Food Demand Survey (FooDS) - June 2015

The June 2015 edition of the Food Demand Survey (2015) is now out.

A few notable results:

• Changes in willingness to pay (WTP) for meats was mixed.  WTP for hamburger was down almost 10% but WTP for chicken wings was up almost 10%.  WTP for both steak and chicken breast was up relative to May.
• Expected food expenditures at home and away from home were down this month relative to May.
• For the third month in a row, the largest percentage jump in awareness for different food issues was for bird flu.  Moreover, this is the first time for bird flu to be ranked in the top three issues of awareness and for concern since the beginning of the survey.  There was also a rise in concern for swine flu and for mad cow.
• I asked several new ad hoc questions this month, but I'll report on these separately in the coming weeks.

Eating: the new religion

Ever notice the religious fervor that sometimes companies food movements and dietary fads?  Well, you're not alone.  In fact, it appears there is now an entire academic conference on the subject.  This from a Canadian paper:

“McCann is one of several academics presenting papers at next week’s Congress of the Humanities & Social Sciences in Ottawa looking at how the explosion of “clean eating” — whether raw food and juicing, the paelo diet, gluten-free regimens or fervent veganism — has created a moral hierarchy for food.

She argues that the rise in food movements has coincided with a decline of religion in society, with many people seeking familiar values such as purity, ethics, goodness. But these movements also tend to encourage behaviours that have steered a generation away from religion: Judgment, self-righteousness, an us-versus-them mentality. And, she adds, many seek a fulfilment that cannot be satisfied with food.”

and

““If you think you’re the pure, someone else is impure,” she says. The more self-righteous we are about what we eat — because it’s ethical or healthy or local — the more we also tend to judge others on what they eat. Or worse, who they are.

There’s a reason someone says ‘I am a vegetarian,’ rather than ‘I eat vegetarian.’”

Study Shows Most Americans Could Eat Locally, but Should They?

This paper in Frontiers of Ecology and Environment by Andrew Zumkehr and Elliott Campbell conducts a type of simulation to suggest that most Americans could eat locally (see the accompanying press release here).

That seems like the wrong question.  It shouldn't be whether we CAN eat locally but whether, WHY would you want to eat everything grown locally?  

The paper basically assumes local is "good" and asks how do we get more of it.  A few, uncritical references are made to the fact that local food systems may "result in large GHG emission reductions" or that it "shortens the distances required for economic and energy-efficient recycling of waste streams between farms and cities" or it " may increase community involvement in food production issues, potentially leading to improved environmental constraints on landuse practices."  Yet, there is good reason to believe that local food systems would generate more GHG emissions, result in less food choice and dietary diversity, increase price and availability risk for consumers, and drive up food costs.  There is a lot written on each of these issues, none of which is referenced here.

In any event, the authors do some calculations to suggest it may be technological feasible to provide enough calories to feed everyone in this country with local production.  The authors used yield data from each county in the US to infer the productivity of growing crops in each location.  However, it is likely a mistake to assume that yield would remain constant as production expands to more marginal lands.  In fact, it is almost certainly the case that observed yields near urban locations are an upper bound for the productivity in the area because only those lands that are currently productive enough to out compete other uses are those currently in use for crop production.  That is, you're only observing yield from the most productive lands and you're not observing yields from the least productive lands.

It might not be surprising to hear that the authors don't calculate the cost of all this.  The words "cost" and "price" appear exactly three times in the paper, the latter of which in reference to the fact that they don't study price effects.  The paper concludes that: 

“current foodshed potential of most US cities is not limited by current agronomic capacity or demographics to any great extent, and that the critical barriers to this transition will be social and economic.”

Saying the main barrier is "economic" is akin to saying the main barrier is reality.  The reality of the resource constraints that nature deals us and our willingness to pay to overcome some of those constrains.

Nonetheless, that doesn't keep them from proposing some grand plans .  From the press release: 

“Campbell’s maps suggest careful planning and policies are needed to protect farmland from suburbanization and encourage local farming for the future.”

I don't see anything in this paper that suggests we need "careful planning" or to "encourage local farming."  If people want local foods and are fully willing to pay for them, farmers will provide it.   

Behavioral Economics and Public Policy

David Just and Andrew Hanks have a new paper forthcoming in the American Journal of Agricultural Economics entitled: The Hidden Cost of Regulation (I noticed Marc Bellemare beat me to the punch in discussing his views on the paper).  

This is an important paper in many respects.  As I see it, one of the general problems with the behavioral economics literature is that the findings of behavioral biases (e.g., status quo bias, overweighting low probability risks, loss aversion, present, etc.) are almost always put forth as motivation for more government regulation.  Yet, it is easy to imagine many behavioral economic findings suggesting just the opposite - though that is rarely the conclusion drawn by the authors.

Here's an  example I used in the Food Police

“Here is the irony. The behavioral economists have told us for years that humans make mistakes by exaggerating the importance of low-probability risks. Yet, I have not seen a single behavioral economist use this insight to tell the food police to relax and put their fears over growth hormones, genetically modified food, or pesticides into perspective. Instead, we see the behavioral economists partner with the food police to advocate policies they want even if it means ignoring the implications of their own research. ”

Now, enter the paper by Just and Hanks.  They show that if consumers have a positive emotional attachment to a good that a government policy that attempts to restrict consumption of that good may cause a backlash by causing people to want it even more.

 Think of the Bloomberg large soda ban.  The very action of telling people "you can't have large sodas" makes them want large sodas even more, which makes banning large sodas even more costly in terms of foregone consumer welfare.  They argue that the reverse  may also be true: subsidizing something like healthy food that people feel like they should be consuming more of makes  them want it all the more.  

The general story here is that people's preferences (what they want) may not be independent of the policies government officials pursue.  It is an issue I've studied on a couple of occasions (here and here) with regard to the effects of mandatory labels on genetically engineered food. If people see a mandatory label as information about the risks of genetic engineering, the very presence of a label could make them even more averse to genetically engineered food.  

All this makes the normal sort of "welfare economics" we economists normally do a bit tricky.    Normally we look at the choices (and prices) before a policy is in place and the choices (and prices) after a policy is in place to determine whether consumers are better off with the policy or not.  How do we determine better off?  With a mathematical function derived from the choices people make.  Think of it like: happiness = f(prices, # of options).   But, if a policy changes preferences, then it is hard to know whether the consumer is happier or sadder because, in a sense, they're now a different person that has different tastes and wants.  Not only have prices and number of options changed but the function relating happiness to these factors has changed too.

While the Just and Hanks paper is largely a theoretical paper, I'm please to see a framework put forward for people to seriously evaluate public policies in a fully consistent behavioral economics framework rather than the ad hoc way it's normally done.  I also hinted as this sort of thing in a paper with Bailey Norwood and Stephan Marette where we ran some experiments where people could either choose for themselves or where other's made choices for them (we called the choosers the "paternalist" and the recipients of the choices (or children as Stephan calls them) the "paternalee)".  

“One interpretation of these results is that paternalees place an intrinsic value on freedom of choice. This does not necessarily imply that the paternalees’ choices are in any sense “optimal” or that, should paternalees suffer from time-inconsistent preferences, their long-term well-being couldn’t be enhanced by restricting current choices. Nevertheless, if this interpretation is correct, the results suggest that any long-term benefits that might arise from paternalism must be weighed against the loss of freedom of choice.”

Moo

If you're looking for some light reading for summer vacation, I highly recommend the book Moo by Jane Smiley.  It's an older fiction book - published in 1995 - that I only recently became aware of when it was recommended to me by my friend Keith Coble.  Anyone who went to school or worked at one of the many land grant universities around the country will almost certainly relate to the tales of intrigue and jealousy among professors, students, and school administrators.  What will also ring true is the secretary who basically run the place and the villainous economics professor whose main interest in life seems to be gaining fame and lining his pocketbook.   Oh, and of course there is the secret pig that an animal science professor keeps on campus to test his own pet theories. 

Here was one of my favorite passages about campus politics:

“It was well known to all members of the campus population that other, unnamed groups reaped unimagined monetary advantages in comparison to the monetary disadvantages of one’s own group, and that if funds were distributed fairly, according to real merit, for once, some people would have another think coming.”