EI Senior Economist Carol Miu publishes article about sampling methodology in the Whole Foods merger.

EI Senior Economist Carol Miu published in the Spring issue of the American Bar Association Economics Committee Newsletter “Sampling Methodology in Merger Analysis: the Whole Foods Survey.” A survey may be a valuable tool in merger analysis, as it can shed light on consumers’ likely reactions to price increases, the core issue in market definition and competitive effects analysis.  Surveys, however, must be designed and executed with care, to minimize sources of inaccuracies and statistical bias.  In FTC v. Whole Foods, the District Court decided against giving “any weight or consideration” to the survey that was conducted by the defendant’s survey expert.  The Court relied on the FTC’s expert, who argued that the methodological flaws of the survey rendered the data and results unreliable.  Among the weaknesses that the FTC’s survey expert identified were a low response rate, incorrect extrapolation of data collected through quota sampling, the participation of unqualified respondents, and survey questions that required respondents to perform mathematical calculations.   A better sampling plan would have eliminated many of the problems that the FTC’s expert enumerated.  Developing a sampling plan involves four steps: 1) defining the population of interest, 2) selecting a sampling frame, 3) developing a sampling method, and 4) deciding on a sample size. For the full text, see: Miu, Carol, “Sampling Methodology in Merger Analysis: the Whole Foods Survey,” American Bar Association Economics Committee Newsletter, Vol. 9, No. 1, Spring 2009, pp. 5-10.