Consumer Economics and Food Policy

Course content

The aim of the course is to give an understanding of the choices consumers make about purchases and consumption of food products every day, and how these choices interact with the production and marketing of the products. This enables the students to address important aspects of the behavior of the different actors on the food market.

Consumer acceptance is central to the success of marketing of new innovative food products. It is therefore essential to reveal main drivers of consumers’ demand for new differentiated products. Danish consumers in general consider food products as safe to eat. But what happens when consumers have to choose between food safety and other product attributes such as taste or convenience? Is consumer demand enough to ensure high levels of food safety, or is it necessary for politicians to implement some regulation in order to secure sufficient levels? Does the market structure ensure sufficient incentives for producers to supply the high quality food products that the consumers demand, and at a price they are willing to pay? The course will go into a deeper understanding of such questions and their implications for food production, marketing, innovation and policy.

Economics of consumer behavior

The course in based on economic theory and the main part focuses on consumers’ food choices. The underlying assumptions about the consumers’ decision making are discussed, including the concepts of demand functions, preferences, indifference curves, and budget constraints. These economic concepts are put into a broader perspective on consumer behavior. Different methods to identify (and influence) consumers’ preferences for product attributes are introduced. This includes methods to uncover consumers’ revealed preferences based on data on observed behavior, as well and identification of preferences based on stated behavior methods, such as choice experiments. In addition, the mechanisms in different approaches to product marketing are discussed.  

Production, market structure and regulation

Basic theory concerning producer behavior in relation to food production is introduced. This includes behavior related to firms’ profit maximization, cost minimization and other motivations underlying production behavior. The role of market structure (competition, monopoly, oligopoly, etc.) for price formation, product quality, product diversity etc. is addressed. Market failures, such as environmental or public health externalities, public goods or information failures – and policy tools to remedy such market failures, will be discussed. Taxes, subsidies or labelling schemes are examples of such policy tools. Information campaigns is another type of policy instrument which may affect the behavior of consumers, such as whole grain labels or campaigns about the health benefits of eating fruits and vegetables.

Case studies

In order to obtain a comprehensive picture of how choices are made by the different actors on the food market we use real world examples throughout the course – in exercises as well as in project work. Cases concern relevant topics such as innovation, food safety, organic food and obesity. The students will have the opportunity to propose their own subjects for case studies.

Education

MSc Programme in Food Science and Technology

Learning outcome

The aim of the course is to give the students a basic understanding of economic thinking in relation to decision making in the food area. In addition, the course provides an overview of economic policy instruments that can be used to affect the market.


After completing the course the students should be able to:

Knowledge:

Have a basic understanding of the mechanisms behind consumers’ demand for food products

Have a basic understanding of methods used to collect data concerning consumer preferences including both stated preferences and observed preferences

Have a basic understanding of producers’ supply of food products

Have a basic understanding of different types of public regulation


Skills:

Be able to define central concepts within the area of microeconomics and consumer behavior

Be able to describe different methods to uncover consumer preferences

Be able to describe basic considerations in relation to marketing of new food products

Be able to apply microeconomic theory to analyse elementary economic problems in the food area

Be able to describe basic principles of different regulation instruments  

Competences:
Cooperate with fellow students in analysing and solving different economic problems in a broader perspective.

Communicate and discuss concrete economic problems and solutions with different target groups

Independently work with economic problems related to the food market

Central parts of the curriculum will be presented through traditional lectures. This knowledge will be elaborated on in theoretical exercises. The students will in groups work with different case studies. The course includes a project and term paper. In the project the students works in groups with a hypothetical case where consumer preferences for a new food products has to be identified. The term paper is on a predefined topic addressing a current societal challenge within the food area. The term paper gives the students an excellent opportunity to apply the theory on a relevant topic and thereby get a deeper understanding of the theory. An individual project report has to be submitted and approved in relation to the term paper as a requirement for the 4-hour written exam.

Text book supplemented with relevant articles

Steven E, Landsburg (2008), Price Theory and Applications, 7e, Thomson South-Western.

The course cannot be attended by students from Jordbrugsøkonomi/​Agricultural Economics - ENRE, Naturressourcer med fagpakke i miljøøkonomi

ECTS
7,5 ECTS
Type of assessment
Written examination, 4 hours under invigilation
Written exam in lecturehall.

The course has been selected for ITX exam on Peter Bangs Vej.
Aid
Without aids

The University will make computers and power available to students taking written exams with invigilation in the University’s building on Peter Bangs Vej 36 (ITX). These students are therefore not permitted to bring their own computers, tablets or mobile phones. If textbooks and/or notes are permitted at a given exam, these must be in paper format or on a USB flash drive.

Marking scale
7-point grading scale
Censorship form
No external censorship
One internal examiner
Criteria for exam assessment

To obtain the grade 12 the student has to fulfill the Learning outcomes

Single subject courses (day)

  • Category
  • Hours
  • Lectures
  • 42
  • Theory exercises
  • 20
  • Preparation
  • 100
  • Project work
  • 40
  • Exam
  • 4
  • English
  • 206