Economic costs of misinforming about risk: the EDB scare and the media

This study reports results of an analysis of consumer responses to news reports of grain-product contamination by the pesticide ethylene dibromide (EDB). The results demonstrate that it is possible to quantify market disruption related to the dissemination of risk information. Implications include the need for increased awareness among risk managers that public perceptions, regardless of their objective accuracy, can induce real economic costs. Such costs should be considered in designing regulatory and information policies.