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 Each year Federal and State food safety authorities and private enterprises spend billions of dollars on food-safety-related activities. Yet 76 million U.S. consumers still contract foodborne illnesses, resulting in 325,000 hospitalizations, 5,000 deaths, and an unknown number of chronic complications each year.
Are some foodborne illnesses inevitable, or can they be prevented through government regulation? If food safety could be observed, this would not be a troubling question. Consumers could choose the level of food safety they were willing to pay for, thereby creating powerful economic incentives for food suppliers to make all possible cost-effective investments in plants, equipment, and labor training that promote food safety.
If a food supplier produced foods that were not as safe as consumers wanted, consumers would simply turn to other suppliers, buying safer food elsewhere. The supplier of insufficiently safe foods would have to offer safer foods or face financial ruin. Consumers could also choose their own level of food safety: consumers who are willing to scrupulously clean their kitchens and thoroughly heat their foods might not feel the need to buy the same level of safety as those who are less adept at defensive actions. Under these conditions, there would be no reason to involve the public sector in food safety.
But food safety is usually not discernable as foods move from farms to manufacturers to distributors to consumers. Food contaminated with disease-causing pathogens may look, smell, and taste exactly like a safe product. Many pathogens cause illnesses and disease only after a period of days or weeks, so being able to definitively link illnesses and disease with particular foods is a rare event. If consumers cannot identify unsafe foods, they have no way of choosing safer foods. Consequently, suppliers are not rewarded for producing safer foods and are not penalized for ignoring safety. Consumers’ food purchases create few financial incentives for suppliers to provide food safety. 
ERS food-safety research examines how markets, consumers, and regulators interact to provide safe food, and analyzes the economic efficiency of these interactions. The aim of ERS research is to inform public sector food-safety policies, by addressing:
- Do consumers’ food choices create sufficient incentives or are consumers’ demands for safety unmet even though suppliers are physically and financially able to meet those demands?
- Can food safety be marketed and, if so, how do sellers (all along the food supply chain) gain buyers’ trust that foods meet advertised safety margins? Is trust bought with third-party certification or made with contracts?
- What would greater food safety cost at different points in the food supply chain?
- Can public-sector intervention solve problems of unmet safety demands and, if so, at what cost?
- Do regulatory actions increase economic incentives for food-safety innovation and adoption of better practices throughout the supply chain? Regulatory options include hazard analysis critical control point (HACCP) requirements and enforcement applied to food manufacturers, school lunch contracts, pathogen testing from farm to retail, and consumer safe-food handling labels.
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