Consumer Economics and Food Policy

The aim of the course is to give the students a basic understanding of economic thinking in relation to decision making by consumers and producers in the food domain, and to provide an overview of economic policy instruments that can be used to affect the food market.

How can we apply economic mechanisms to mitigate levels of obesity, increase consumption of plant based foods, or reduced climate impacts related to food consumption? This course gives a basic understanding of how economics can be applied in the markets for food products. It enables the students to address the role of economics in relation to food innovation, food system design, food marketing and food policy. The course focuses on three topical areas: Consumer behavior, Food service and retail sectors, and Public regulation.

Economics of consumer behavior

Consumer acceptance is central to the success of marketing of new innovative food products. It is therefore essential to understand the main drivers of consumers’ demand for new differentiated products. How do consumers make trade-offs between different characteristics of the food products, for example between sensory quality and safety attributes, between naturalness and convenience, between price and environmental sustainability, etc.? How much are consumers willing to pay for specific product attributes and how are they affected by price changes? The course will go into a deeper understanding of such questions based on economic theory of consumer behavior, which is put into a broader perspective.  

Economics of food service and retail sectors

Professional customers (food retailing and food service, such as restaurants, canteens, institutions) play increasing roles on the demand side of the food markets. How important is price in these firms’ sourcing of inputs for their activities? How important are other commodity attributes such as sensory quality, convenience, storability, nutritional value for groups with special needs? With an outset in economic theory of firm behavior, this part of the course will address the economic mechanisms underlying these industries’ demand for food commodities.

Regulation

Food consumption and production may have unintended side-effects, for example in relation to health (such as food safety or nutrition-related issues) or environmental impacts (e.g. greenhouse gas emission, nitrate leaching, pesticide pollution). The course will go into a deeper understanding of market failures (where the market mechanism tends to yield sub-optimal outcomes for society) and their implications for food production, marketing, innovation and policy. Policy tools used to remedy market failures as taxes, subsidies or labelling schemes will be discussed.

For each of the three topical areas, the learning activities will be centered around 1-2 illustrative cases, which will be used to explore the theories and their use.