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Greece

I've been in Greece for the past week teaching a short course on experimental methods used in consumer research.  Given all the news about the financial crisis in Greece, I thought I'd share a few personal observations.

By and large, it's been hard to see much effect of the crisis (but not having been here before, I admit to not having a good reference point).  Restaurants, beaches, and historical sites are full (of Greeks and tourists).  Banks are closed, but I haven't noticed lines outside of ATMs more than a couple people deep, and typically there is no wait at all.  I've been in a couple grocery stores and they were fully stocked.  A common remark I've heard in crowded areas is "Crisis? What crisis?"

None of that is to say things are great for the average Greek citizen.  There are capital controls, so Greeks can only pull out 60 euros (now 50 since banks have run out of 20s) daily from domestic accounts (withdraws from international accounts are not limited).  And, there is a lot of uncertainty and concern about what will happen.  But, a lot of Greeks have been moving their money out of the country in the months and years before capital controls were instituted.  I've been impressed by the knowledge waiters and cab drivers have about the financial situation of the country, and by and large, they seem to be taking it all in stride.  Things don't look too bright for public sector employees - which include all University professors in the country.

Of course, I've largely been in tourist spots in Athens and Crete, which may well be affected differently than other areas (although I did have a layover in Athens on the same day the "no" vote came out and got to witness the party in Syntagma square; hours before the vote came out there were far more journalists and TV cameras than "real people" in the square).  International credit cards still work and are generally accepted, though there is a definite preference for cash.

My overall impression?  Beautiful scenery, great people, and scrumptious food.  I just hope they can find a way to pay off their bills.

Why are people fearful of GMOs?

I answered that question and others like it for Roberto Ferdman in a piece at the Washington Post.

Here's one excerpt

“Ok, let’s talk about the future now. Would you say that we have hit the peak of GMO aversion?

You know, I actually have no idea. These things are really hard to predict. Much harder than most people realize.

Let’s suppose you had some really large food safety scare, which touched GMO crops even tangentially. That would sway opinions incredibly quickly. Now that doesn’t seem like it’s going to happen, and I certainly don’t think it will, but it’s not out of the question.

The other way it could go, however, is that someone introduces a biotech crop that captures the public’s imagination but doesn’t scare them. That way, people warm up to a GMO crop that is more approachable, and in doing so, become desensitized to the bizarreness or strangeness about GMO crops that they once felt.

A perfect example is this new arctic apple, which doesn’t brown. Especially if it isn’t made by some big agricultural behemoth, like Monsanto.

But people might also just realize that most of the cheese they eat is made with enzymes that are genetically engineered. Diabetics, after all, use insulin that is made from a genetically engineered bacteria or yeast.”

French sterotypes busted

This new paper in the American Journal of Agricultural Economics (coauthored by French and American agricultural economists)  is likely to bust a few sterotypes many Americans have about French eating patterns.  The abstract starts by tackling the first sterotype: that if we Americans would all just eat like the French, we'd be thin and healthy.

“Limited access to healthy food is commonly regarded as a contributing factor to poor dietary choices. The objective of this article is to test this hypothesis in a French context given France’s increasing obesity rates and incidence of poor dietary habits.”

Poor dietary habits among the French? Surely not!  Joking aside, i tis true that French obesity rates are below that in the US, but the trends are similar.  Actually, in the US, the upward trend has leveled off.  But the fact remains, there isn't that much difference between what French and American consumers like to eat.

Secondly, the French must be better eaters because of their frequent trips to all those quaint shops and farmers markets - right?  The paper:   

“our results, which indicate that fewer but larger retail outlets increase the odds of consuming the recommended level of fruit and vegetables.”

So, it seems that that Frechmen and Frenchwomen who eat recommended levels of fruits and vegetables are more likely to do so by getting them in large retail outlets like supermarkets.  

All in all, I think many Americans conflate the images they see on vacations to touristy spots in Paris or Nice for what is typical of everyday living in France.  But, even when I vacation within the US, I tend to eat and shop much differently than I do when living "regularly" back home.  That's why its important to augment our anecdote experiences with data.  

 

What's good for countries is good for communities

A new paper by Trevor Tombe in the American Economic Journal: Macroeconomics provides a cautionary tale for those who think we'd be better off economically if we sourced more food closer to home.  

The paper starts off with this stylized fact

“Agriculture in poor countries has low productivity and high employment relative
to other sectors. Differences in aggregate productivity and income between
rich and poor countries are therefore primarily due to differences within agriculture;
Schultz (1953) calls this the Food Problem”

The problem, it seems, is that poor, agricultural-based countries don't trade.

“Trade data, though, presents a puzzle: with low relative agricultural
productivity, developing countries should be massive food importers; yet, they
are not (see section I.B). The “missing” food imports suggests trade costs may
be important for international productivity differences.”

These "trade costs" that are holding up trade include bad policies like tariffs but also bureaucratic problems like border delays.

The paper has a nice set graphs, and the following shows a few of them related specifically to agriculture.

First, when you don't trade agricultural products with you're neighbors, you tend to be poor.

Countries that have more agricultural trade have higher GDP/worker.  The correlation is 0.68.  Countries that have more agricultural trading partners tend to be richer and more productive.

A lot of local food advocacy is premised on the idea that we need smaller farms with more farmers.  I don't think anyone would argue that greater local food production would mean  more employment in agriculture.  Well, would that be good for the economy?  According to this paper, no. This graph shows a very clear negative correlation between a country's employment share in agriculture and GDP/worker.  More workers in agriculture is typically going to mean lower economic output.  

Finally, this graph shows that the higher the share of food spending on domestic output (i.e., the more local foods purchased), the lower the country's GDP/worker.   

There's no reason to believe what's true of countries wouldn't also be true for states or cities trading with each other.

The author concludes:

“Agricultural trade costs account for roughly 25 percent of the aggregate differences between rich and poor countries. Trade costs in agriculture and manufacturing together account for over 40 percent. Even observable, policy-relevant trade costs (tariffs and border
delays) have important negative productivity effects in poor countries. The food
trade is missing in poor countries and in our models; it should be no longer.”