Nutritional Guidelines Redux

By now, I'm sure many readers have seen the announcement that the secretaries of the USDA and HHS have announced that the latest dietary guidelines will NOT include issues of sustainability.

This is a topic I've commented on several times in the past, and I was interviewed by Stewart Varney on the Fox Business Network yesterday about the development (I haven't found a link yet to post).

Here are just a few scattered thoughts and comments.

First, it is a bit odd that the nutritional guidelines don't consider behavioral responses of consumers.  That is, if it is recommended not to eat food type X, then what will consumers switch to eating instead?  Note that the question isn't: what do we wish consumers would eat instead, but rather what substitutions will actually occur?  This issue was highlighted in a post by Aaron Carroll on the NYT Upshot blog when discussing a large study that showed reducing saturated fat intake didn't produce noticeable health benefits: 

“The study also resulted in a reduction of unsaturated fats and an increase in carbs. That’s specifically what the committee argues shouldn’t happen. It says that bad fats should be replaced with better fats. However, people did reduce their saturated fats to 10 percent of intake, and didn’t see real improvements in outcomes. This has led many to question whether the quantitative recommendation made by the committee is supported by research.”

In a day and age when behavioral economics is all the rage, and is even being required by the White House, it is a bit absurd to believe consumers will follow all the guidelines and recommendations to-a-tee.  A more pragmatic approach is to realize most people will devote enough attention to get a couple take-home messages, and then act.  We need to study how consumers will actually substitute given their preferences and the messages they digest.  This isn't necessarily a critique of information behind the guidelines themselves (after all, we do want some systematic, scientific summary of the state of nutritional knowledge), but rather a call for research on how the guidelines are actually implemented and communicated and are ultimately used by consumers.

Second, this article by Tania Lombrozo at NPR touches on an issue I addressed several months ago: when guidelines mix nutrition and "sustainability", it necessarily involves value judgments not  science.  She writes:

“Science can (and should) inform our decisions, but you can’t read off policy from science. Invoking science as an arbiter for questions of values isn’t just misguided, it’s dangerous — it fails to recognize what science can (and can’t) provide and it fails to make room for the conversations we should be having: conversations about the kinds of lives we ought to live, the obligations we have to each other, to future humans and to other animals, and — among other things — what that means for the food choices we make every day.”

Finally, looking at a lot of discussion surrounding this issue, while the guidelines purportedly discuss "sustainability" - the issue is often boiled down to a single issue: greenhouse gas emissions.  While it is clear that beef is a larger emitter of greenhouse gasses than most other animal and plant-based food, the impacts need to be placed in context.  In the US, livestock production probably accounts for a very small percentage of all all greenhouse gas emissions.  Telling people to eat less meat will likely have small effects on greenhouse gas emissions.  My gut feeling is that further investments in productivity-enhancing research will have a larger effect on greenhouse gas emissions than cajoling consumers.  

In other places discussing "sustainability" the issue of food security is mentioned, as is resource use.  To an economist's ears, when I hear "resource use", I immediately think of prices.  Prices are the mechanism by which resources get efficiently allocated in a market-based economy.  As such, it gives me pause when I think of a report by a a group of nutritionists making recommendations on proper resource use.   I'd never trust a dictator (or even a group of economists) on having enough knowledge to making optimal decisions on resource use.  Beef is a relatively expensive food.  That tells us it is using a lot of resources, and that higher price causes us to eat less than we otherwise would.  

But, what about externalities?  To the extent beef production uses a lot of corn or land, that's already reflected in the price of beef.  But, does the price of beef reflect water use and potential (long run) impacts of greenhouse has emissions?  Probably not fully.  So, the key there is to try to get the prices right.  Well functioning water markets would be a start.  Greg Mankiw recently had an interview on getting the price of carbon right.  Once the prices are right, then "recommendations" regarding resource use are somewhat meaningless: you're either willing to pay (and able) the price to buy the items you like to eat or not.  

Thinking about hormones and cloning . . .

The American Journal of Agricultural Economics just released a forthcoming paper I co-authored with John Crespi, Brad Cherry, Laura Martin, Brandon McFadden, and Amanda Bruce.  Why so many authors?  Because it takes a lot of brains to try to figure out what's going on in people's brains when making decisions about food.

Here's a description from the paper of what we did: 

“In this paper, participants in a neuroimaging (fMRI) experiment made choices regarding
types of milk produced with or without an unfamiliar technology process (cloning or growth hormone) while recording their choices and the time it took to make those choices. Focusing on nine areas of the brain that have been found to be important in previous research for economic valuation, the experiment and subsequent analyses show which of these areas are correlated with the deliberative process and which are correlated with the final choice. One area of particular interest that revealed correlation for both activities was the ventromedial prefrontal cortex. This region is implicated in experiments of valuation and salience, and it was significantly correlated with deliberation and an increased likelihood of choosing the more familiar milk.”

Here's one of the figures from the paper.  The orangish-yellowish areas indicate brain areas that were more active when the person was choosing between milks with different characteristics vs. when they were just looking at milk with different characteristics.  Choosing really is a different mental process than simply looking.

We find that we can predict choice and decision time based on activation in different brain areas.

Here's how the paper ends:

“When making decisions we recall memories, we feel emotions, we weigh costs and benefits, and while we cannot observe these neural processes directly, we can determine which of the valuation areas of the brain slow the process down and which speed it up. That is, which areas are involved in the internal deliberation that eventually becomes choice? While a large portion of the brain (figure 3 and table 3) ponders the decision, the final choice appears most highly correlated with localized areas in the medial prefrontal cortex, and among those, it is fascinating that correlation is stronger, in our study, when the choice is over growth hormones than cloning technology. Why is this? Food labeling has been a source of research interest for years, and neuroscience technology will make it a fruitful area of study for years to come.”

Pushback against Nudges

A couple items recently came across my desk that were somewhat critical (at least in parts) of the use of behavioral economics in public policy making - in particular the idea that government can use insights from behavioral economists to nudge us into making the "right" decisions.

The first item is this new paper by Viscusi and Gayer for the Brookings Institute.  They reasonably ask why behavioral economists haven't spent nearly as much time studying the irrationality of bureaucrats, politicians, and policy makers as they have studying the irrationality of consumers.  Here's an extended quote (footnotes omitted) from their discussion on the propensity of government officials to suffer from a phenomenon called ambiguity aversion:

“Ambiguity aversion is a form of irrational behavior and should not be confused with risk aversion in which people are averse to the risk of incurring a large loss . . .

Government policies frequently reflect this ambiguity aversion with novel risks. For example, court rulings tend to demonstrate a bias against innovation and the attendant uncertainties
of novel drug products. In situations where there are adverse health effects from new drugs, the courts are more likely to levy sanctions against the producer. This bias on behalf of the public is also reflected in product liability case experiments using a sample of judges participating in a legal education program. The judges considered hypothetical cases involving novel drugs and their associated liability risks. When given a choice between a new drug posing an uncertain risk or another drug with a higher known risk, most of the judges recommend that the company market the latter drug.

Another instance of ambiguity aversion involves genetically modified organisms (GMOs) . . . GMOs have come under fire and are increasingly subject to potential regulation throughout the world. . . Critics have characterized GMO foods as being very risky products of biotechnology, labeling them “Frankenfoods.” The policy trade-off involved is that GMOs may pose uncertain risks that currently are believed to be low in magnitude, but they reduce the cost of producing agricultural products, which in turn lowers food prices and promotes better nutrition. ”

They go on to hint at the idea (though never come right out and say it) that the precautionary principle is a behavioral bias.  

The other item was an article in the The Guardian that asks whether all the cutesy messages by companies and governments encouraging us to "do the right thing" are really all that helpful or more effective than traditional policies.  The conclusion: 

“And another lesson, not mentioned by the team, but by other economists , is that it is very important to question whether the choices of the behaviourists, whether in government or in ad agencies where nudging opens up a yet more glorious prospect, are invariably wise and good. What, for instance, made the Highways Agency think that a made-up kiddie quote indebted to the Pret school of copywriting condescension (“a little girl asked us why we didn’t make gingerbread men”) might be preferable to speed cameras that build up points for offending drivers, as opposed to irritation in the law-abiding? Or preferable, indeed, to nothing? Maybe a little girl was involved.”

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.”

Applying behavioral economics to politics

This is an interesting review paper on Behavioral Political Economy by Jan Schnellenbach and Christian Schubert.

One of the points they make is that researchers have not fully integrated the insights of behavioral economics into analyses of how politicians and bureaucrats behave.
 

A quote

“The case of Libertarian Paternalism therefore illustrates the difference between BPE [behavioral political economy] and behavioral welfare economics, which is very akin to the old conflict between Political Economy and traditional welfare economics. Behavioral welfare economists are currently at risk of repeating the mistake of neglecting the real-world political process with its many intricacies. Under these conditions, policy advice addressed to an imaginary social planner may not only be useless, but even dangerous, if it helps to promote policies that have unintended, negative consequences under real-world conditions. ”