 3:

For j = 4:

For j = 5:

and so on, until reaching the term Znt. A remaining issue is selection of the 

appropriate n —the degree of the polynomial. The selection process can start 

with a relatively high degree (e.g., n = 5), in which case equation (2) can be 

written as

 (3) 

 8The estimable version of the PIL 

truncates negligible terms used in calculating the Zjt values but can be used 

to obtain the effects of X on Y over any 

time interval.

 8The estimable version of the PIL 

truncates negligible terms used in calculating the Zjt values but can be used 

to obtain the effects of X on Y over any 

time interval.

... ; ( 1) 1 2 3 4 2

1

2

3

2

2

2

1

1

0

2 2 2 t

X X X X X

i

X Z t t t

t

i

t i t

t      

  
 
 










£

... ; ( 1) 1 2 3 4 3

1

3

3

3

2

3

1

1

0

3 3 3 t

X X X X X

i

X Z t t t

t

i

t i t

t      

  
 
 










£

... ; ( 1) 1 2 3 4 4

1

4

3

4

2

4

1

1

0

4 4 4 t

X X X X X

i

X Z t t t

t

i

t i t

t      

  
 
 










£

... ; ( 1) 1 2 3 4 5

1

5

3

5

2

5

1

1

0

5 5 5 t

X X X X X

i

X

Z t t t

t

i

t i t

t      

  
 
 










£

. t 2 2t 3 3t 4 4t 5 5t t Y  b  a Z  a Z  a Z  a Z  e

, 2

t t

n

j

t j jt Y  b £a Z  R  e 
10

The Effects of Avian Infl uenza News on Consumer Purchasing Behavior / ERR-65

Economic Research Service/USDA

To determine the optimal n, regression equation (3) is fi t a number of times, 

successively dropping the highest degree term. The choice of appropriate 

degree is then determined by the ability of the model to fi t the data. The 

model with the best fi t can be selected based on the Akaike information criterion, the Schwarz criterion, adjusted R2, or other measures of model fi t.

Finally, the weights (wi

) on Xτ in equation (1) can be recovered using estimates of aj

 (j = 2,...,n). The formula for calculating weight wi is

 (4)

Equation (4), along with estimated values for aj

, is used to calculate the 

weights on current and lagged number of newspaper articles on bird fl u in the 

demand equation.

, 0,..., 1. ( 1) 2 
   £i t

i

a

w

n

j

j

j

i
11

The Effects of Avian Infl uenza News on Consumer Purchasing Behavior / ERR-65 

Economic Research Service/USDA

Estimating News Impacts 

on Poultry Demands

This study was an effort to conduct a fi rst-order analysis of the effects of 

AI news on consumer behavior and employed a relatively simple log-log 

demand specifi cation.9 It estimated weekly demand for two products: fresh 

poultry, and frozen and processed poultry. In each demand function, weekly 

prices of the two poultry products are included as explanatory variables along 

with weekly prices of beef, pork, and fi sh and seafood. Inspection of the data 

revealed some similarities between the Italian and U.S. markets. In Italy, 

quantities of poultry purchased have been rising over time. Thus, the estimated demands include a time trend to refl ect changes in meat demand due 

to factors such as changes in income, population, and diet preferences. Also, 

like the U.S. purchases, Italian purchases display regular, seasonal patterns, 

so estimated demand includes indicator variables identifying purchases made 

in summertime and December.

The estimated demand equation for fresh poultry is as follows:

Here, qfshp is the weekly quantity of fresh poultry sold; pfshp, pfrzp, pbf,

ppk, and pfh are prices of fresh poultry, frozen and processed poultry, beef, 

pork, and fi sh and seafood, respectively10; summer is a dummy variable 

equal to 1 if the week is in June, July, or August, and 0 otherwise; newyear

is a dummy variable equal to 1 if the week is in December, and 0 otherwise; 

z2avrow and z3avrow are the second- and third-degree polynomials for the 

square root of the number of non-Italy-specifi c newspaper reports variable, 

respectively; z2avit and z3avit are analogously defi ned variables for the 

square root of Italy-specifi c newspaper reports; time is a linear time trend;

is the estimated coeffi cient for the fi rst-order autocorrelation of the regression 

residual; and the numbers in parentheses below the coeffi cients are the estimated standard errors. Average prices are derived by dividing total weekly 

sales values by quantities sold. To account for diminishing returns to additional media information, this analysis used the square root of both non-Italyspecifi c newspaper reports and Italy-specifi c newspaper reports in generating 

the PIL terms following the procedure detailed above.

The Akaike information criterion was used to determine the model with 

the best fi t. The model was found to perform best when both the non-Italyspecifi c newspaper reports and Italy-specifi c newspaper reports enter with 

 9Estimating more complex functional 

forms and conducting comprehensive 

specifi cation testing is outside the 

scope of this exploratory project.

 9Estimating more complex functional 

forms and conducting comprehensive 

specifi cation testing is outside the 

scope of this exploratory project.

 10The cross-price elasticities for pork 

and fi sh are negative, indicating that 

they are complements to poultry. This 

fi nding may be related to the relatively 

simple functional form used for this 

study. It is possible there are excluded 

meat demand shifters that are simultaneously affecting demand for poultry, 

pork, and fi sh. Another possibility is 

that there are minimum quantities of 

these meats that are typically purchased 

with little price responsiveness (e.g., 

subsistence levels) and then remaining 

super-numerary expenditures allocated 

to meat are divided between poultry, 

beef, pork, and fi sh and seafood (Piggott and Marsh, 2004). In this case, 

higher prices would increase expenditures on the fi xed subsistence quantities 

and reduce super-numerary expenditures, which may result in a reduction 

in total consumption of all meats even 

if there is a relative shift of super-numerary consumption from pork and fi sh 

to poultry.

 10The cross-price elasticities for pork 

and fi sh are negative, indicating that 

they are complements to poultry. This 

fi nding may be related to the relatively 

simple functional form used for this 

study. It is possible there are excluded 

meat demand shifters that are simultaneously affecting demand for poultry, 

pork, and fi sh. Another possibility is 

that there are minimum quantities of 

these meats that are typically purchased 

with little price responsiveness (e.g., 

subsistence levels) and then remaining 

super-numerary expenditures allocated 

to meat are divided between poultry, 

beef, pork, and fi sh and seafood (Piggott and Marsh, 2004). In this case, 

higher prices would increase expenditures on the fi xed subsistence quantities 

and reduce super-numerary expenditures, which may result in a reduction 

in total consumption of all meats even 

if there is a relative shift of super-numerary consumption from pork and fi sh 

to poultry.

ln(qfshp) = 24.739 – 2.286 ln(pfshp) – 0.012 ln(pfrzp) + 0.722 ln(pbf) – 2.459 ln(ppk)

 (1.716) (0.299) (0.458) (0.647) (0.594)

 – 1.593 ln(pfh) – 0.011 summer + 0.099 newyear – 0.022 z2avrow

(0.290) (0.027) (0.034) (0.008)

 + 0.021 z3avrow – 0.044 z2avit + 0.040 z3avit + 0.006 time (5)

 (0.009) (0.021) (0.022) (5.7E – 4)

R2 = 0.829; AIC = -269.7; DW = 2.027; N = 104; = –0.286

 (0.105)

R$ 1

1 ρˆ
12

The Effects of Avian Infl uenza News on Consumer Purchasing Behavior / ERR-65

Economic Research Service/USDA

three as the highest degree of polynomial. A fi rst-order autocorrelation 

correction was found to be suffi cient.

The price elasticity of demand for fresh poultry was estimated to be -2.286. 

In a study of Italian meat demand, Fanelli and Mazzocchi (2002) found the 

own-price demand elasticity for poultry to be between -1.481 and -1.250, 

depending on model specifi cation. The difference between this study’s estimate and that of Fanelli and Mazzocchi may stem from two factors. First, 

the Nielsen data are weekly, whereas Fanelli and Mazzocchi used monthly 

data. Consumers are more price responsive in the short run than in the long 

run because of inventory behavior (see, for example, Wohlgenant and Hahn 

(1982); Hendel and Nevo (2006)). Second, if prices are simultaneously 

determined with quantities, the estimated elasticity may be biased upward 

(in absolute value) (Reiss and White, 2005). For agricultural products, endogeneity is more likely to be a problem in high-frequency data because supply 

is to some extent predetermined in the short run. To correct for this potential 

bias, this study would have to identify supply shifters that are highly correlated with prices but not with the disturbances and use instrumental variables 

in estimating the model. The tradeoff is the loss of effi ciency in exchange for 

avoiding potential inconsistency. Although outside the scope of the present 

study, exploring endogeneity is a potentially important extension. 

The frozen poultry equation along with the estimated coeffi cients and standard errors are as follows:

Here, qfrzp denotes the weekly quantity of frozen and processed poultry sold; 

z4avit and z5avit are, respectively, the fourth and fi fth degrees of polynomial 

for the square root of Italy-specifi c newspaper reports, and all other variables 

are defi ned as earlier for the fresh poultry equation.

The own-price elasticity for frozen and processed poultry is -1.172, which is 

much less elastic than estimated for fresh poultry, as expected. Coeffi cients 

on the summer and newyear dummy variables are not statistically signifi -

cant for frozen poultry demand. The model with the best fi t in terms of AIC 

and adjusted R2 is the one with the highest degrees of polynomials of 2 and 

5, respectively, for non-Italy-specifi c newspaper reports and Italy-specifi c 

newspaper reports. All coeffi cients on the Italy-specifi c newspaper reports 

terms are statistically signifi cant at the 1-percent level, while the coeffi cient 

on the second-degree polynomial of the square root of non-Italy-specifi c 

newspaper reports is signifi cant at the 5-percent level.

ln(qfrzp) = 18.891 – 0.020 ln(pfshp) – 1.172 ln(pfrzp) + 0.462 ln(pbf) – 0.915 ln(ppk)

 (1.073) (0.192) (0.297) (0.398) (0.405)

– 1.028 ln(pfh) – 0.020 summer + 0.018 newyear – 0.002 z2avrow

(0.190) (0.016) (0.021) (8.2E–4)

 – 0.398 z2avit + 2.388 z3avit – 4.537 z4avit + 2.544 z5avit + 0.001 time (6)

 (0.073) (0.607) (1.368) (0.836) (0.004)

R2 = 0.907; AIC = -357.9; DW = 2.011; N = 104; = –0.158

 (0.108)

R$ 1
13

The Effects of Avian Infl uenza News on Consumer Purchasing Behavior / ERR-65 

Economic Research Service/USDA

Simulating Results of Bird Flu News 

on Poultry Demand

These results indicate that media information on avian infl uenza had a statistically signifi cant effect on sales of both fresh and frozen poultry products in 

Italy. The model results revealed that newspaper reports had an impact that 

persisted over time. In addition to the polynomial transformations that specifi ed the lag structure of newspaper reports on poultry purchases, the square 

root of the counts of newspaper reports was used to allow for declining 

marginal effects of newspaper reports. Additional reports contribute to an 

increase in total impact on meat purchases, but at a declining rate.

Constructing a model that would detect impacts that persist across weeks and 

that increase at a decreasing rate means the covariates related to newspaper 

reports are polynomial transformations of square roots of the original weekly 

counts of newspaper reports. In effect, the relative magnitudes of the coeffi cients are not very intuitive. To gain more insight on these effects, this analysis used the coeffi cient estimates on the polynomials to derive the weights 

on the square roots of the media indices. These weights are the wi

 in equation (1), while X is the square root of the media indices. Interpretation of the 

weights is straightforward for a single newspaper report. In this case, a value 

of -0.0060 would indicate a 0.6-percent decrease in purchases for a particular 

week. These percentage decreases in purchases over time are plotted in 

fi gures 2 and 3. A second newspaper report would create a smaller impact 

than the fi rst, but one for which the relative week-to-week impacts follow the 

same patterns. The square root transformation means that four reports would 

double the impacts displayed in the fi gures.

Time patterns of results indicate the response of fresh poultry consumption 

to AI news peaked in the second week after the initial newspaper reports. 

For non-Italy-specifi c news, the response of fresh poultry sales in the second 

week was more than fi ve times the size of the instantaneous response in the 

fi rst week. The difference between the fi rst-week response and second-week 

response was less pronounced for bird fl u news pertinent to Italy but was still 

about 50 percent larger in the second week than in the fi rst week.

For frozen and processed poultry sales, the response to news was qualitatively more distinct between news about the rest of the world and news 

related to Italy. For non-Italy-specifi c news, the response was monotonic 

over time. The response peaked in the same week the news was reported 

and declined to about a third of the initial response in the second week. By 

the fi fth week, the size of the response was already negligible. The temporal 

response to Italy-specifi c news had a more complex pattern. The size of the 

response fi rst peaked in the second week then dropped to about a fi fth of the 

peak level in the following week, after which the response increased again 

and did not dissipate even after the 24th week. Although not the expected 

temporal response, this pattern was robust across multiple specifi cations 

of the model. It is possible that this is refl ective of inventory behavior with 

frozen and processed poultry products or other factors contributing to more 

complex dynamics in the consumer response for frozen and processed 

poultry products in Italy. 
14

The Effects of Avian Infl uenza News on Consumer Purchasing Behavior / ERR-65

Economic Research Service/USDA

Figure 2

Weekly reduction in poultry purchases associated with a marginal

increase in non-Italy-specific newspaper reports

Percent

Source: USDA, Economic Research Service.

-.28

-.24

-.20

-.16

-.12

-.08

-.04

.00

2 4 6 8 10 12 14 16 18 20 22 24

Weeks

Frozen poultry

Fresh poultry

Figure 3

Weekly reduction in poultry purchases associated with a marginal

increase in Italy-specific newspaper reports

Percent

Source: USDA, Economic Research Service.

Weeks

Frozen poultry

Fresh poultry

-.7

-.6

-.5

-.4

-.3

-.2

-.1

.0

2 4 6 8 10 12 14 16 18 20 22 24
15

The Effects of Avian Infl uenza News on Consumer Purchasing Behavior / ERR-65 

Economic Research Service/USDA

To evaluate the impact of avian infl uenza media coverage on sales of poultry 

products, this analysis conducted two counterfactual experiments to simulate 

how consumers may have responded without concerns regarding avian infl uenza. The fi rst experiment simulated sales of poultry products had there been 

no Italy-specifi c news about bird fl u. This effect is achieved by setting the 

newspaper report variables avit to zero and simulating quantities with the rest 

of the price, trend, and seasonality variables set at their historical values. On 

top of the fi rst experiment, the indicator of non-Italy-specifi c bird fl u news, 

avrow, was further set to zero and quantities were simulated with the remaining 

variables. This second experiment offers some insight into potential market 

conditions had there been no news on bird fl u in European news sources. 

For frozen and processed poultry, it appears that non-Italy-specifi c news 

together with Italy-specifi c news reduced purchases only slightly more than 

Italy-specifi c news alone (fi g. 4). In effect, for frozen and processed poultry, 

non-Italy-specifi c news had a small impact on purchases relative to the 

impact of Italy-specifi c news. In contrast, for fresh poultry, non-Italy-specifi c 

news is calculated to reduce purchases more than Italy-specifi c news (fi g. 5). 

This fi nding may refl ect the timing of outbreaks in different locations. 

Outbreaks in Western Europe outside of Italy, and the associated media 

attention, occurred prior to heightened Italy-specifi c news. Thus, Italian 

consumers already may have made substantial adjustments to their consumption of fresh poultry, which is likely to be perceived as a greater risk than 

250

300

350

400

450

500

550

600

2005M01 2005M07 2006M01 2006M07

No Italy-specific or non-Italy-specific news

No Italy-specific news

Actual purchases

Figure 4

Actual and simulated frozen and processed poultry purchases in Italy

Kilograms per week (thousands)

Source: USDA, Economic Research Service.
16

The Effects of Avian Infl uenza News on Consumer Purchasing Behavior / ERR-65

Economic Research Service/USDA

frozen and processed poultry. Discovery of H5N1 in wild birds in Italy and 

the increase in Italy-specifi c news, however, appears to have contributed to 

declines in consumption of frozen and processed poultry similar to earlier 

declines in fresh poultry. 

Two additional graphs illustrate the proportionate reduction in sales related to 

news on avian infl uenza. Figure 6 plots the historical sales of fresh poultry as 

a percentage of the simulated sales with no reporting of bird fl u by European 

news sources, and as a percentage of the simulated sales when there was no 

Italy-related news but there still was news about bird fl u in the rest of the 

world reported by European news agencies. Figure 7 plots these percentages 

for frozen and processed poultry.

For fresh poultry, historical sales were, on average, 79.8 percent of what they 

would have been if both avrow and avit were zero. If there were no Italyspecifi c news but still non-Italy-specifi c news, average sales were simulated 

to be 86.5 percent of what they would have been without news on bird fl u. 

In other words, non-Italy-specifi c news reduced fresh poultry sales by an 

average of 13.5 percent, and Italy-specifi c news was responsible for a further 

6.7-percent drop in sales relative to the unaffected case. For frozen and 

processed poultry, avrow and avit are responsible for a 4.1-percent and 14.6-

percent drop in sales, respectively.

No Italy-specific or non-Italy-specific news

No Italy-specific news

Actual purchases

Figure 5

Actual and simulated fresh poultry purchases in Italy

Kilograms per week (thousands)

Source: USDA, Economic Research Service.

100

150

200

250

300

350

400

2005M01 2005M07 2006M01 2006M07
17

The Effects of Avian Infl uenza News on Consumer Purchasing Behavior / ERR-65 

Economic Research Service/USDA

Figure 6

Proportion of baseline fresh poultry purchases remaining 

with Al news impacts

Purchases with news impacts as a proportion 

of purchases without news impacts

Source: USDA, Economic Research Service.

.55

.60

.65

.70

.75

.80

.85

.90

.95

2005M01 2005M07 2006M01 2006M07

Italy-specific and non-Italy-specific news

Italy-specific news

Figure 7

Proportion of baseline frozen and processed poultry purchases 

remaining with Al news impacts

Purchases with news impacts as a proportion 

of purchases without news impacts

Source: USDA, Economic Research Service.

Italy-specific and non-Italy-specific news

Italy-specific news

0.60

0.65

0.70

0.75

0.80

0.85

0.90

0.95

1.00

2005M01 2005M07 2006M01 2006M07
18

The Effects of Avian Infl uenza News on Consumer Purchasing Behavior / ERR-65

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However, examining sample averages masks the magnitude of some shortrun 

effects. Sales of poultry in Italy plummeted in October 2005 following news 

reports that the virus had spread beyond the Russian Federation and neighboring Kazakhstan into Turkey, Romania, and Croatia. The situation was 

further aggravated when the virus was found in wild swans in southern Italy 

in February 2006. As shown in fi gures 6 and 7, Italy-specifi c news and other 

European news were estimated to have combined to reduce fresh poultry sales 

by as much as 43.6 percent in the week ending March 5, 2005. In percentage 

terms, the largest reduction in frozen and processed poultry sales occurred in 

the week ending April 16, 2005, when sales dropped by 37.5 percent.
19

The Effects of Avian Infl uenza News on Consumer Purchasing Behavior / ERR-65 

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Conclusion

Interpreting These Results—How Different 

Should We Expect a U.S. Experience With 

Bird Flu To Be?

The Italian case study could be used to predict a U.S. response to bird fl u 

news if Italian and U.S. food demands, food choices, risk preferences, and 

risk perceptions were alike. Italian and U.S. consumers do exhibit some 

similar characteristics, but there are striking differences as well. Aspects of 

these differences help explain why a U.S. response to news about bird fl u 

might be larger or smaller than the Italian response. 

The Italian retail market for poultry differs from the U.S. market in numerous 

ways. An obvious difference is the amount of poultry consumed. U.S. 

consumers eat far more chicken per capita than do Italians—60.4 pounds 

in 2005 in the U.S. versus. 23.5 pounds in Italy.11 Differences in income 

drive many of the differences in meat consumption patterns. Per capita 

income for 2006 was estimated at $43,500 in the United States and $29,700 

in Italy (Central Intelligence Agency, no date). And, income was allocated 

differently in each country. Food accounts for 16.59 percent of expenditures in Italy, compared with 9.73 percent in the United States. This difference equates to food commanding a 70-percent larger share of household 

expenditures in Italy than in the United States (USDA, ERS, 2003). Italian 

income and price elasticities of demand for meat (responsiveness to changes 

in income and prices) are approximately three times as high as those in the 

United States (USDA, ERS, 2003). In summary, the income differences give 

U.S. consumers greater ability to make dietary changes, yet the elasticities 

reveal that Italians are three times as responsive as Americans to changes in 

prices or income.

Nevertheless, the two countries exhibit some attributes of food consumption 

that are nearly identical. Expenditures for meat are more alike than those for 

other food groups, as meat makes up 23.58 percent of total food expenditures 

in Italy and 19.58 percent in the United States. Over the long run, Italian 

meat consumption has changed in ways that are quite similar to changes 

in the United States. Over the 1970s and 1980s, Italian chicken consumption doubled (Dono and Thompson, 1994). Further, in both countries, the 

changes in the pattern of meat consumption raised the question of whether 

the changes indicated changing preferences—concern over blood cholesterol 

and how it might be reduced with a shift toward white meat—or whether 

movements in relative prices and income explain the change. The changing 

patterns of meats consumed and the shared evolution of food concerns both 

point to similarities in food demand. Further, income growth and globalization of the food retail and foodservice industry are giving rise to increasingly 

similar food consumption patterns across the world (Frazão et al., 2008). 

Further convergence is likely.

All food, regardless of country of origin, carries with it some health risks. Thus, 

it would be reasonable to suppose that all consumers (U.S. and Italian) always 

make food choices conscious of the health risks posed by consuming foods. The 

different average income levels in each country point to different responses to 

 11U.S. per capita food consumption 

is represented here by food availability (USDA, ERS, 2007). Italian 

consumption was calculated from total 

consumption (USDA, FAS, 2006) 

and population (Central Intelligence 

Agency, no date).

 11U.S. per capita food consumption 

is represented here by food availability (USDA, ERS, 2007). Italian 

consumption was calculated from total 

consumption (USDA, FAS, 2006) 

and population (Central Intelligence 

Agency, no date).
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new foodborne health risks. Assuming that health and safety are normal goods 

and respond positively to increases in income, relatively larger responses to risks 

identical to those in Italy could be expected in the United States. Also, the larger 

income levels in the United States indicate that U.S. consumers might have more 

options for mitigating impacts of any new health risk.

But having the ability to make dietary changes and actually making changes 

are not one and the same. The extent of reactions to news about human health 

and safety likely depends on consumers’ perceptions of changing health risks. 

Determining whether U.S. consumers would make as large a change in food 

choices as Italian consumers did requires answering two questions. First, would 

bird fl u news raise risk perceptions of U.S. consumers as much as it did for 

those of Italian consumers? Second, would changing risk perceptions have as 

much impact on Americans’ food choices as on Italians’ food choices?

Harrison et al. (2004) surveyed Italian and U.S. consumers, attempting to 

compare risk perceptions and preferences. Although the study focused on 

potential risks posed by genetically modifi ed (GM) foods and not on HPAI 

H5N1, it did survey consumers in metropolitan areas of each country on the 

issue of acceptance of foods and health risks posed by foods. 

Harrison et al. found that Italian consumers are different from U.S. 

consumers, as Italians are less likely to purchase GM foods. But the two 

groups of consumers exhibited strong similarities that could have been 

reasonably anticipated. In both countries, higher levels of perceived risks 

decreased the likelihood that a consumer would purchase GM foods. 

Perceived risk was the most important factor in purchase decisions in both 

countries—more important than trust in government oversight, knowledge 

or awareness of GM foods, or demographics. Surprisingly, given Europe’s 

recent experiences with mad cow disease and dioxin in the food supply, 

consumer confi dence in the government’s ability to control and monitor GM 

foods had almost the same effect on consumers’ willingness to purchase GM 

foods in both countries. But, Italians were more sensitive to potential risks 

than Americans. Changes in perceived risks had a relatively larger effect on 

purchasing decisions for Italians than for Americans.

These fi ndings point to the possibility that news about bird fl u detections 

might lead to a smaller response by U.S. consumers. Even if the quantity 

(and distribution over time) of news in the United States about bird fl u was 

similar to that in Italy, the differences in risk perceptions and risk preferences could make the U.S. response much smaller than the Italian response. 

Americans might not perceive so large a health risk as did Italians, and 

Americans might not be as concerned with risks as Italians.

With any detection of bird fl u in the United States, public health authorities are likely to comment publicly on the threat posed to consumers. For 

example, suppose bird fl u were detected in wild birds and public health 

authorities knew that the infected birds constituted isolated cases and were 

not part of a wave of infected birds. Knowing that the infected wild birds 

were unlikely to contaminate commercial fl ocks, authorities could assume 

that the possibility of infected commercial poultry entering the food supply 

chain is remote. Thus, it is likely that public health authorities would tell 

consumers that the risk of the detection to humans is negligible.
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A detection of HPAI H5N1 in the United States is likely to generate extensive 

media coverage for a while; the news would be about a potentially fatal illness. 

But, if consumers are told that the risk is negligible and their prior assessment 

is that the risk is negligible, there would be no reason for consumers to change 

risk perceptions if they believe public health authorities are credible. News of 

HPAI H5N1 outbreaks would not be news from a risk perspective.

With no substantial changes in risk perceptions, there would be no reason for 

consumers to change their food choices. The fi ndings of Harrison et al. reinforce that conclusion. If their fi ndings hold for all types of foodborne health 

risks, one should expect the U.S. response to bird fl u news to be small. Under 

the assumption that food choices of Italian consumers are more infl uenced 

by changing risk perceptions than are those of U.S. consumers, the U.S. 

response should be smaller.

Further, this scenario shares attributes with the response to the 2003 BSE 

announcements in the United States. Survey evidence indicates that prior 

to the announcements, consumers generally treated human health risks of 

BSE as negligible. When government agencies announced BSE detections, 

they also emphasized the risk was negligible (Kuchler and Tegene, 2006). 

The impact of bird fl u news on consumers’ risk perceptions may be nearly 

identical to impacts of BSE announcements if consumers respond similarly to government agency announcements regarding negligible bird fl u 

risk. Reductions in beef consumption following BSE announcements were 

short-lived.

If the risk posed by bird fl u is not negligible,12 the Italian response to HPAI 

H5N1 discovered in wild birds would not offer much guidance in estimating a U.S. response. In this case, risk and risk perceptions would change. 

Consumer behavior would be more diffi cult to predict. Consumer response 

toward familiar health risks is diffi cult to forecast, especially in the short run. 

An unfamiliar risk raises the uncertainty about behavior, and even the limited 

available evidence does not all point to the same outcomes.

In the short run, the range of possible consumer responses is wide. News 

about E. coli (STEC 0157) contamination of spinach shut down the spinach 

industry during 2006. And the fatality rate for E. coli (STEC 0157) is less 

than 1 per 1,000 cases (USDA, ERS, 2006), orders of magnitude less than the 

fatality rate for bird fl u. On the other hand, pathogens in the food supply are 

numerous despite a wide range of private and public sector actions designed 

to reduce contamination (Mead et al., 1999). Cases like the spinach contamination are extreme and unusual. 

 12Bird fl u poses human health risks 

if the virus is in the food supply or 

if it mutates to a form that is easily 

transmissible among people. The latter 

hazard bears no relation to chicken consumption and is not considered here.

 12Bird fl u poses human health risks 

if the virus is in the food supply or 

if it mutates to a form that is easily 

transmissible among people. The latter 

hazard bears no relation to chicken consumption and is not considered here.
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