Consumers and the Dairy Growth Hormone: Opportunity and Controversy

MARSHALL MARTIN, JEAN RIEPE, JOSEPH UHL, AND RICHARD WIDDOWS*

Economic theory suggests that consumers gain from technological improvements [Watson and Holman, 1977]. Bovine somatotropin, or bST, is the first product of biotechnology that may have a widespread, significant effect on agriculture, the food supply, and food prices [Kuchler, et al., 1989]. This dairy growth hormone was approved by the Food and Drug Administration (FDA) for commercial use in November 1993, with adoption beginning in February 1994, Research results indicate that significant efficiencies in milk production can be obtained from bST's use [Smith and Bauman, 1986]. As bST is adopted, with appropriate dairy policy, these production efficiencies should translate into lower milk and dairy product prices at the grocery store.

Despite the potential economic benefits to consumers from bST, the technology is controversial and its economic implications for consumers have not been fully examined. This study discusses some of the controversies surrounding bST, quantifies some of the likely economic impacts of bST on U.S. consumers, and explores how the information on potential impacts could influence the bST debate. The results will give decision makers more information with which to conduct benefit/cost assessments and on which to base public policy decisions. Indeed, expected socioeconomic impacts are exerting more influence than ever before on the public debate over product approval and acceptance [Scheid, 1989; Sun, 1989]. To date, however, the vast majority of the studies conducted on potential socioeconomic impacts of the introduction of bST have focused on expected impacts on the dairy industry, primarily farmers.

THE BST CONTROVERSY

Bovine somatotropin is a naturally occurring growth hormone which directs nutrients to the production of milk in dairy cows. Biotechnology has made it possible to manufacture the hormone in a cost effective manner. Injecting lactating dairy cows with the recombinant bST increases the amount of milk produced during the lactation cycle without a commensurate increase in feed [Smith and Bauman, 1986]. Results from research trials show significant increases in annual milk production with the use of bST, with expected onfarm increases of 9-12 percent per treated cow [Marion, et al., 1988]. Accordingly, bST is expected to alter the production, pricing, and consumption of fluid milk and other dairy products.

There are several public policy issues involving bST. One of the biggest areas of debate is the impact on dairy farms. Concerns range from fear of driving out small family farmers to shifting the locus of dairy production out of the Upper Midwest to changing farmers' way of life [Comstock, 1988; Scheid 1989; Kinsman, 1987; Sun, 1989]. Other people view bST as a size- neutral technology whose cost effective adoption will be based primarily on managerial ability [CAST, 1993]. Others see bST simply as part of a technology stream, and think that its impact on the dairy industry will not be enormous, especially in light of previous technological impacts [Fallert, et al., 1987; Smith, 1988]. Some people, however, decry the use of additional technology

*Purdue University.

42

FEBRUARY 1995, VOL. 1, NO. 1 43

in an industry which they think is already too efficient as evidenced by the levels of surplus dairy products the government must purchase [Comstock, 1988; Scheid, 1989; Zepeda, 1989; Gorner and Kotulak, 1990]. Several studies of the expected economic impacts of bST adoption have examined likely effects on dairy industry structure, and on the incomes and geographical dispersion of dairy farms [Schmidt, 1989; Fallert, et al., 1987; Kalter, et al., 1985; Office of Technology Assessment, 1986; Yonkers, et al., 1989; Marion, et al., 1988]. Different results and conclusions have been reached depending upon the assumptions made, especially with regard to bST adoption rates and production effects [Schmidt, 1989; Fallert, et al., 1987; Kalter, et al., 1985]. Most studies, however, indicate that there will be economic winners and losers [Zepeda, 1989; Kalter, et al., 1985; Marion, et al., 1988]. In part, on the basis of some expected negative economic impacts on the dairy industry, moratoriums on bST have been sought [Scheid, 1989; Feedstuffs, 1989]. The U.S. Congress legislated a 90-day moratorium on commercial bST use from the date that the FDA approved bST [Hoard's Dairyman, 1993].

The impact of bST on cows has been another focus of controversy. Some people are concerned about negatively affecting cows' quality of life [Comstock, 1988]. Others raise fears of increased mastitis or other cow-health-related problems [CAST, 1993; Gibbons, 1990; Kinsman, 1987]. There are several consumer issues surrounding supplemental bST use. Human health concerns have been raised including an allegation that the recombinant bST is significantly different enough from natural bST that human beings will be affected by it [Sun, 1989; Gibbons, 1990; Kinsman, 1987]. These concerns exist despite the fact that the FDA, believing that milk from bST-treated cows is safe, has authorized its consumption [Benson and Guest, 1990]. Others are apprehensive that the use of antibiotics to manage cow health problems will increase, and that these drugs will find their way into the milk supply [CAST, 1993; Jukes, 1989].

Other consumer issues include the perception that bST use will adulterate the natural wholesomeness of milk [Richards, 1989]. Furthermore, some people believe the composition of milk will be altered [Jukes, 1989]. While scientific analysis has not been able to distinguish between milk produced with or without bST, some people believe that the milk from bST-treated cows is somehow different [Zepeda, 1989]. All of these consumer concerns have led to a debate over labeling of dairy products, on whether or not dairy products should be identified as coming from bST-treated cows, and whether milk from treated and untreated cows should be commingled.

Environmental concerns also have been raised. Use of bST may accelerate the historical trends towards fewer, but larger, dairy farms. The number of cows and their location could alter feed requirements and the amount and concentration of manure produced. Also, these modifications in feed requirements could induce changes in crop production patterns and fertilizer and pesticide use. One study concluded that the national and regional environmental impacts from bST adoption would be small, about a 1 percent change in chemical use [Preckel, et al., 1990]. The adoption of bST would require more feed per cow, but the long term decline in the size of the U.S. dairy herd is expected to continue. While larger concentration of cows on some dairy farms could cause local manure disposal problems, sufficient land for proper manure disposal is available in the key dairying regions. The FDA has required numerous studies to help deal with the cow health, human health, and environmental issues raised by bST. Despite the accumulating scientific evidence of bST's safety and recent approval by the FDA, some people are still expressing concerns [CAST, 1993; Comstock, 1988].

Issues of a broader scope have been complicating the debate on bST. Biotechnology in general, and bST in particular, has become a lightning rod for broader societal issues such as the appropriate role of family farms in modern agriculture. As one of the first significant biotechnology products in agriculture, bST also is serving as a test case for all biotechnology products [Scheid, 1989; Gorner and Kotulak, 1990]. A third broader issue is control over agricultural technology [Comstock, 1988; Scheid, 1989; Zepeda, 1989].

44 INTERNATIONAL ADVANCES IN ECONOMIC RESEARCH

There are many and different types of concerns being expressed about bST. Thus, although bST has been approved, its acceptance by farmers and consumers is by no means certain. To date, Monsanto, the only U.S. commercial source of bST approved by the FDA, estimates that I0 percent of U.S. dairy cows are being treated with bST. Furthermore, since February 1994 there have been no significant declines in the consumption of milk and dairy products despite efforts by some groups to boycott or avoid consumption of milk from bST-treated cows.

ANALYTICAL FRAMEWORK

Measuring the Consumer Impacts of bST

Changes in consumers' surplus are commonly used by economists to evaluate economic welfare impacts on consumers resulting from changes in technology, industrial efficiency, or government policy. Consumers' surplus is defined as the difference between what consumers actually pay in the marketplace for a given quantity of a commodity and what they would be willing to pay [Varian, 1987]. Most economists, however, are interested in estimating the change in consumers' surplus that corresponds to a price change resulting from the introduction of a new technology or government policy. If the adoption of bST results in a retail price decline, as expected, then the change in consumer's surplus would be positive. Under certain assumptions, the estimated increase in consumers' surplus would be proportional to the actual increase in consumers' utility or welfare. Changes in consumers' surplus can be investigated both for consumers in the aggregate and for groups of consumers based on various defining criteria. In this study both types of changes were investigated.

The adoption of bST by the nation's dairy farmers could have differential impacts on consumers, depending on household characteristics and consumption patterns. There are several reasons to expect that the benefits of bST may not flow equally to all consumers of dairy products. First, there are substantial variations in household dairy product purchase rates by socioeconomic characteristics [Blaylock and Smallwood, 1983]. Consumers with higher purchase rates would be expected to benefit the most from bST-induced price reductions. However, some consumers use little or no dairy products. Only about 77 percent of all households purchase dairy products, while 70 percent purchase and consume fluid milk [Haidacher, et al., 1988]. Thus, non-consuming households would not benefit from price reductions.

Second, the proportion of household income and food budget spent on milk and dairy products varies widely among households. The classical economic measure of distributional impacts is the budget share. The larger the proportion of household income spent for a particular product, the more significant is a price change to consumers. During the 1980s, dairy products accounted, on average, for 13 percent of the at-h°rtae food budget [Haidacher, et al., 1988]. Lower income households spent a larger share of their incomes and food budgets on milk than higher income households. The proportion of income spent on dairy purchases typically approaches four percent for households with annual incomes of less than $5,000, while the percentage is less than one-half of one percent for households earning over $50,000 [U.S. BLS, 1987].

Third, it is reasonable to believe that consumers' responsiveness to dairy product prices will vary for households with different socioeconomic characteristics. The variations in household income elasticities, but not price elasticities, are well documented [Kilmer, 1989; Blaylock and SmaUwood, 1983]. Consumers' responsiveness to a change in dairy product prices would be expected to differ depending upon their usage rates, financial circumstances, their perception of available substitutes, and other factors such as the presence of children in the household.

Background for Analysis This study extends to the consumer level the assumptions and results of the study by Fallert, et

al., the most comprehensive and rigorous evaluation available on the potential economic impacts

FEBRUARY 1995, VOL. 1, NO. 1 45

of bST on the U.S. dairy industry. The 1987 study by Fallert, et al. evaluated the simulated performance of the U.S. dairy industry from 1990 to 1996 with and without the use of bST to enhance milk production. The authors assumed that bST would be introduced commercially in early 1990, and that the effects of adopting bST would work their way through the sector by 1996. The study focused on the effects of bST on herd size, milk productivity per cow, milk supplies, commercial use, farm-level milk prices, dairy industry structure, the dairy price support program, and the international competitive position of the U.S. dairy industry. A 1990 update confirmed the assumptions and conclusions of the original study [Blayney and Fallert, 1990].

Government price support policies will influence the rate and extent of bST adoption, milk prices, and milk production increases. High price supports would encourage producers to adopt bST to raise production. With low price supports, some producers would still adopt bST but fewer than under high price supports. Production would increase more modestly, but prices would fall in response to the supply increase.

FaUert, et al. developed four dairy price support scenarios to analyze trends in the dairy industry through 1996 with and without bST. The minimum milk support prices (per cwt.) associated with these scenarios are as follows: I = $10.10; II = $9.60; III = $8.60; and IV = $11.10. Government purchases of manufactured dairy products were assumed to be the primary mechanism by which farm-level milk prices would be supported at the indicated levels. Milk prices currently are supported at $10.10/cwt. The Fallert, et al. support prices deviate in both directions from this by 10 to 15 percent.

Major assumptions of Fallert, et al. on milk yield response and adoption rates were made following extensive literature review and expert consultation. Fallert, et al. assumed an absolute increase per treated cow of 1,800 pounds of milk per year. This represents 12 percent of the 1991 average U.S. milk production per cow. About 10 to 12 percent of dairy farms were assumed to adopt bST in the first year (1990), with adoption rates peaking at 45 to 70 percent by 1996 depending on the policy scenario.

Results from Fallert, et al. indicate that bST adoption should be profitable for individual dairy farms. In the aggregate, total milk production should rise, milk prices should fall, and commercial disappearance expand. However, the magnitudes of these effects will depend largely on the government price support policy. Price supports that are lower and tend toward market clearing levels likely will result in smaller production increases, larger price declines, and lower government purchases. In contrast, high price supports will eliminate almost any price decreases while encouraging large production gains and substantial government purchases.

METHODOLOGY

Aggregate Consumer Welfare A computer spreadsheet was constructed to calculate retail prices, consut~tion and changes in

consumers' surplus based on the commercial disappearance and farm price data from the Fallert, et al. study for both the bST and no-bST situations. Included in the spreadsheet were the four most important dairy products: fluid milk, cheese, butter, and ice cream, as well as the aggregation of all dairy products in milk equivalent form (total commercial disappearance). Calculations encompassed the entire bST adoption period of 1990 through 1996 and were replicated for all four government price support scenarios.

The key data in the analysis were the farm price and commercial disappearance data from Fallert, et al. The spreadsheet was set up under the assumption that all relevant price elasticities were imbedded in the Fallert, et al. model which generated the base data, and that marketing margins are a constant percentage. The practical result of these assumptions was that retail prices and quantities changed in the spreadsheet by the same percentages as the farm prices and commercial disappearance figures taken from FaUert, et al. The appropriate data were collected

46 INTERNATIONAL ADVANCES IN ECONOMIC RESEARCH

from various USDA publications [Agricultural Outlook; Putnam, 1989; USDA, 1979]. The initial price for commercial disappearance was calculated as a quantity-weighted average of the milk equivalent prices of the products.

Measurement of Distributional Impacts

The potential distributional impacts of a bST-induced fluid milk retail price reduction were simulated in a computer spreadsheet using consumer expenditure survey data [U.S. BLS, 1987]. These cross-sectional data measure household milk expenditures by various household characteristics. The major household socioeconomic characteristics included were: income, race, size, region, composition, and urbanization. The simulated bST impacts on the demand for fluid milk by household socioeconomic characteristics were examined both on a per-household basis and for all households with specific characteristics. The distributional impacts were measured by the changes in milk consumption, milk expenditures, consumers' surplus, and budget share resulting from the introduction of bST.

In this model, the distributional impacts of bST were triggered by a reduction in retail dairy product prices resulting from a rightward shift in the supply curve for dairy products. Retail price reductions of 5, 7, and 10 percent were simulated. These bracket the largest two price reductions suggested by the Fallert, et al. study. The results represent expected one year impacts on house- holds after the entire price reduction from bST has occurred.

The household purchase responses to these retail price changes were estimated by assuming an own-price elasticity of demand for fluid milk of -0.33 [Haidacher, et al., 1988; Kilmer, 1989]. No reliable estimates of own-price elasticities by household socioeconomic characteristics exist.

IMPACTS OF BST ON CONSUMERS

Aggregate Impacts

Consumers as a single group can gain significant economic welfare benefits from the introduction of bST provided that government price support policy allows milk prices to decline. Retail price fluctuations and cumulative changes in consumers' surplus due to the introduction of bST were calculated for the 7-year adoption period, 1990-1996 (Table 1). The adoption of bST could result in retail price declines for all dairy products. However, the magnitude of price declines relates directly to the level of government price support. The highest farm milk price support (Scenario IV, $11.10/cwt) results in retail dairy prices falling a mere 0.4 percent over the 7-year adoption period.

Changes in consumers' surplus are always positive and accumulate over the 7-year adoption period to $3.2 billion with a high price support (Scenario IV-- $11. t0/cwt) and $31.3 billion with a low price support (Scenario 111--$8.60/cwt.). The $31.3 billion under Scenario III represents 8.5 percent of cumulative consumer expenditures for all dairy products over the same 7-year period. The consumers' surplus gain generated for each dairy product reflects that product's share of commercial disappearance. Fluid milk and cheese generate the largest increases in consumers' surplus and butter the smallest.

The results reveal that high government price supports will limit economic welfare gains to consumers from bST. Reducing price supports to or near market clearing levels would allow consumers to gain the maximum benefits available as farmers produce milk more efficiently with the new technology.

Distributional Impacts

For all household types, the quantity of fluid milk consumed increases as a result of a bST-induced 5 percent reduction in retail prices (Table 2). These quantity responses range from 5 to 10 pounds per household and are proportional to the no-bST household rates of fluid milk

FEBRUARY 1995, VOL. 1, NO. 1 47

usage. Increases in milk consumption of this magnitude would reduce government dairy product purchases, improve the nutritional levels of the population, and reduce the demand for milk substitutes.

TABLE 1 Cumulative Price Reductions and Consumers' Surplus Gains

from the Adoption of bST, by Government Scenario, 1990-1996.

Retail Total Government P r i c e Commercial Fluid Ice

Scenar io R e d u c t i o n s Disappearance Milk Cheese Butter Cream

IIP II I

IV

(percent) . . . . . . (millions of dollars) . . . . . .

($8.60) 9.3 31,278 8,823 8,743 1,198 6,734 ($9.60) 4.8 13,414 3,784 3,749 514 2,888

($10.10) 1.6 16,535 4,664 4,622 633 3,560 ($11.10) 0.4 3,174 896 887 122 683

a The Roman numeral refers to one of four government price support scenarios used by Fallert, et al., while the number in parentheses indicates the minimum price support per cwt. for manufacturing grade milk under that scenario fall about 9 percent when government supports are low enough (Scenario III, $8.60) to allow a relatively free market for milk.

The economic benefits of bST would be widely dispersed to all segments of the population consuming fluid milk. Because of the inelastic demand for fluid milk, household milk expenditures would decline for all households. All household types would experience a consumers' surplus gain from bST.

Although the bST benefits would be widely distributed, the expenditure savings and surplus gains would vary for different household types (Table 2). The monetary household expenditure savings and surplus gains are greater for higher income, white, larger, child-present, rural households than for other household units because of their higher fluid milk usage rates.

The distributional impacts and expected changes in milk expenditures and consumers' surplus by household income levelsare of special interest. On a household basis, expenditure reductions and consumer's surplus gains become larger as income increases up to the $50,000 level and then decrease somewhat. On an aggregate basis, the income groupings containing the largest number of households tend to gain the most. Expenditure savings and gains in consumers' surplus are greatest for the middle income group since this group ($20,000-$29,000 annual income) contains the largest proportion of households (17 %) and also exhibits relatively high consumption increases.

White households consume higher levels of milk and dairy products than minority households. Consequently, white households would experience greater household and aggregate benefits from bST adoption than other households (Table 2). Nevertheless, minority households should realize economic benefits from bST.

Family size, composition, and life cycle also will influence the welfare gains from bST adoption. Since household milk consumption is closely associated with number of children in the home, larger families stand to reap greater economic benefits from bST than smaller families (Table 2). However, because of the larger number of 2-, 3-, and 4-person households, the aggregate benefits from bST adoption are considerably greater for these households than for either smaller or larger units. Husband-and-wife-only households, husband-and-wife households with children between the ages of 6 and 17, and single-person households would receive greater benefits from bST adoption

48 INTERNATIONAL ADVANCES IN ECONOMIC R E S E A R C H

than other units. Results from the budget share analysis suggest that all households experience a reduction in the milk budget share as a result of the introduction of bST.

TABLE 2 Impacts of bST on Consumer Demand for Milk by Household Characteristics

Simulated 5 Percent Retail Price Reduction

Household Percent of Change in Change in Expenditure Consumer Surplus Characteristics Households" Consumption • Gain

(thousand $) (percent) (pounds/year) (S/household) (million $) (S/household) (million $)

Household Inc. 100 Below 5 9 5.3 -3.19 -23.9 4.68 35 5-9 15 6.6 -4.00 -50.0 5.89 73 10-14 13 7,7 -4.67 -48.6 6.86 71 15-19 10 8.2 -4.93 -41.3 7.24 6t 20-29 17 8.1 -4.89 -69.4 7.19 102 30-39 13 9.0 -5.45 -56.9 8.00 84 40-49 9 10.3 -6.23 -44.5 9.15 65 Over 50 13 10.1 -6.12 -64.4 8.89 95

Race 100 White 89 8.3 -5,00 -421.4 7.35 619 Black 11 6.5 -3.93 -39.1 5.77 57

Household Size 100 One 28 3.7 -2.26 -60.6 3.32 88.9 Two 30 7.0 -4.23 -118.7 6.21 174.3 Three 17 9.6 -5.78 -90.6 8.49 133.0 Four 14 12.2 -7.38 -99.7 10.83 146.8 Five 7 14.0 -8.45 -55.6 12.41 81.6 Six or more 4 17.2 -10.38 -36.3 15.20 53.3

Household Comp. 100 H W only 22 7.1 -4.30 -87.9 6.32 129.1 H W C < 6 6 10,0 -6.04 -35.9 8.87 52.7 H W C 6-17 15 12.4 -7.45 -106.5 10.94 156.5 H W C > 18 8 12.9 -7.78 -61.1 11.43 89.7 Sgl. parent 6 8.5 -5.12 -29.9 7.51 43.9 Single 38 5.0 -3.00 -108.7 4.41 159.7

Urbanization 100 Urban 86 7.9 -4.75 -383.1 6.97 562.6 Rural 14 9.7 -5.86 -78.6 8.60 115.4

Assumes a -.33 price elasticity of demand for all households.

a Source: Integrated Diary and Interview Survey, U.S. BLS, 1987.

FEBRUARY 1995, VOL. 1, NO. 1 49

This reduction increases as the price reduction increases from 5 to 10 percent. Moreover, the bST-related price reductions have a relatively greater percentage impact on lower-income, black, larger, single-parent, and rural families.

INFORMING THE DEBATE

Recombinant bST is both significant and controversial. Significant because of being the "first" major product of agricultural biotechnology. Its success or failure may impact the development and adoption of other products. Significant because of the improvement in the productive efficiency of the dairy industry that is likely to result from bST's adoption. Significant because consumers stand to gain from the lower milk prices bST will make possible. But, much of the controversy surrounding bST is emotional or based on incomplete information or understanding.

This paper provides empirical evidence that c o n s u m e r s can benefit economically from bST. Some opponents of bST believe that the only winners from bST will be its manufacturers, and that their increased profits will come at the economic and quality-of-life expense of all other players including cows, consumers, dairy farmers, and nature. Second, the results reveal that the consumers who will benefit the most are those that society typically wants to help the most--poorer people with children to feed. These are exactly the people targeted by most government assistance programs.

How can the factual results of this paper be used to inform the bST debate? First, people need to know:

• government dairy support prices above market clearing levels make milk and dairy products less affordable for families than they could be in the face of productivity-increasing technological advances;

• consumers stand to gain economically from bST-induced reductions in dairy product prices; and

• consumers who are likely to gain the most from bST from a food budget share perspective are lower-income families with children (also black, rural, and single-parent households as well). Second, this information could be disseminated to the following target groups:

• state and federal legislators to reform government dairy policy to make it more consumer oriented;

• dairy farmers to encourage adoption of bST to make the early-adopter and consumer benefits possible;

• veterinarians, feed companies, cooperative extension service, and others to provide technical support for successful onfarm use of bST;

• dairy processors, other dairy/food wholesalers, and food retailers who handle milk and dairy products;

• consumer advocacy groups to alert them to the potential economic benefits of bST for consumers;

• local medical personnel, media, and other opinion leaders who may receive questions about bST from the public; and

• consumers within the realm of personal contact (relatives, friends, co-workers, neighbors, golf or bridge partners, etc.) to reassure or inform them of potential consumer benefits of bST.

50 ~ T E R N A ~ O N A L ADVANCES IN ECONOMIC RESEARCH

CONCLUSIONS AND IMPLICATIONS

The results of this study suggest that the consumer benefits associated with the adoption of bST by U.S. dairy farmers can be significant and will be widely distributed across all types of milk- consuming households. Aggregate economic benefits over the 7-year bST adoption period alone are estimated to be $31.3 billion i f farm milk prices are allowed to fall to market clearing levels.

Higher-income, white, larger, child-present, and rural households are expected to receive the largest consumers' surplus gains in absolute dollar terms. However, when distributional impacts of bST are examined through budget share analysis, benefits to lower-income, larger, child-present, single-parent, and rural households would be greater. These distributionalbudget share impacts are strongly progressive, benefitting the neediest households with children and lower incomes.

Government dairy price support policy will significantly affect the magnitude of benefits received by consumers from the introduction of bST. If government dairy price supports are sustained at a relatively high level, retail prices of milk and dairy products will have little if any room to fall. Consequently, consumers' economic welfare gains from the increased efficiency of milk production with bST adoption will be minimal at best. Only if milk prices are allowed to fall to market clearing levels will consumers experience the maximum economic benefits available from bST adoption.

The government dairy price support policy implications are clear. Therefore, persons desiring to make milk and dairy products more affordable for families with children should seek dairy policy reform which would maximize the beneficial impacts on consumers from bST.

However, government policy is not the only factor that will influence the magnitude of consumer benefits available from bST. Debate on controversial issues regarding consumers, animal well- being, the environment, public policy, and society will shape individual, government, and corporate response to bST and, hence, the magnitude of consumer benefits, Potential hindrances to consumer benefits could include such diverse hurdles as: legislative bans on bST; low bST adoption rates by farmers; resistance to milk from bST-treated cows by processors, other wholesalers, and/or retailers of dairy products; wholesale and retail pricing practices; regulatory mandates such as labeling or separate handling facilities for milk from treated versus untreated herds; and sustained consumer aversion. Some of these hurdles are amenable to education and persuasion while others are not. Consumers should seek to inform themselves and to influence others' opinions and actions where possible.

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52 INTERNA~ONAL ADVANCES IN ECONOMIC RESEARCH

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