An Economic Assessment of Food Safety Regulations

The Economics of Food Safety

The food supply in the United States is generally consid-

ered healthy, nutritious, and safe.  However, the modern

industrial food system may result in undesired or

unanticipated outcomes that pose a health hazard for

consumers.  Fresh or processed meat and poultry

products may contain bacteria, viruses, fungal toxins,

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Economic Research Service/USDA

An Economic Assessment of Food Safety Regulations

required level of safety in the food products they market.

Even if firms were to attempt to provide food-safety

information through product labels, there may be some

concern from a consumer protection standpoint about

firms' making unsubstantiated health-risk claims in

labeling or advertising.

The  lack of consumers’ food-safety information and the

lack of producers’ incentives to provide such information

lead to a market failure. The workings of a non-regulated

market may yield greater-than-optimal levels of patho-

gens in the food supply and excessive human-health

risk, which could result in higher levels of illness and

mortality from foodborne pathogens.  In such a case, the

public welfare could be enhanced if society regulated the

food-processing industry to reduce the level of foodborne

pathogens and increased consumers’ knowledge, so

they could take action to reduce their risk of exposure to

foodborne illness.

The economic issue of concern is how best to achieve

the goal of a safer food supply.  Although regulations

governing the production, processing, distribution, and

marketing of food products may create benefits by

increasing the safety level of the Nation’s food supply

and reducing risk of illness, these regulations can also

increase producers’ costs and potentially raise food

prices.  The task is to ensure that the regulations maxi-

mize the net benefits of increasing food safety, equating

the marginal benefits of safer food with the marginal

costs of achieving food safety goals.

In the next section, we present a baseline estimate of the

extent of microbial foodborne illness and associated

deaths in the United States.