The Behavioral and Neuroeconomics of Food and Brand Decisions

That's the title of a special issue I helped edit with John Crespi and Amanda Bruce in the latest issue of the Journal of Food and Agricultural Industrial Organization.  

Here's an excerpt from our summary:

“To economists interested in food decisions, progress seen in other fields ought to be exciting. In the articles for this special issue, we gathered information from a wide range of research related to food decisions from behavioral economics, psychology, and neuroscience. The articles, we hope, will provide a useful reference to researchers examining these techniques for the first time…The variety of papers in this special issue of JAFIO should provide readers with a broad introduction to newer methodological approaches to understanding food choices and human decision-making”

A complete listing of the authors and papers are below (all of which can be accessed here)

•       The Behavioral and Neuroeconomics of Food and Brand Decisions: Executive Summary
o   Bruce, Amanda / Crespi, John / Lusk, Jayson

•       Cognitive Neuroscience Perspectives on Food Decision-Making: A Brief Introduction
o   Lepping, Rebecca J. / Papa, Vlad B. / Martin, Laura E.

•       Marketing Placebo Effects – From Behavioral Effects to Behavior Change?
o   Enax, Laura / Weber, Bernd

•       The Role of Knowledge in Choice, Valuation, and Outcomes for Multi-Attribute Goods
o   Gustafson, Christopher R.

•       Brands and Food-Related Decision Making in the Laboratory: How Does Food Branding Affect Acute Consumer Choice, Preference, and Intake Behaviours? A Systematic Review of Recent Experimental Findings
o   Boyland, Emma J. / Christiansen, Paul

•       Modeling Eye Movements and Response Times in Consumer Choice
o   Krajbich, Ian / Smith, Stephanie M.

•       Visual Attention and Choice: A Behavioral Economics Perspective on Food Decisions
o   Grebitus, Carola / Roosen, Jutta / Seitz, Carolin Claudia

•       Towards Alternative Ways to Measure Attitudes Related to Consumption: Introducing Startle Reflex Modulation
o   Koller, Monika / Walla, Peter

•       I Can’t Wait: Methods for Measuring and Moderating Individual Differences in Impulsive Choice
o   Peterson, Jennifer R. / Hill, Catherine C. / Marshall, Andrew T. / Stuebing, Sarah L. / Kirkpatrick, Kimberly

•       A Cup Today or a Pot Later: On the Discounting of Delayed Caffeinated Beverages
o   Jarmolowicz, David P. / Lemley, Shea M. / Cruse, Dylan / Sofis, Michael J.

•       Are Consumers as Constrained as Hens are Confined? Brain Activations and Behavioral Choices after Informational Influence
o   Francisco, Alex J. / Bruce, Amanda S. / Crespi, John M. / Lusk, Jayson L. / McFadden, Brandon / Bruce, Jared M. / Aupperle, Robin L. / Lim, Seung-Lark

The making of hybrid corn

After giving a talk at University of Nebraska a couple weeks ago, Cory Walters suggested the book The Hybrid Corn Makers: Prophets of Plenty written by Richard Crabb in 1947 (the whole book can be downloaded here).  I’m a couple chapters in and it is already fascinating.  The introduction (which explains hybrid corn)  was written by HD Hughes, a professor who was at Iowa State College at the time.    

Hughes writes:

“One of the greatest advantages of the technique of breeding hybrid corn is the opportunity afforded to develop strains especially well fitted to particular conditions of weather, soil, disease, and insects. By bringing together the right combination of inbreds, hybrids are “custom built” for particular needs. . . . From this we can see how important it is to find the particular hybrids best adaptetd to conditions likely to prevail in a given location. Many hybrids, especially those used in the northern corn-growing areas, are so closely adapted to particular conditions that they are superior to other hybrids only in an area no more than fifty or one hundred miles north or south”

I share this passage because there seems to be a common, modern view that "monoculture" cropping agriculture has led to a dramatic reduction in genetic diversity.  I gave a talk last week to a large intro to food science class and talked a bit about biotechnology.  One student asked me precisely this question: Don't GMOs reduce genetic diversity and thus make the entire system more vulnerable to  disease, etc.  But, as the above quote shows, even in the 1940s, there are many different types of corn in different locations, and that's true still today.  I also pointed this out when responding to Nassim Taleb's claims about GMOs: 

“Moreover, what he doesn’t seem to get with regard to modern GMOs is that a GMO isn’t a variety. A particular trait - say herbicide resistance - is introduced into many, many varieties in different parts of the country and the world. ”

In any event, the first chapter of the book is an interesting discussion on the history of corn and how it spread across South and North America.  Crabb writes:

“Scouts sent by Columbus to explore what is now the Island of Cuba became the first white men of record to see corn. On November 5, 1492, the first corn fields they encountered stretched across the Caribbean countryside continuously for eighteen miles.”

and

“Columbus returned to Spain in early in 1493, carrying with him the first maize ever seen in Europe. That year corn grew in the royal gardens of Spain and withing two generations was growing as a food crop in every country of sixteenth-century Europe. In less than a century, Indian corn had moved completely around the world.”

Nutritional Guidelines Redux

By now, I'm sure many readers have seen the announcement that the secretaries of the USDA and HHS have announced that the latest dietary guidelines will NOT include issues of sustainability.

This is a topic I've commented on several times in the past, and I was interviewed by Stewart Varney on the Fox Business Network yesterday about the development (I haven't found a link yet to post).

Here are just a few scattered thoughts and comments.

First, it is a bit odd that the nutritional guidelines don't consider behavioral responses of consumers.  That is, if it is recommended not to eat food type X, then what will consumers switch to eating instead?  Note that the question isn't: what do we wish consumers would eat instead, but rather what substitutions will actually occur?  This issue was highlighted in a post by Aaron Carroll on the NYT Upshot blog when discussing a large study that showed reducing saturated fat intake didn't produce noticeable health benefits: 

“The study also resulted in a reduction of unsaturated fats and an increase in carbs. That’s specifically what the committee argues shouldn’t happen. It says that bad fats should be replaced with better fats. However, people did reduce their saturated fats to 10 percent of intake, and didn’t see real improvements in outcomes. This has led many to question whether the quantitative recommendation made by the committee is supported by research.”

In a day and age when behavioral economics is all the rage, and is even being required by the White House, it is a bit absurd to believe consumers will follow all the guidelines and recommendations to-a-tee.  A more pragmatic approach is to realize most people will devote enough attention to get a couple take-home messages, and then act.  We need to study how consumers will actually substitute given their preferences and the messages they digest.  This isn't necessarily a critique of information behind the guidelines themselves (after all, we do want some systematic, scientific summary of the state of nutritional knowledge), but rather a call for research on how the guidelines are actually implemented and communicated and are ultimately used by consumers.

Second, this article by Tania Lombrozo at NPR touches on an issue I addressed several months ago: when guidelines mix nutrition and "sustainability", it necessarily involves value judgments not  science.  She writes:

“Science can (and should) inform our decisions, but you can’t read off policy from science. Invoking science as an arbiter for questions of values isn’t just misguided, it’s dangerous — it fails to recognize what science can (and can’t) provide and it fails to make room for the conversations we should be having: conversations about the kinds of lives we ought to live, the obligations we have to each other, to future humans and to other animals, and — among other things — what that means for the food choices we make every day.”

Finally, looking at a lot of discussion surrounding this issue, while the guidelines purportedly discuss "sustainability" - the issue is often boiled down to a single issue: greenhouse gas emissions.  While it is clear that beef is a larger emitter of greenhouse gasses than most other animal and plant-based food, the impacts need to be placed in context.  In the US, livestock production probably accounts for a very small percentage of all all greenhouse gas emissions.  Telling people to eat less meat will likely have small effects on greenhouse gas emissions.  My gut feeling is that further investments in productivity-enhancing research will have a larger effect on greenhouse gas emissions than cajoling consumers.  

In other places discussing "sustainability" the issue of food security is mentioned, as is resource use.  To an economist's ears, when I hear "resource use", I immediately think of prices.  Prices are the mechanism by which resources get efficiently allocated in a market-based economy.  As such, it gives me pause when I think of a report by a a group of nutritionists making recommendations on proper resource use.   I'd never trust a dictator (or even a group of economists) on having enough knowledge to making optimal decisions on resource use.  Beef is a relatively expensive food.  That tells us it is using a lot of resources, and that higher price causes us to eat less than we otherwise would.  

But, what about externalities?  To the extent beef production uses a lot of corn or land, that's already reflected in the price of beef.  But, does the price of beef reflect water use and potential (long run) impacts of greenhouse has emissions?  Probably not fully.  So, the key there is to try to get the prices right.  Well functioning water markets would be a start.  Greg Mankiw recently had an interview on getting the price of carbon right.  Once the prices are right, then "recommendations" regarding resource use are somewhat meaningless: you're either willing to pay (and able) the price to buy the items you like to eat or not.  

Thinking about hormones and cloning . . .

The American Journal of Agricultural Economics just released a forthcoming paper I co-authored with John Crespi, Brad Cherry, Laura Martin, Brandon McFadden, and Amanda Bruce.  Why so many authors?  Because it takes a lot of brains to try to figure out what's going on in people's brains when making decisions about food.

Here's a description from the paper of what we did: 

“In this paper, participants in a neuroimaging (fMRI) experiment made choices regarding
types of milk produced with or without an unfamiliar technology process (cloning or growth hormone) while recording their choices and the time it took to make those choices. Focusing on nine areas of the brain that have been found to be important in previous research for economic valuation, the experiment and subsequent analyses show which of these areas are correlated with the deliberative process and which are correlated with the final choice. One area of particular interest that revealed correlation for both activities was the ventromedial prefrontal cortex. This region is implicated in experiments of valuation and salience, and it was significantly correlated with deliberation and an increased likelihood of choosing the more familiar milk.”

Here's one of the figures from the paper.  The orangish-yellowish areas indicate brain areas that were more active when the person was choosing between milks with different characteristics vs. when they were just looking at milk with different characteristics.  Choosing really is a different mental process than simply looking.

We find that we can predict choice and decision time based on activation in different brain areas.

Here's how the paper ends:

“When making decisions we recall memories, we feel emotions, we weigh costs and benefits, and while we cannot observe these neural processes directly, we can determine which of the valuation areas of the brain slow the process down and which speed it up. That is, which areas are involved in the internal deliberation that eventually becomes choice? While a large portion of the brain (figure 3 and table 3) ponders the decision, the final choice appears most highly correlated with localized areas in the medial prefrontal cortex, and among those, it is fascinating that correlation is stronger, in our study, when the choice is over growth hormones than cloning technology. Why is this? Food labeling has been a source of research interest for years, and neuroscience technology will make it a fruitful area of study for years to come.”

Pushback against Nudges

A couple items recently came across my desk that were somewhat critical (at least in parts) of the use of behavioral economics in public policy making - in particular the idea that government can use insights from behavioral economists to nudge us into making the "right" decisions.

The first item is this new paper by Viscusi and Gayer for the Brookings Institute.  They reasonably ask why behavioral economists haven't spent nearly as much time studying the irrationality of bureaucrats, politicians, and policy makers as they have studying the irrationality of consumers.  Here's an extended quote (footnotes omitted) from their discussion on the propensity of government officials to suffer from a phenomenon called ambiguity aversion:

“Ambiguity aversion is a form of irrational behavior and should not be confused with risk aversion in which people are averse to the risk of incurring a large loss . . .

Government policies frequently reflect this ambiguity aversion with novel risks. For example, court rulings tend to demonstrate a bias against innovation and the attendant uncertainties
of novel drug products. In situations where there are adverse health effects from new drugs, the courts are more likely to levy sanctions against the producer. This bias on behalf of the public is also reflected in product liability case experiments using a sample of judges participating in a legal education program. The judges considered hypothetical cases involving novel drugs and their associated liability risks. When given a choice between a new drug posing an uncertain risk or another drug with a higher known risk, most of the judges recommend that the company market the latter drug.

Another instance of ambiguity aversion involves genetically modified organisms (GMOs) . . . GMOs have come under fire and are increasingly subject to potential regulation throughout the world. . . Critics have characterized GMO foods as being very risky products of biotechnology, labeling them “Frankenfoods.” The policy trade-off involved is that GMOs may pose uncertain risks that currently are believed to be low in magnitude, but they reduce the cost of producing agricultural products, which in turn lowers food prices and promotes better nutrition. ”

They go on to hint at the idea (though never come right out and say it) that the precautionary principle is a behavioral bias.  

The other item was an article in the The Guardian that asks whether all the cutesy messages by companies and governments encouraging us to "do the right thing" are really all that helpful or more effective than traditional policies.  The conclusion: 

“And another lesson, not mentioned by the team, but by other economists , is that it is very important to question whether the choices of the behaviourists, whether in government or in ad agencies where nudging opens up a yet more glorious prospect, are invariably wise and good. What, for instance, made the Highways Agency think that a made-up kiddie quote indebted to the Pret school of copywriting condescension (“a little girl asked us why we didn’t make gingerbread men”) might be preferable to speed cameras that build up points for offending drivers, as opposed to irritation in the law-abiding? Or preferable, indeed, to nothing? Maybe a little girl was involved.”