Food Conspiracies

This past weekend, I was a guest on a radio show that is broadcast through a network to about 100 stations across the US.  I was talking about my book, The Food Police.  Having done dozens of these kinds of shows over the past six or seven months since the book release, I figured that I've heard just about every question there was to ask.  I was wrong.  

After some standard back-and-forth questions with the host, the line was opened to callers.  Here are a few of the claims I heard - each from a different caller: 

• Adding fluoride to water doesn't prevent cavities and causes joint pain, teeth browning, cancer, and Alzheimers   
• Canola oil is an "unnatural" newly created synthetic product that causes cardiac problems and high blood pressure
• Organic farmers are small farmers; small farmers treat their soil better than large farmers
• With GMOs the genes they inject into DNA.  They are unnatural and become free floating in the soil; 70% of babies have the Bt toxin in their blood as a result of GMOs; the implication is that GMOs are very dangerous
• A new wave of cancer patients are successful fighting cancer by moving to a diet of organic produce 

Some of these are more grounded in reality than others but overall I think I lost a little bit of faith in my fellow man.  I don't mean that in a belittling way.  But it makes me wonder what it is in human nature or what incentives exist in media/internet that would take a little grain of truth and turn it into some of these beliefs that are so at odds with the evidence.  

The Paternalist Meets His Match

That is the title of a new paper that I co-authored with Bailey Norwood and Stephan Marette that was just released by the journal  Applied Economic Perspectives and Policy.  It will be coming out in their special issue on Nudge.

Here are a few excerpts from the paper: 

As illustrated by Nancy Reagan’s “Just Say No,” and Michelle Obama’s “Let’s Move!” campaigns, public figures are often interested in the choices made by others. Indeed, concern for other’s food and health choices is often manifested in public policy, from America’s 1920s-era prohibition on alcohol, all the way to today’s bans on trans fats. Some form of altruism is often indicated as the prime motivator for such paternalism (e.g., Arrow 1963; Jacobsson et al. 2007). Developments in behavioral economics have added fuel to the fire by suggesting that people’s health and food choices may not actually promote their own long-term well-being.

and

Yet, the conclusion that paternalism is warranted in light of the evidence of behavioral biases is typically a logical extrapolation, rather than a direct observation that paternalistic policies actually maximize efficiency or enhance welfare, however conceived. . . . The purpose of this paper is to study paternalism from both the perspective of the paternalist and the recipient of the paternalism (the person whom we refer to as the paternalee). That is, rather than taking evidence of decision-making biases as prima fascia justification for paternalism, we study how paternalists make decisions for others and how paternalees respond to decisions made for them.

From the abstract: 

Using data from over 300 people recruited from two cities in the United States and France, we study how choices between a relatively healthy item (apples) and a relatively unhealthy item (cookies) are influenced by one’s role as either the paternalist or the paternalee. We find that after being provided information on nutritional content, but not before, paternalists make healthier choices for the paternalees than for themselves. Surprisingly, prior to being provided information, paternalees desire healthier choices than they expect the paternalists to give, a phenomenon that seems to arise from a type of egotism where individuals believe they make healthier choices than everyone else. Results in both locations reveal that more than 75% of paternalees prefer their own choices compared to the ones made for them by the paternalists, and are willing to pay nontrivial amounts to have their own choices. Any intrinsic value people place on the freedom of choice must be weighed against whatever benefits might arise from paternalistic policies, and consequently the scope for paternalism may be narrower than is often purported.

Mirrors in Grocery Carts

One of my colleagues forwarded me this article in the New York Times on some research published in an agricultural economics journal on the effects of "nudges" on consumer purchases of vegetables and produce.  

One part of the authors' research program is looking at how placing a mirror in the cart affects sales (I suppose it is supposed to encourage you to think more about the effects of your purchases on your long term self).  They don't yet know what effects the mirrors will have, but what they have found is the following: 

the scientists tinkered again with the cart, creating a glossy placard that hung inside the baskets like the mirrors. In English and Spanish, the signs told shoppers how much produce the average customer was buying (five items a visit), and which fruits and vegetables were the biggest sellers (bananas, limes and avocados) — information that, in scientific parlance, conveys social norms, or acceptable behavior.

By the second week, produce sales had jumped 10 percent, with a whopping 91 percent rise for those participating in the government nutrition program called Women, Infants and Children. 

This research is being facilitated by a grocery chain, which is interesting.  I find it interesting because this research and the author's article (Michael Moss) position this as research into the "Nudge" phenomenon advocated by many behavioral economists:

Mr. Payne and Mr. Niculescu are pursuing a strategy that behavioral scientists call nudge marketing, an idea popularized by the 2008 book “Nudge,” by the former Obama administration regulatory affairs administrator Cass R. Sunstein and the University of Chicago professor Richard H. Thaler.

Nudge marketing calls for applying just the right amount of pressure to persuade: not too little, not too much.

Here's my beef.  The Sunstein and Thaler book is primarily about government "nudges".  This research is about a grocery store's "nudge".  Retailers try to nudge us all the time - it's called advertising.  And I suspect this store will not continue with the mirrors and special carts if it ultimately hurts sales in the long run. The difference between a store nudge and a government nudge is important: if we don't like what a store is doing, we can leave and shop elsewhere.  Stores have an incentive to only adopt those nudges that consumers actually want, as revealed in their purchase behavior.  Governments, by contrast, have no such accountability or rapid feedback mechanisms.  For these reasons, I think it is important to draw a distinction between marketing and advertising on the one hand and nudging on the other.    

Food Nudges

Over at Reason.com, Baylen Linnekin writes about the the growing call for Food Nudges.   The issue of libertarian paternalism - government enacting rules to, among other things, framing the way options are presented - has gained a lot of attention since news stories indicating the development of a "behavioral insights team."  

This is an important enough issue that I devoted all of chapter 4 of the Food Police  to this topic.  Here are a few of my quick thoughts on the issue:

• "Libertarian paternalism" is certainly less objectionable than old-fashioned paternalism in that it presumably preserves freedom of choice, while only trying to nudge people toward the "correct" choice (thus, Bloomberg's large soda ban would be an example of old-fashioned paternalism whereas making the larger cups less prominently displayed would be an example of a nudge).
• Nevertheless, there is a a key philosophical problem here in determining what is the "correct" or "best" choice toward which people should be nudged.  Who decides what is "best"?  And how can the bureaucrats objectively claim the option is "best" when people are choosing something different?  Here are the ways I put it in the book:

"Thus, the elite seek to replace each individual's judgement of the "good" with their own."

and

"The supposed proof of this irrational behavior is said to be found in survey responses in which we say we wished we weighed less or saved more.  But our current self will always wish that our previous self had dieted and saved more, because we are now in the position to reap the benefits without paying any of the costs.  The paternalist has simply decided that your abstract future self is right and your current-acting future self is wrong, and the only possible excuse the paternalist can give for his paternalism is his own preferences for your actions."

• Paternalism - of any sort - is less objectionable when we're talking about children.  But, these arguments must cease a some age - otherwise we are merely wards of the state. 
• There seems to be an under appreciation of the ability of competition and the market to structure the choice environment in a way that we most prefer (as determined by our actions).  It seems a little arrogant for some third-party to claim to "know" that re-arranging the choices to nudge us will lead to a "better" outcome, when there are hundred if not thousands of businesses competing for our paychecks, the most successful of which (the ones who stick around and multiply) offer those combinations of choice options we find most desirable.  
• I am not at all claiming that our choices can't be influenced by the way they are framed or presented to us - the research seems pretty clear on that matter. However, when we begin to divorce the idea that the choices people make correspond with what they ultimately want, we open the door for all kinds of coercive and tyrannical behavior.  Much of the behavioral economics literature is useful - and I have no problem with the government using those insights to make the things they are already doing more efficient and less cognitively demanding on citizens (I'm thinking here of the pain in the rear it is to fill out my income tax forms), but I balk when we start to license a third party (or a "behavioral insights team") that presumes the responsibility to (directly via a ban or indirectly via a nudge) know what I should choose.   

Mea culpa - fat tax version

About two years ago, I co-authored a paper that was published in the journal Health Economics  with the title "When Do Fat Taxes Increase Consumer Welfare."  

I started work on that paper because I was troubled by the contradictory way in which economists had approached the analysis of fat taxes.  One the one hand, economists estimated the effects of fat taxes by using elasticities of demand that were derived from a rational consumer-utility maximizing model.  In this kind of conceptual model, a tax (or a price increase) cannot make a consumer better off.  However, on the other hand, economists were publishing these papers with the premise that somehow the tax could make people better off.   In the paper, we tried to think about an approach for reconciling these two stances by asking whether a tax could make people better off if we make the reasonable assumption that people also care about (and consider) weight or health effects when choosing the quantity and type of food to buy.   

We had argued that in this situation, it was possible but empirically unlikely a tax could make people better off.  Enter Professor Neill, who wrote a comment on our work, saying "no" - it is concetually impossible for a fat tax to increase consumers' well-being in a "standard" economic model of the consumer.  Here are the first sentences of our forthcoming response to Dr. Neill:

We are flabbergasted at how such a fundamental lesson of mathematical economics escaped our attention, but Professor Neill is right and we were wrong. We apologize. 

Neill pointed out, embarrassingly to us, what should be obvious to any serious student of economics.  A tax is akin to reducing someone's income.  No one is better off with less income.  Even if one wants to weight less, they don't need a tax to do it.  A consumer can achieve a lower weight at current prices and re-allocate their income toward other non-weight-increasing goods and achieve a higher level of satisfaction.  

So, how do economist justify fat taxes?  One approach is to claim that obesity is an externality - that my food choices impose a cost on you (via Medicare/Medicaid) and thus a tax can force me to properly consider those costs.  However, in a paper a couple years ago, Bhattacharya and Sood dismantled the validity of that argument (although it is not well understood and continues to be debated).  

Another response is that the "rational consumer utility maximization" model is incorrect.  This "behavioral economics" approach posits that people fail to properly account for their future well-being and that a tax can force people to make decisions today that their future selves will ultimately find beneficial.  The precise mechanism for this welfare improvement is rarely laid out with any precision.      

In our reply to Neill, we tried to sketch out a behavioral-economics type model to see when a fat tax might be justified on those grounds.  Here is our conclusion:

under this sort of behavioral economics framework, where people naively or myopically optimize utility without considering future weight effects, it is possible to imagine situations where raising prices might increase ultimate experienced welfare. However, this condition occurs only when price is very high and falls in the range where consumption would take place only because people are ignoring the ultimate health impacts; at lower prices, a ‘fat tax’ would only lower welfare.