Fast Food Restaurants Getting Healthier

One of the reasons I’m often critical of government policies that attempt to force healthy eating on the public (say through ingredient bans or fat taxes) is that I have a different view of “Big Food” than many foodies.  Big Food is often portrayed as powerful, nefarious entity preying on helpless consumers.  I’m more apt to seeing fast food restaurants as responding to consumer demand for convenient, inexpensive, quick food.  They offer burgers and fries because this is what consumers are willing to pay for. 

However much we may want McDonald’s et al. to offer healthier alternatives, at the end of the day they must make enough money to stay afloat.  If more salads are offered than consumers want or are willing to buy, that’s a recipe for disaster.  As one organic farmer put it: the first rule of sustainability is that you have to make enough money this year to do it all over again next year.  I have little doubt that the McDonalds of the world would offer a lot more salads if they thought they could make money doing it. 

Against this backdrop, I noticed a recent study by the Hudson Institute that examined the offerings of fast-food restaurants over the past five years (it was covered by the WSJ here).  Here’s what the study found:

“between 2006 and 2011, lower-calorie foods and beverages were the growth engine for the restaurants studied. In 17 of the 21 restaurant chains evaluated, lower-calorie foods and beverages outperformed those that were not lower-calorie. In addition, chains that increased their servings of lower-calorie items saw positive returns as a result. These chains generated:

• a 5.5 percent increase in same-store sales, compared with a 5.5 percent decline among chains selling fewer lower-calorie servings;
• a 10.9 percent growth in customer traffic, compared with a 14.7 percent decline; and
• an 8.9 percent increase in total food and beverage servings, compared with a 16.3 percent decrease.”

The lesson is that you don’t always need government regulation.  The market will deliver healthy foods when the public decides that’s what they want.

The Economics and Politics of Obesity

That was the title of a talk I gave last week at the University of Alabama-Birmingham in the seminar series run by the Nutrition Obesity Research Center.  I talked about emerging trends associated with obesity (some of which defy popular narratives), the government's role in "combating" obesity, reasons why I find justifications for government action in this area less compelling than many public health professionals, evidence from empirical research on effectiveness of policies designed to "fix" the obesity problem, and finally I concluded with my thoughts on what caused the rise in obesity and what "we" should do about it.  

If you'd like to watch my talk (which runs about 50 minutes), click here.  

Food Socialism

From Bloomberg.com, we learn:

At a bustling food market in downtown Caracas, armed officers belonging to President Hugo Chavez’s National Bolivarian Guard marched by boxes of lettuce and tomatoes, checking prices and storage rooms.

and

“This is the worst it’s ever been, I can’t find any eggs, rice or flour,” Noreli de Acosta, a 55-year-old housewife.  

What is behind it all?

Chavez suffered his only electoral defeat in 2007 when voters narrowly rejected a referendum to change 69 articles of the constitution amid shortages of beef, milk and sugar. He subsequently accelerated the nationalization of farms and food industries. Since taking office in 1999 he’s seized more than 1,000 companies or assets.Capital controls have exacerbated shortages by limiting the amount of foreign currency Venezuelans can obtain to import goods.

Yet, rather than freeing up capital controls, here is what the socialist government is up to:

Last year the government ordered companies such as Procter & Gamble Co. (PG) and Unilver Plc (ULVR) to lower the price of shampoo, soap and other personal care products to contain inflationary pressures. Authorities regulate prices for a wide range of products including chicken, cheese and coffee.

The government blames producers and merchants for hoarding products and this week carried out televised raids of warehouses. Among goods confiscated were 9,000 tons of sugar, part of which was imported by a supplier to the local unit of PepsiCo Inc. (PEP)

Shockingly, Chavez supporters are undeterred:

At a nearby poultry store, display cabinets were half empty and one shopper complained that prices were twice what the government mandated.

Morela Tirado, a 53-year-old housewife, said such shortages are only a small inconvenience and have not undermined her support for the Chavez government.

“So you switch meat for chicken, pasta for rice, what’s the big deal? Nobody is going hungry,” said Tirado. “It’s not that there’s no food, you just don’t always get what you want.”

It's too much of a stretch to say that calls for fat taxes, large soda bans, and veggie subsidies will lead to this kind of outcome.  But, I'd at least hope that situations like this in oil-rich Venezuela at least serve as a cautionary tale for those who think we can top-down engineer everyone's weight, health, and eating patterns.  After all, it is hard to imagine that Chavez and his advisers thought their capital controls, import restrictions, price-caps, and confiscations would lead to such bad outcomes.  These were - I'm sure - well meaning (but short sighted) plans to control the economy in one way, all the while forgetting that interventions in one area cause unexpected disruptions in another.    

Do People Want More Food Regulation? Or Less?

Over at Reason.com, Baylen Linnekin reports on the results of a recent poll by the Associated Press-NORC Center for Public Affairs Research.  According to Linnekin, the poll shows little public support for food taxes and bans.  Balyen contrasts the recent survey with some previous survey work I’d done which seems to show the opposite.

A vast literature on polling and survey research shows that subtle changes in wording and response categories can result in large shifts in behavior.  Thus, it is useful to compare the two questions side-by-side. In the end, I think you’ll find much more similarity in the two studies than perhaps first meets the eye.

Here is the exact AP-NORC poll question and response categories (it was a telephone poll and you can find the script here):

Do you favor, oppose, or neither favor nor oppose the following government policies?FOR EACH FAVOR OR OPPOSE: Is that strongly (favor/oppose) or somewhat (favor/oppose)?

Requiring more physical activity in schools (84%, 89%)

Providing nutritional guidelines and information to people about how to make healthy choices about diet and exercise (83%, 90%)

Funding farmers markets, bike paths and other healthy alternatives (74%, 81%)

Providing incentives to the food industry to produce healthier foods (73%, 80%)

Requiring restaurants to post calorie information on menus (70%, 78%)

Banning advertisements for unhealthy foods aimed at children (44%, 53%)

Placing a tax on the sale of unhealthy foods and drinks (31%, 40%)

Limiting the types or amounts of foods and drinks people can buy (15%, 25%)

As shown above, there were eight issues listed (in random order across respondents).  I’ve listed them in order of support.  I’ve also listed the % favoring in parentheses beside each issue, then a comma and the % favoring plus not opposed (to which I’ve added in the “neither opposed nor unopposed” to the total).

I’d hardly call this set of responses free market or libertarian.  There is ample support for requirements, subsidies, and mandates.  Given the way the question was asked, I could see a respondent perceiving the question to ask something like “rank these interventions from most favored to least favored.”  It would be interesting to know if there were strong order effects.  For example, if “taxes” came first, were they more/less supported than if they came last.  In any event, there is apparently weaker support (and less than majority support) for “fat taxes” and bans on amounts or types of foods people can buy (although, my gut feel is that if you replaced the vague “types or amounts of foods” with something specific like “transfats” or “GMOs” you might get a very different answer)

My study (published in Food Policy) phrased the questions a different way and used an online format.  I asked about preference for government action related to 10 food issues.  None of them match up perfectly with the list of eight above, but I’ll pull out two that are somewhat similar to the above. 

Each question asked:

Which of the following best describes your view on what the U.S. government should do?

Each question had two options that involved more government action, a status-quo option, and two options that involved less government action. 

Here are the results from one question about healthy food with % of respondents falling into each category:

Which of the following best describes your view on what the U.S. government should do?

Ban the use of transfats, saturated fats, and other unhealthy ingredients in food production (15.1%)

Increase regulations to restrict the use of transfats, saturated fats, and other unhealthy ingredients in food production (38.8%)

Maintain current policies on transfats and saturated fats (e.g., mandatory labeling in the supermarket)       (31.6%)

Reduce regulations on transfats and saturated fats    (2.7%)

Make no law regarding transfats, saturated fats, and other unhealthy food ingredients, leaving people to take responsibility for their own diet          (11.8%)

So, 53.9% wanted more regulation on this topic, 31.5% wanted the status-quo and 14.5% wanted less regulation.

Here are the results from another question I asked:

Which of the following best describes your view on what the U.S. government should do?

Create an agency to plan food production and distribution to improve nutritional intake (15.4%)

Use extensive taxes and subsidies to promote healthier foods           (14.2%)          

Maintain current regulations designed to promote healthier foods which include mandatory nutritional labels on foods and establishing suggested dietary intake (53.1%)     

Decrease efforts to promote healthier foods  (5.3%)

Eliminate all food health regulations; allow citizens to make their own food choices (11.9%)        

So, 29.7% wanted more regulation on this topic, 53.1% wanted the status quo, and 17.2% wanted less regulation.

In total, seven of the questions I asked about garnered majority support for government action and the most favorable related to issues that could be perceived as relating to food safety, food affordability, and animal welfare. Three issues did not garner support for more government action.  So, in my study 70% of the issues raised were such that people wanted more government action compared to the status quo or less government action. 

The AP-NORC poll asked about eight issues, and (depending on how you treat the “undecideds”), either 62.5% or 75% garnered majority support for more government action. 

So, yes, we can find a couple questions were we “free market” folks can take a bit of comfort.  However, the overall response patterns in both surveys are much more statist than I am comfortable with.  That’s one reason I decided to write The Food Police (you can also read more on my interpretation of these results here)  I’m hopeful I can bring more folks over to my way of thinking by presenting a perspective that differs from the one normally offered by many food writers.   

Do Food Consumers Vote Differently Than They Shop?

According to some research I just published in the Journal of Agricultural and Resource Economics with a former graduate student, Kate Brooks, who is now an assistant professor at the University of Nebraska, the answer is "yes."  

Our research suggests caution in using people's shopping behavior (as, for example, indicated by grocery story scanner data) to infer which public policies they may or may not support.  In the particular application we studied, people were willing to pay large premiums to avoid milk and meat from cloned cows when asked what they wished to buy when shopping in a grocery store.  One might conjecture from this behavior, then, that the consumers would approve of a government ban on use of clones in meat and milk production.  

According to our research, that conjecture would be wrong.  The majority of consumers did NOT favor a ban on cloning in food animals.  In fact, most people would demand compensation if a ban were enacted (rather than be willing to pay to have the ban).  This finding defies many of the explanations often given for differences in voting and shopping behavior, such as the consumer-vs-citizen hypothesis or the hypothesis that consumers perceive the existence of externalities.  The behavior is more consistent with the notion that people have an option value (they don't want to get rid of a technology that may produce some promising result in the future even if they don't want it now) or that people respect the freedom of others to arrive at their own choices even if they happen to be at odds with one's own preferences.     

The other interesting thing about our finding is that is exactly the opposite of what has been observed in other food issues.  For example, in California, 63.5% of voters voted in favor of Prop 2 in 2008 to effectively ban battery cages in egg production.  Yet, the retail market share of cage free eggs is less than 5%.  In this case, shoppers aren't willing to shell out the extra bucks for cage free eggs in the grocery store, but they enthusiastically voted to ban the product they normally buy in the voting booth.  Why?  Hard to say.  My feeling is that the costs are much more salient in the store than in the voting booth.  Another possibility is that the universe of voters is different than the universe of shoppers (all voters shop but not all shoppers vote).  There are, of course, other possible explanations.  

Gaining a better understanding why people behave differently when shopping and voting is a key area of future research for food economists.  And, the fact that people often behave so differently in the two environments represents a key challenge for food economists who conduct regulatory cost-benefit analysis and advise policy makers.