What is the Most Effective Way to Produce Food Safety? INFORMS Seminar Series Isenberg School of...
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What is the Most Effective Way to Produce
Food Safety?
INFORMS Seminar SeriesIsenberg School of Management
October 29, 2004
Julie A. Caswell [email protected]
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The Food Safety Landscape in the U.S.
Safety– Foodborne disease remains significant– Recent (over) emphasis on biosecurity
Nutrition and obesity– The “SUPER SIZED” American
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How Do We… Identify priorities for risk reduction (i.e.,
improving public health) through– Government regulation– Company and supply chain quality
assurance
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Goals of Regulatory Systems
Protect and enhance public health Protect consumers from fraud, inform
consumers (right to know) Facilitate efficient market operation
– Enhance consumer decision-making– Lower transaction costs
Reward particular industries or consumers (rent seeking)?
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Food Safety Research Consortium
Partners at 6 Universities and Resources for the Future
Multidisciplinary– Microbiologists– Food Scientists– Nutritionists– Economists– Lawyers
The Big Goal– Creating decision tools to improve risk management
decision making by the federal government (and private parties)
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Why Do We Emphasize Risk Management?
Governments Are Applying the Risk Analysis Framework to Make Regulatory Decisions– Risk assessment– Risk management– Risk communication
But Effort is Seriously Out of Balance
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Risk Assessment
Is the:
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Risk Management
Is the:
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What’s Needed:
Is risk management like the:
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Risk Management Choosing interventions that:
– Address significant public health and market risks
– Are effective from a technical perspective The desired level of safety is attained
– Are effective from an economic perspective
Cost effective– The desired level of safety is attained at the lowest cost
Meet benefit-cost criteria– The desired relationship of benefits to costs is attained
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Foodborne Illness Risk Ranking Model
Quantity foodborne risks from food/ pathogen combinations
Rank the related health impacts of illnesses– Illnesses, Hospitalizations, Deaths– Quality Adjusted Life Years (QALYs)
Rank the related monetary costs of illnesses– Willingness to Pay– Cost of Illness
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Predictive Modeling
How do interventions affect risk generation and transmission?
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Effectiveness and Costs of Interventions Ranking Model
How economic factors influence private decisions that then affect risk outcomes– In production– In consumption
How economic factors affect regulatory decisions– Perceived (argued) benefits and costs– Cost effectiveness analysis– Benefit-cost analysis
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Input from Economists Consumer behavior
– Demand for quality (e.g., safety)– Incentives/disincentives to self-protect
Supplier incentives/disincentives– Consumer demand for safety– Supply chain demand for safety– Government requirements– Liability– Costs
Benefits and costs of government-mandated interventions
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The Supply Chain is Crucial to Outcomes
Levels of risk generating and risk reducing activity, and cost of food, are influenced by – Interaction of supply and demand– Interaction along the supply chain
An example: substitutes– In input markets – In demand– In trade
Focus on models that incorporate– Risk transmission– Price transmission
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Degree of Market Failure is Crucial to Regulation
Market failure in food safety is never complete
This impacts– Complexity of incentives to reduce risks– Number of private and public approaches
that can be used – Measurement and attribution of benefits
and costs
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Lessons on Benefits and Costs
Benefits– Emphasis on the value of avoiding adverse health
outcomes– With efforts to count other benefits
Costs – Measuring costs of regulation is more difficult for
foodborne risks because of mix of incentives– Flexible regulatory approaches that allow choice
are likely to be more cost effective– Redistribution rather than level of costs is likely to
be most prominent effect of regulations
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For Modeling Need Best Means to Measure
Interventions (public and private)– Current– Alternative
Technical feasibility (risk reduction)– At point applied– Along the supply chain
Costs and cost effectiveness (includes effects of economic incentives)– At point applied– Along the supply chain
Keeping in mind use as a decision tool
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Current Work Meta analysis of costs and
effectiveness of interventions in the red meat industry
Linking cost and benefit data to generate measures of:– Cost effectiveness– Net benefits
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Future Work Modeling workshop in December 2004 Grant applications for further development
of Effectiveness and Costs of Intervention Ranking Model
Integration of work with other modules of Food Safety Research Consortium work
Work on traceability in food systems– BSE as an example
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Remember the Goal Creating decision tools to improve risk
management decision making by the federal government (and private parties– Risk ranking– Predictive modeling– Cost and effectiveness modeling