1 Using COI and WTP Methods to Estimate the Societal Costs of Foodborne Illness (The views in this presentation are my own and do not reflect any Tanya Roberts, Economic Research Service (The views in this presentation are my own and do not reflect any official position of ERS or the U.S. Department of Agriculture) IRAC Public Conference: Risk Assessment, Economic Analysis, and Foodborne Illness Regulations November 16, 2007

2 Overview Why a public role in foodborne illness data? –Epidemiological information is missing –Missing information  low economic incentives COI/WTP estimates of human foodborne illness –Illness (morbidity) cost estimates –Value of a statistical life (unidentified person dies) Discussion of valuation

3 CDC Estimates of Human Illnesses Caused by Foodborne Pathogens 200+ foodborne pathogens linked to human illness CDC estimates for U.S. each year –76 million acute FBI –325,000 acute hospitalizations –5,200 acute illnesses result in death –Unknown number of sequellae –Mead et al. (1999) Emerging Infectious Diseases, 5(5):

4 Weak Incentives for Pathogen Control Identifying illness/food/pathogen connection is difficult –Illness often occurs days after pathogen consumption –Known outbreaks are best chance for ID food 2005 FoodNet data on outbreaks –Only 410 outbreaks (10,781 illnesses) have pathogen ID –Illnesses in an outbreak with pathogen ID are 0.014% of all 76 million foodborne illnesses Weak private sector incentives for pathogen control –Even smaller probability that ill person will be compensated –Market failure because of missing information/compensation Signal for government intervention to correct economic incentives

5 ERS Foodborne Cost Estimates Morbidity-COI; Mortality-WTP Pathogen2000 $ (Billions) Salmonella2.4 Listeria monocytogenes2.3 Campylobacter spp.1.2 E. coli O157:H70.7 E. coli, non-O157 STEC0.3 Total $6.9 billion

6 Societal costs: market/regulatory failure? $6.9 billion/yr estimate for human illnesses is low –Only 5 pathogens underestimates public health problem –COI method for morbidity (medical costs, productivity losses) Research results: “ Benefit/Cost Analysis of HACCP” –Found public health protection benefits > industry costs –Too little food safety provided by private sector – Role for regulators to improve food safety –Economic incentives are embedded in Regulations Enforcement

7 ERS needs better estimate of society’s value for safe food COI morbidity valuation is based on medical costs and productivity losses WTP valuation for value of a statistical life is a comprehensive valuation measure –Includes value for lost leisure time –Includes value for pain and suffering –More consistent with economic theory than COI ERS needs to use WTP for morbidity valuation –Vast majority of foodborne cases do NOT die –5,200 deaths/year out of 76 million cases/year –WTP would value these illnesses more accurately

8 ERS Future: Willingness to Pay Method Few consumer surveys on WTP for food safety –Accuracy a question when so few –ERS commissioned two studies –Hammitt and Haninger is one of these studies How use the data in Hammitt and Haninger? –Assess what data are most accurate “best estimates” of societal values –Combine WTP estimates with CDC/FoodNet estimates of foodborne illness, by severity category

9 Issues for new valuation estimates Premature Death : value of a statistical life (VSL) –Include all foodborne deaths in estimates –Compare WTP in consumer surveys to WTP in risky jobs Morbidity for acute foodborne illness –Use what illness severity categories? –Use WTP to reduce food risk from H&H survey

10 Severity of foodborne illnesses 76 million cases of acute foodborne illness each year a Deaths a = 0.007% Hospitalizations a = 0.425% Medical visits b = 20% of cases Ill person with no medical visit b = 80% of cases a Mead 1999 Emerg. Inf. Dis.; b Jones 2007 Epidemiol. Infect.

11 FoodNet Data by Age, Severity/Age % % % Pathogen test+ 41% 55% 4% Hospitalization 31% 55%14% Deaths 10% 43% 47% Illness severity categories are mutually exclusive..

12 H&H Estimates of WTP to Avoid the Risk of a Foodborne Illness Adult moderate case of foodborne illness –1 day: $11,100 –3 days: $11,700 –7 days: $14,400 Child moderate case of foodborne illness –1 day: $28,000 –3 days: $30,400 –7 days: $26,500 –Smaller sample size for children Big problem, small variation with days of illness

13 Impose Daily Values on WTP* per Foodborne Illness Disease severity Duration Value per case days child adult No medical care 1* $3,800 $2,100 (1 day moderate illness) See physician/no test 3* $11,400 $6,300 (3 days moderate illness) See physician/+ test 7* $26,500$14,400 (7 days moderate illness) Hospitalized cases 7 $26,700$16,100 (7 days severe illness) * linear transformation of moderate 7 day value, Hammitt&Haninger

14 WTP/VSL to Avoid Foodborne Deaths Age 1 DeathCasesTotal cost (million $) (#) (billion $) Child (0-14) $ Adult (15-69) $6 2, Elderly (70+) $4.22, TOTAL5,200 $29 billion

15 WTP Values: Acute Foodborne Illnesses Severity of cases* Cases Total costs # billion US$ No medical care 60,800, (1 day moderate) See physician/no test 12,878, (3 days moderate) See physician/+test 1,991, (7 days moderate) Hospitalized cases 325,000 6 (7 days severe) Premature deaths 5, TOTAL (preliminary)76 million $350 billion *No sequellae included in this estimate, based on H&H

16 Discussion of Valuation Preliminary WTP estimates: morbidity –Higher values for morbidity than Cost of Illness method –Will other WTP studies replicate these high values? WTP estimates: mortality –Death by food doesn’t appear to be valued differently than other deaths How will new CDC/FoodNet estimates change? –Changes in total number of cases or severity? –Change the distribution of illnesses by pathogens? –Will sequellae be included this time?