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

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.  

Food by Subscription

I was recently interviewed by the Atlanta Tribune for a story they were running on subscription-based services that deliver meal ingredients to your home.  

It was a bit ironic that this interview request came at this time because my family had recently been trying out one such service: HelloFresh.  Here's what I had to say about why we tried it out:

“My wife spent a large amount of time each week menu planning (i.e., figuring out what to cook for the week), and then even after getting the week planned out sometimes our local grocery store wouldn’t have all the items she needed. So, recently, she signed on to HelloFresh as a way to cut down on time spent searching for recipes and traipsing about town for different ingredients.”

Why is the market growing?

“In general, it’s hard to separate a short-term fad from a trend that has staying power. One thing to look at is the underlying economic forces and see whether there is reason to believe a larger market could exist.
...
Demand for convenience has grown. Demand for quality has grown. The subscriptions boxes offer convenience and quality, all in the comfort of one’s home. Typically one had to choose one or the other (e.g., I could have convenient but that would mean low quality or eating out), but boxes are an innovation that has broken down that traditional constraint. ”

On whether the market will continue to grow

“Hard to say. It will depend on the ability of the box services to continue to offer competitive offerings with grocery stores and restaurants, and it will depend on how these other food service outlets respond in turn. For example, restaurants already offer take out. And, what’s to stop Walmart or Kroger from offering their own boxes ready for pickup?”

Isn't this just a frivolous expense?

“Whether something is a “splurge” depends on one’s budget. . . The box service my family uses winds up costing us about $10 per person per meal. We could easily spend that amount if we went out to eat at a sit-down restaurant, and fast food is only slightly less expensive. Cooking from scratch would be less expensive in terms of food cost, but would require “hidden costs” in more time planning, shopping, and cooking. It’s unlikely that boxes are the best option for every family, but they’ll likely make sense for some families some of the time.”

Impact of Process Labeling

The Council for Agricultural Science and Technology (CAST) just released a new paper on the impact of process food labeling.  The paper was written by a number of top-notch ag economists including Kent Messer, Marco Costanigro,  and Harry Kaiser.  It's a nice summary of the issues involved in the labeling of food processes (like organic or non-GMO or rbST free) as opposed to labeling food outcomes (like calories).

The summarize five points after reviewing the literature:

“1. Consumers want to have a sense of control over the foods their families eat.
2. Food markets are characterized by asymmetric information. Producers know more about the quality of the products than consumers. Many important quality traits are unknown until after consumption, or they are never revealed.
3. Consumers are not well informed about the various technologies used in the agricultural and food sector of the United States; however, they have greatly benefited from the tremendous technological progress that has occurred over the past century.
4. Consumers use process labels as cues to infer quality traits that are important to them, such as taste, food safety, and the environmental and societal impacts.
5. There is strong evidence that consumers consider process labels, frequently adjust their behavior in response to them, and, when these labels imply a negative aspect of a food, can shun that product. ”

They also present a number of challenges presented by these sorts of labels, such as

“Process labels can be used by marketers to stigmatize rival conventionally produced products, even when there is no scientific evidence that food produced in this manner
causes harm.”

The authors end with some policy recommendations.  Here's the first one:

“Mandatory labeling should only occur in situations in which the product has been scientifically demonstrated to harm human health.”

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.”