Nostalgic Demand

51 Pages Posted: 13 Aug 2018 Last revised: 24 Apr 2019

See all articles by Daniel Björkegren

Daniel Björkegren

Brown University - Department of Economics

Date Written: June 25, 2018

Abstract

This paper attempts to understand demand for local and other nostalgic production in food. In U.S. household scanner data, nostalgically produced foods sell for a large premium. Controlling for income and demographics, experts who work in food production and health are no less likely to purchase nostalgic milk and eggs, but are less likely to purchase local eggs in regions where eggs are produced at scale. In a choice experiment, willingness to pay for local tomatoes decreases when quality is shown. A simple theory explains this puzzling demand. When goods have too many dimensions of quality to communicate in market exchange (the USDA records over 70 for milk), innovation has ambiguous effects, consumers seek nostalgic signals of quality, and straightforward policies can backfire.

Keywords: quality, innovation, asymmetric information, food, health

JEL Classification: L15, D82, I12

Suggested Citation

Björkegren, Daniel, Nostalgic Demand (June 25, 2018). Available at SSRN: https://ssrn.com/abstract=3220583 or http://dx.doi.org/10.2139/ssrn.3220583

Daniel Björkegren (Contact Author)

Brown University - Department of Economics ( email )

64 Waterman Street
Providence, RI 02912
United States

HOME PAGE: http://dan.bjorkegren.com

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