What's going on in your brain?

Ever wonder why you choose one food over another?  Sure, you might have the reasons you tell yourself for why you picked, say, cage vs. cage free eggs. But, are these the real reasons?

I've been interested in these sorts of questions for a while, and along with several colleagues, have turned to a new tool - functional magnetic resonance imaging (fMRI) - to peak people inside people's brains as they're choosing between different foods.  You might be able to fool yourself (or survey administrators) about why you do something, but you're brain activity doesn't lie (at lest we don't think it does).  

In a new study that was just released by the Journal of Economic Behavior and Organization,  my co-authors and I sought to explore some issues related to food choice.  The main questions we wanted to know were: 1) does one of the core theories for how consumers choose between goods of different qualities (think cage vs cage free eggs) have any support in neural activity?, and 2) after only seeing how your brain responses to seeing images of eggs with different labels, can we actually predict which eggs you will ultimately choose in a subsequent choice task?   

Our study suggests the answers to these two questions are "maybe" and "yes".  

First, we asked people to just look at eggs with different labels while they were laying in the scanner.  The labels were either a high price, a low price, a "closed" production method (caged or confined), or an "open" production method (cage free or free range), as the below image suggests.  As participants were looking at different labels we observed whether blood flow increased or decreased to different parts of the brain when seeing, say, higher prices vs. lower prices.  

We focused on a specific areas of the brain, the ventromedial prefrontal cortex (vmPFC), which previous research had identified as a brain region associated with forming value.  

What did his stage of the research study find?  Not much.  There were no significant differences in brain activation in the vmPFC when looking at high vs. low prices or when looking at open vs. closed production methods.  However, there was a lot of variability across people.  And, we conjectured that this variability across people might predict which eggs people might choose in a subsequent task.  

So, in the second stage of the study, we gave people a non-hypothetical choice like the following, which pitted a more expensive carton of eggs produced in a cage free system against a lower priced carton of eggs from a cage system.  People answered 28 such questions where we varied the prices, the words (e.g., free range instead of cage free), and the order of the options.  One of the choices was randomly selected as binding and people had to buy the option they chose in the binding task.  

Our main question was this: can the brain activation we observed in the first step, where people were just looking at eggs with different labels predict which eggs they would choose in the second step?

The answer is "yes".  In particular, if we look at the difference in the brain activation in the vmPFC when looking at eggs with a "open" label vs. an "closed" label, this is significantly related to the propensity to choose the higher-priced open eggs over the lower-priced closed eggs (it should be noted that we did not any predictive power from the difference in vmPFC when looking at high vs. low priced egg labels).  

Based on a statistical model, we can even translate these differences in brain activation into willingness-to-pay (WTP) premiums:

Here's what we say in the text:

“Moving from the mean value of approximately zero for vmPFCmethodi to twice the standard deviation (0.2) in the sample while holding the price effect at its mean value (also approximately zero), increases the willingness-to-pay premium for cage-free eggs from $2.02 to $3.67. Likewise, moving two standard deviations in the other direction (-0.2) results in a discount of about 38 cents per carton. The variation in activations across our participants fluctuates more than 80 percent, a sizable effect that could be missed by simply looking at vmPFCmethod value alone and misinterpreting its zero mean as the lack of an effect. ”

The Rise of “Nudge” and the Use of Behavioral Economics in Food and Health Policy

The Mercatus Center just published a short piece I wrote on the the application of behavioral economics to food policy.  Here are a few excerpts:

“The rising popularity of applying behavioral economics in policymaking—or the creation of policies that “nudge” people into changing their decisions—might seem a bit odd to a food company executive. After all, advertisers and marketers have been using psychological insights for decades to encourage consumers to buy and pay more. Yet a number of bestselling books on the topic of behavioral economics have been published in the last decade, such as Nudge, Predictably Irrational, and Thinking Fast and Slow, and insights from the field are increasingly influencing policy discourse. So while behavioral economics might be seen as simply the merger of economic and psychological insights, it must also be partially understood as an attempt to influence the way government interacts with citizens. While marketers use psychological insights to boost company profits, advocates of the nudge argue that these same insights might be used by government to increase consumers’ well-being.”

and 

“It is commonly argued that governments should be allowed to enact paternalistic policies and nudge consumers because businesses do it all the time—such policies would supposedly level the playing field. It is of course true that we are constantly bombarded by advertisements and private nudges. But there is a crucial difference between government and private-business nudges. That difference is the role that competition plays in encouraging businesses to respond to consumers. When we are bamboozled or misled by a company in a way we ultimately dislike, we stop buying its product or find a new supplier. This knowledge often (though not always) constrains companies that fear the loss of reputation that might come from undertaking actions that work against their consumers’ desires. These same incentives prompt entrepreneurs to develop better alternatives. Government, with its power to mandate and coerce, lacks the intense competitive pressures provided by the profit motive. None of this is to say that people might not come to accept and appreciate certain forms of government paternalism (who among us now bristles at seat belt laws?), it is only to say that the fruitful application of behavioral economics to food policy is much more complicated than is often supposed. ”

I also point out what I think is a key asymmetry: behavioral economic results are almost always used to advocate for more regulation and intervention, but at least some behavioral economic results could be interpreted to have the opposite implication.  I also give an assessment on how behavioral economics can be fruitfully used by governments and companies alike.

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.”

The Behavioral and Neuroeconomics of Food and Brand Decisions

That's the title of a special issue I helped edit with John Crespi and Amanda Bruce in the latest issue of the Journal of Food and Agricultural Industrial Organization.  

Here's an excerpt from our summary:

“To economists interested in food decisions, progress seen in other fields ought to be exciting. In the articles for this special issue, we gathered information from a wide range of research related to food decisions from behavioral economics, psychology, and neuroscience. The articles, we hope, will provide a useful reference to researchers examining these techniques for the first time…The variety of papers in this special issue of JAFIO should provide readers with a broad introduction to newer methodological approaches to understanding food choices and human decision-making”

A complete listing of the authors and papers are below (all of which can be accessed here)

•       The Behavioral and Neuroeconomics of Food and Brand Decisions: Executive Summary
o   Bruce, Amanda / Crespi, John / Lusk, Jayson

•       Cognitive Neuroscience Perspectives on Food Decision-Making: A Brief Introduction
o   Lepping, Rebecca J. / Papa, Vlad B. / Martin, Laura E.

•       Marketing Placebo Effects – From Behavioral Effects to Behavior Change?
o   Enax, Laura / Weber, Bernd

•       The Role of Knowledge in Choice, Valuation, and Outcomes for Multi-Attribute Goods
o   Gustafson, Christopher R.

•       Brands and Food-Related Decision Making in the Laboratory: How Does Food Branding Affect Acute Consumer Choice, Preference, and Intake Behaviours? A Systematic Review of Recent Experimental Findings
o   Boyland, Emma J. / Christiansen, Paul

•       Modeling Eye Movements and Response Times in Consumer Choice
o   Krajbich, Ian / Smith, Stephanie M.

•       Visual Attention and Choice: A Behavioral Economics Perspective on Food Decisions
o   Grebitus, Carola / Roosen, Jutta / Seitz, Carolin Claudia

•       Towards Alternative Ways to Measure Attitudes Related to Consumption: Introducing Startle Reflex Modulation
o   Koller, Monika / Walla, Peter

•       I Can’t Wait: Methods for Measuring and Moderating Individual Differences in Impulsive Choice
o   Peterson, Jennifer R. / Hill, Catherine C. / Marshall, Andrew T. / Stuebing, Sarah L. / Kirkpatrick, Kimberly

•       A Cup Today or a Pot Later: On the Discounting of Delayed Caffeinated Beverages
o   Jarmolowicz, David P. / Lemley, Shea M. / Cruse, Dylan / Sofis, Michael J.

•       Are Consumers as Constrained as Hens are Confined? Brain Activations and Behavioral Choices after Informational Influence
o   Francisco, Alex J. / Bruce, Amanda S. / Crespi, John M. / Lusk, Jayson L. / McFadden, Brandon / Bruce, Jared M. / Aupperle, Robin L. / Lim, Seung-Lark

The making of hybrid corn

After giving a talk at University of Nebraska a couple weeks ago, Cory Walters suggested the book The Hybrid Corn Makers: Prophets of Plenty written by Richard Crabb in 1947 (the whole book can be downloaded here).  I’m a couple chapters in and it is already fascinating.  The introduction (which explains hybrid corn)  was written by HD Hughes, a professor who was at Iowa State College at the time.    

Hughes writes:

“One of the greatest advantages of the technique of breeding hybrid corn is the opportunity afforded to develop strains especially well fitted to particular conditions of weather, soil, disease, and insects. By bringing together the right combination of inbreds, hybrids are “custom built” for particular needs. . . . From this we can see how important it is to find the particular hybrids best adaptetd to conditions likely to prevail in a given location. Many hybrids, especially those used in the northern corn-growing areas, are so closely adapted to particular conditions that they are superior to other hybrids only in an area no more than fifty or one hundred miles north or south”

I share this passage because there seems to be a common, modern view that "monoculture" cropping agriculture has led to a dramatic reduction in genetic diversity.  I gave a talk last week to a large intro to food science class and talked a bit about biotechnology.  One student asked me precisely this question: Don't GMOs reduce genetic diversity and thus make the entire system more vulnerable to  disease, etc.  But, as the above quote shows, even in the 1940s, there are many different types of corn in different locations, and that's true still today.  I also pointed this out when responding to Nassim Taleb's claims about GMOs: 

“Moreover, what he doesn’t seem to get with regard to modern GMOs is that a GMO isn’t a variety. A particular trait - say herbicide resistance - is introduced into many, many varieties in different parts of the country and the world. ”

In any event, the first chapter of the book is an interesting discussion on the history of corn and how it spread across South and North America.  Crabb writes:

“Scouts sent by Columbus to explore what is now the Island of Cuba became the first white men of record to see corn. On November 5, 1492, the first corn fields they encountered stretched across the Caribbean countryside continuously for eighteen miles.”

and

“Columbus returned to Spain in early in 1493, carrying with him the first maize ever seen in Europe. That year corn grew in the royal gardens of Spain and withing two generations was growing as a food crop in every country of sixteenth-century Europe. In less than a century, Indian corn had moved completely around the world.”