Organics, misinformation, and fear-based marketing

I ran across this paper discussing some of the research on consumer preferences for organic, and it delves into the tactics used my marketers of organic products.

The authors conclude:

This review of published research, documented organic and natural produce industry practices and advocacy collaborations shows widespread, collaborative and pervasive industry marketing activities, both transparent and covert, disparaging competing conventional foods and agriculture practices. Further, these activities have contributed to false and misleading consumer health and safety perceptions influencing food purchase decisions. These findings suggest a widespread organic and natural products industry pattern of research-informed and intentionally-deceptive marketing and advocacy related practices that have generated hundreds of billions in revenues.

I agree that much of the marketing (and writing) on organic has led to false beliefs among many consumers.  I've written a lot about that, and I've tried to provide research evidence on the scientific basis (or lack thereof) of such claims.  Thus, I share the author's sentiments.  

But, I personally am much less bothered by marketers.  Isn't this what marketers do?  Why does Nike show LeBron James or Michael Jordan flying through the air wearing their shoes?  What message is Nike trying to send?  It probably has next to nothing to do with how high I'm able to jump or even how well a Nike will fit me should I buy them.  Their commercials are trying to install false beliefs.  

So, I sort of expect those things from marketers and companies trying to sell products (although overt lies and falsehoods expose companies and marketers to legal liability, and for good reason).   What bothers me more is when supposed "objective" journalists or academics spread the same sort of mis-information that flies in the face of scientific evidence.  Moreover, we certainly don't want tax dollars subsidizing false beliefs.  

That's why I found this passage a bit more disconcerting:

As a result, the American taxpayer funded national organic program is playing an ongoing role in misleading consumers into spending billions of dollars in organic purchasing decisions based on false and misleading health, safety and quality claims. Further, U.S. government agencies, including the U.S. Food and Drug Administration, Federal Trade Commission and U.S. Department of Agriculture, which entrusted with the authority to enforce truthful, non-misleading consumer protections against such abuses have either ignored or become complicit in these marketing abuses.



Future of Food

National Geographic has launched a series of stories and videos on the future of food.  One of the big questions they intend to answer is: how will we feed 9 billion people by 2050 without harming the planet? 

A video on the site hints at their five answers:

  • use resources more efficiently
  • grow more on existing farmland
  • stop expanding farms
  • change our diets
  • reduce waste

It's not a bad list.  The first three will require science and new agricultural research and development if they are to be achieved.  The need for technological progress often gets short shrift in discussions about food sustainability, but here it is (implicitly) a prominent solution.  Even the last "food waste" issue has an important technological dimension.  In many developing countries, food waste is a result of poor storage facilities and transportation infrastructure; it isn't all just a result of rich people throwing away too much food (although that is part of it too).  It seems to me that Land Grant Universities are well poised to address precisely these issues, although I suspect we won't get much mention in National Geographic's stories.   

It is also important to discuss the role of economics - particularly the role of prices - in achieving these outcomes.  We may well need to "change our diets."  But, the question is whether this outcome will result from paternalistic policies and dictates or whether changes in relative prices will cause us to change our diets.  If eating a particular food is, truly, "unsustainable", then the price for it must rise as the resources needed to produce the food become more scarce.  

Here is what I had to say on this issue in the Food Police when discussing organics.

Economics teaches that price differences are important, though sometimes imperfect, signals about resource use.  The price we pay for food in the grocery store must reflect all the costs that went into producing it: from land rent to the value of the farmer’s labor to the prices of seed and fertilizer.  Higher prices for organic means that somewhere along the line, organics used more land, more labor, more seed, more fertilizer, or more of any of the other inputs required to produce food.  The prices of all these inputs were each determined by their scarcity relative to people’s desires to use them for other purposes unrelated to food production.  So, when we see that organic is higher priced, it signals us that organics are using many more of the resources that society finds valuable than non-organics.  Using up more resources is exactly the opposite of sustainable.      

Normally the price mechanism is used to ration scarce resources and signal us as to how to allocate resources over time.  Rising prices for increasingly scarce resources like oil and fertilizer cause us to naturally back away from consuming them – thereby resulting in a “sustainable” future.  The fact that we are now using a lot of oil and fertilizer in agriculture means they are currently in ample supply relative to demand.  The sustainability movement represents an elitist attempt to ration scarce resources using social pressure, guilt, and regulation.

As I've previously discussed, desiring sustainable outcomes is uncontroversial - it's how we go about it that matters.  We need to let price mechanism work in telling us when to cut back on particular foods.  That last sentence in the above quote might seem a tad harsh, but shielding consumers from price changes, and distorting market forces, is truly unsustainable.  

Hypothetical bias - Catcher in the Rye edition

Economists tend to be skeptical of the answers people give on surveys - of people's stated preferences.  It's what we do that drives economic outcomes and well-being.  The trouble is that what we say on surveys often diverges from what we do when shopping.  The standard research finding is that, on average, people say on surveys that they are willing to pay about 2.5 times what they will actually pay when real money is on the line - a phenomenon referred to as hypothetical bias.  I've spent a lot of my career trying to devise survey techniques that get closer to the truth and I think we've made progress, but caution is warranted.

A lot of the research on hypothetical bias started in the 1980s and 90s when survey techniques started being more widely used to ask people to state their willingness-to-pay for environmental amenities.  Thus, you can might imagine my surprise when, recently re-reading Catcher in the Rye (published in 1951) the last chapter contained this clear, concise insight on hypothetical bias. 

A lot of people, especially this one psychoanalyst guy they have here, keeps asking me if I'm going to apply myself when I go back to school next September. It's such a stupid question, in my opinion. I mean how do you know what you're going to do till you do it? The answer is, you don't. I think I am, but how do I know? I swear it's a stupid question.

GMOs and Indian Suicides

Just as Keith Kloor seems to put the issue (or myth as he calls it) to rest in an article recently appearing in Issues in Science and Technology, now comes a new article in the journal Globalization and Health suggesting a link between farmer suicides in India and farmer debt, a finding that will no doubt re-ignite the argument that adoption of GMOs caused suicides.  Indeed, the authors conclude the article by saying

Some observers have suggested that the introduction of genetically modified varieties of crops since liberalization has considerably worsened the situation . . .

 For background on the controversy, see this Wikipedia page.

I personally didn't find the new analysis in Globalization and Health as being particularly compelling, and it does NOT, as some reports of the study have suggested, provide "causal links."  The authors estimate simple linear regressions specifying suicide rates (suicides per 100,000 people per year) in a region (or state) as a function of indebtedness (measured as the % of farmers in a region that have taken out a loan in excess of $5).  

I don't doubt that indebtedness and suicides are correlated, but isn't it possible that there is some unobserved factor (or factors) causing both?  Macro-economic conditions? Social-cultural factors within a region (there are no regional fixed effects in the models)? A shift in time preference caused by other unobserved factors? If this sort of endogeneity exists, the estimates are biased.  Although the authors have 5 years of data on their dependent variable, they only have one measure of "indebtedness" at a single point in time, and assume it is the same for all time periods; thus, they cannot include year by region fixed effects.  This means that they cannot separate other regional-specific shocks to suicides from indebtedness effects.

For a more complete and through analysis of the issue, I suggest the papers by Guillaume Gruèrea and Debdatta Sengupta, which first appeared in a working paper with IFPRI and then later in a more condensed form in the Journal of Development Studies.