The Cost of Others Making Choices for You

The journal Applied Economics just released a paper entitled "Choosing for Others" that I coauthored with Stephan Marette and Bailey Norwood.  The paper builds off our previous research that aimed to study the value people place on the freedom of choice by trying to explicitly calculate the cost of others making choices for you (at least in our experimental context).  

The motivation for the study:

“It is not uncommon for behavioural economic studies to utilize experimental evidence of a bias as the foundation for advocating for a public policy intervention. In these cases, the paternalist/policymaker is a theoretical abstraction who acts at the will of the theorist to implement the preferred plan. In reality, paternalists are flesh-and-blood people making choices on the behalf of others. Yet, there is relatively little empirical research (Jacobsson, Johannesson, and Borgquist 2007 being a prominent exception) exploring the behaviour of people assigned to make choices on another’s behalf.”

The essence of the problem is as follows:

“When choices are symmetric, the chooser gives the same food to others as they take for themselves, and assuming the recipient has the same preferences as the chooser, the choice inflicts no harm. However, when asymmetric choices occur, an individual receives an inferior choice and suffers a (short-term) welfare loss. Those losses might be compensated by other benefits if the chooser helps the individual overcome behavioural obstacles to their own,
long-run well-being. However, the short-term losses that arise from a mismatch between outcomes preferred and received should not be ignored, though they often are, and this study seeks to measure their magnitude in a controlled experiment.”

What do we find?

“We find that a larger fraction of individuals made the same choices for themselves as for others in the US than in France, and this fraction increased in both locations after the provision of information about the healthfulness of the two choices. ”

and

“What is interesting is that the per cent of paternalistic choices declined in both the US and France after information was revealed, with a very small decline in France and a considerable decline in the US. The per cent of indulgent choices also declined after information, so the effect of information was that it largely reduced asymmetric choices. Information substituted for paternalism. After information, choosers selected more apples for themselves and more apples for others, such that there was less need for paternalism to increase apple consumption.”

Experimental Auction Summer School 2016

Applications are now being accepted for a summer school on Experimental Auctions that is organized by organized by Maurizio Carnavari and co-taught with Rudy Nayga and Andreas Drichoutis.  This will be our 5th installment.  In the past we've had the summer school near Bologna Italy, but last year we venturing out to Crete, Greece with great success.  This year's course is scheduled from July 5 to July 12, 2016 in Catania, Sicily.

Experimental auctions are a technique used to measure consumer willingness-to-pay for new food products, which in turn is used to project demand, market share, and benefits/costs of public policies. Two weeks ago, I got to meet with a company in Amsterdam, Veylinx (see my previous mention of them here), who is using the method in an online format at a commercial level for marketing research. The content of the course is mainly targeted toward graduate students or early career professionals (or marketing researchers interested in learning about a new technique).  You can find out more and register here.

Here's last year's class in Crete.

And, of course, one shouldn't forget what is perhaps the most valuable part - the after-class networking and brainstorming sessions!

The Future for GMO Foods

On a number of occasions, I've been asked questions like, "What will it take for consumers to become accepting of GMO foods?"  My guess is that we probably aren't going to see much movement resulting from new information or new communication strategies, but rather I suspect a bigger catalyst may be the technology itself.  When scientists produce a product people really want, consumers probably won't care whether it's labeled and they'll overlook whatever small perceived risks are present.  

A while back when writing about the duplicity of a many food companies on the issue of GMO labeling, I wrote

“For now, food companies are not required to add labels indicating the presence of genetically engineered ingredients. But, it might ultimately be in their best interest to do it voluntarily, and in a way that avoids the negative connotations implied by the labels that would have been mandated in state ballot initiatives.

Some day in the near future, after concerted efforts to educate the public and create consumer-oriented biotechnologies, we may see food companies clamoring to voluntarily add a label that proclaims: proudly made with biotechnology.”

I've been reading Dan Charles's 2001 book Lords of the Harvest.  While I could quibble with some of the book's tone and framing of the issues, overall it is an educational and fascinating historical account of the emergence of biotech crops, including many first-hand interviews with the key players (many of whom are still active today).  

Writing about a new genetically engineered tomato that had longer shelf life and better processing characteristics that preserved taste, Charles includes a passage that indicates how GMOs might have evolved  differently (and might still evolve differently) in the public perception.  He writes the following about activities circa 1996:

“Best and his colleagues at Zeneca Plant Sciences had spent an enormous amount of time cultivating British journalists and lining up partners in the food business. They’d already decided that this tomato paste would be packaged in special cans and labeled as the product of ‘genetically altered tomatoes,” even though such labels weren’t required. Two large supermarket chains, Sainsbury and Safeway, agreed to carry the product and promote it. They even turned genetic engineering into a marketing gimmick, advertising the launch of the tomato paste as ‘a world-first opportunity to taste the future.’

The Zeneca tomato paste was in fact purely an experiment in marketing. The tomatoes were grown during a single summer in California and processed using conventional methods, then packaged and flown to Europe. As a consequence, the genetically engineered paste actually cost more to produce than conventional tomato paste and tasted exactly the same. Yet Zeneca and its partners decided to charge less than the going rate for it. They were willing to take a financial loss just to find out if the British public would buy a genetically engineered product.

The answer turned out to be an unequivocal ‘yes.’ Through the summer of 1996 Zeneca’s red cans of tomato paste, proudly labeled ‘genetically altered,’ outsold all competitors.

‘You need to give the consumer a choice,’ says Best. ‘Once they had that choice, eaten it for a couple of years, found that there was no big deal, I think the whole thing would have gone away.’”

So, what happened?  A confluence of events.  Mad Cow was soon discovered in Britain, which heightened food fears and undermined food regulatory agencies (who'd previously promised it was safe to eat beef).  Charles seems to blame Monsanto who he argues focused more on gaining regulatory approval than on charting a path that would engage the public on the issue. In several spots in the book, Charles talks about how Best, and Salquist with Calgene in the US,  masterfully shaped public acceptance for their tomatoes products before bringing them to market.   

 But, as I see it, it was also the technology itself.  While farmers could clearly see the benefits of herbicide-resistant and Bt crops, and they quickly snatched them up in every location where they were allowed, consumers couldn't and still can't.  Fast forward 20 years, and while "GMOs" have become a lighting rod and a proxy-fight for all sorts of agricultural issues,  the underlying reality of "who is  perceived to benefit" still hasn't changed.   I think the anti-biotech crowd knows this because they've fought hard to keep some of the most promising consumer-oriented products from the market.  

So, what will it take to change consumer acceptance of GMOs?  New companies with new products who want to sell and tout the use of biotechnology rather than hide it.  One of the implicit lessons of Charles's book is that companies who seem dominant and powerful today are often upended by entrepreneurs with a new products and a new vision for the future.  My bet is that the same forces will eventually end our current and long-standing quagmire related to public perceptions of GMO foods.  

Assorted Links

There is now a decline in the number of new diabetes cases

New USDA-ERS report on prevalence and impacts of antibiotic use in animal agriculture

Is ag econ academic research cited? Yes

In an editorial in the Washington Post last week, Steven Pearstein discusses the cost of higher education.  One of the comments that has drawn a lot of criticism is his claim about how much academic work goes uncited.  Pearstein writes: 

“The number of journal articles published has climbed from 13,000 50 years ago to 72,000 today, even as overall readership has declined. In his new book “Higher Education in America,” former Harvard president Derek Bok notes that 98 percent of articles published in the arts and humanities are never cited by another researcher. In social sciences, it is 75 percent. Even in the hard sciences, where 25 percent of articles are never cited, the average number of citations is between one and two.”

That claim has been widely retweeted - and criticized (e.g., see here or here or here).  

Well, what about research by agricultural economists?  I actually wrote a paper on this topic with Tia Hilmer that was published back in 2009.  Here's an excerpt:

“Overall, the frequency of “dry holes” [or uncited papers] for the AJAE [American Journal of Agricultural Economics] is much lower than the figure of 26% for general economics journals reported by Laband and Tollison (2003). The percentage of papers receiving exactly zero citations to date is only 5.5% in 1991, 2.2% in 1993, 10.6% in 2001, 9% in 2003, and 45% in 2005. Clearly the AJAE performs much better than the average journal in Laband and Tollison’s (2003) sample of over 91 journals in terms of publishing research that is ultimately cited. Of further note is that a relatively large frequency of papers (over 20%) from the 1991 and 1993 publication years have received 20 or more citations. Although only about 10% of papers published in 2001 and 2003 have attained this level of citations, if the same trend continues we would expect the figure to double over the next decade. The RAE [Review of Agricultural Economics] experiences a higher level of “dry holes”– 32% in 2003 and 67% in 2005. The most cited paper published by the RAE in 2003 has received 11 citations to date. By contrast, the most cited paper published by the AJAE in 2003 has received 32 citations to date.”

I can't speak for other disciplines, but at least for agricultural economics, the "75% is never cited" claim is clearly at odds with the facts.  Rather, given enough time, nearly ALL the papers published in our top journal - the AJAE - is eventually read and cited by someone.