Effects of restaurant menu labels

Brenna Ellison, David Davis, and I have a paper forthcoming in the journal Economic Inquiry and that is finally available online.

Here's are the study objectives:

The overall purpose of this research is to perform an in-depth examination of menu labeling and pricing policies in a full-service, sit-down restaurant. Specifically, this research determines: (1) whether caloric labels in a fullservice restaurant influence food choice, (2) whether symbolic calorie labels are more/less influential than numeric calorie labels, (3) how effective menu labels are relative to “fat taxes” and “thin subsidies” at reducing calories ordered, and (4) the economic value of menu labels.

Our projections of the short-run effects of different policies (numeric label, symbolic label, 10% tax on high calorie items, or 10% subsidy on low calorie items) on the number of calories ordered at the restaurant we studied are as follows:

The only policy option which resulted in a statistically significant change in calories (where the 95% confidence interval on the change didn't include zero) was a "symbolic" calorie label - essentially a traffic light label with a red dot next t the highest calorie items, a yellow dot next to medium calorie items, and a green dot next to lowest calorie items.  We put the point estimate on the value of the symbolic label at about $0.13/person/meal.

It is important to note that the symbolic label policy option was also the one that had the most detrimental effect on restaurant revenues (these results are in Brenna's dissertation).  Also, curiously enough, Brenna's surveys suggest most people say they don't want the symbolic label.  Here's what we wrote in a different paper discussing a post-meal survey conducted with some of the diners:

Interestingly, despite the calorie+traffic light label’s effectiveness at reducing calories ordered, it was not the labeling format of choice. When asked which labeling format was preferred, only 27.5% of respondents wanted to see the calorie+traffic light label on their menus. Surprisingly, 42% preferred the calorie-only label which had virtually no influence on ordering behavior.

Do cows dislike GMO corn?

The Huffington post recently ran a story about one Iowa farmer who became skeptical of effects of GMOs on his animals:

Around the same time he planted his first GMO test fields, he also decided to do a little experimenting on his own. He had heard from farmers in Nebraska that cows "shied away from the BT corn." So he gave his cows the choice to consume the conventionally grown corn or BT corn. His cows ate the conventionally grown, however they smelled the BT corn and walked away from it. "That's not normal," says Vlieger. He has tried this with many other animals and found that if they have not been forced to consume GMOs in the past, they won't eat them and will go for the conventional feed instead.

In his role as a crop and livestock nutrition adviser, Vlieger knew other farmers who were feeding their animals GMOs. In South Dakota, a farmer fed his sows BT corn and they had on average 1.6 less piglets per litter. The piglets also weighed less at birth

The story is billed as a "farmer's perspective" about GMOs (coincidentally enough the story ran on a website sponsored by Chipotle, who has been critical of the technology).  The claims about adverse effects of biotech crops on animal performance is consistent with claims made by many anti-biotech advocates.  It was one repeated by Jeffery Smith when I debated him on the John Stossel show about the subject (our portion starts about the 23 minute mark).  

How does the anecdotes correspond with the scientific evidence on the subject?  The answer is: it doesn't hold up.   

One study from the Animal Science Department at the University of Nebraska found:

Steer performance was not different between Bt corn root worm protected or RR hybrids and their parental controls following the 60 day grazing period. The animal performance demonstrates feeding value of corn residue does not differ between genetically enhanced corn hybrids and their non-genetically enhanced parent hybrid. Similar research at the University of Nebraska also showed no difference in steer performance due to the incorporation of the Bt trait for corn borer protection (2001 Nebraska Beef Report, pp 39-41). There was also no preference between Bt and nonBt hybrids. During the grazing period, 47.5% of the steers were observed grazing Bt residue, and 52.5% of the steers were observed grazing nonBt residue.

A review study published in the journal Livestock Production Science also found:

In none of these experiments was animal performance, whether measured as growth rate, feed efficiency and carcass merit in beef cattle, egg mass in laying hens, milk production, composition and quality in dairy cows or digestibility in rabbits, affected by feeding transformed plants compared to animals fed control or isogenic plants.

In general, when one reads stories like the one at Huffington Post, it is important to step back and ask: why it is that most commercial animal operations have no problem feeding biotech corn or soy?  If biotech was really causing Tyson or Cargill or JBS to lose money because of reduced animal performance, don't you think they'd do something about it?  The fact that they have no qualms feeding biotech corn and soy probably tells you as much as any of the published scientific studies on the topic.

Assorted Links

Small, organic farming isn't easy 

A new report from USDA-ERS on biotechnology (the summary: Genetically engineered (GE) crops (mainly corn, cotton, and soybeans) were planted on 169 million acres in 2013, about half of U.S. land used for crops. Their adoption has saved farmers time, reduced insecticide use, and enabled the use of less toxic herbicides. Research and development of new GE varieties continues to expand farmer choices.)

SB1000 would require all drinks sold in California stores made with added sweeteners equal to 75 or more calories per 12 ounces to carry warning labels on the front of cans and bottles.

Is it really possible that soda taxes have no dead weight loss.  This study seems to suggest so

State Egg Battles

The New York Times ran an article yesterday about the egg battle going on in California.

Here's the issue:

California voters set new standards for hen housing in 2008 when they approved a ballot measure that imposed more generous living conditions for egg layers in their state. When producers complained that the measure created a competitive disadvantage, the Legislature tacked on a law that mandated imported eggs be produced under the same standards.

It's the second action - the legislative prohibition against certain types of eggs coming into California - that has the attorney general of Missouri complaining about an interstate commerce clause violation.  California imports a little less than half the eggs it consumes from other states.  Missouri, in particular, supplies about 540 million eggs a year to California. Thus:

The Missouri attorney general has filed a lawsuit to block the California egg rules, and at least three other states are considering doing the same. The beef and pork lobbies are also lining up against the California rules in an effort to prevent any new restrictions on raising livestock.

The attorney general says: 

“I recognize that the California district courts and the Ninth Circuit have not been particularly friendly to this sort of assertion we’re making here, but I also have confidence that will not be the last word on this analysis,” he said. “The U.S. Supreme Court is unlikely to allow a state to put this type of trade barrier in place in the agricultural arena or any other arena.” 

The briefly article discussed the potential price impacts of the new standards for California citizens.  I wished it would have spend a bit more time talking about consumer demand for "cage free" eggs and the interplay between market outcomes and regulated outcomes.  

The market share for cage free eggs in California was only about 10% and yet Prop 2 (which essentially banned the cages) passed with 63% of the vote.  If the population of shoppers is the same as the population of voters (which it isn't), this would mean about 53% of Californians voted to ban a product they regularly buy.  This "vote-buy" gap is not well understood, and we're working on research now to get a better handle on why and under what conditions it emerges.  

What has caused the recent rise in commodity prices?

Brian Wright from UC Berkeley attempts to answer that question in a recent review article in the Journal of Economic Perspectives.  His provocative answer:

The rises in food prices since 2004 have generated huge wealth transfers to global landholders, agricultural input suppliers, and biofuels producers. The losers have been net consumers of food, including the large numbers of the world's poorest peoples.  The cause of this large global redistribution was no perfect storm.  Farm from being a natural catastrophe, it was the result of new policies to allow and require increased use of grain and oilseed for production of biofuels.  Leading this trend were wealthy countries, initially misinformed about the true global environmental and distributional implications.