Several months ago, I published a study in the journal Food Policy entitled The
Political Ideology of Food. The
results, which suggested most people want more food regulation, were picked up
in a variety of outlets such as the Food
Navigator and Reason.com.
In responding to media inquiries about the study, I
consistently told reporters something along the lines of the following: I’ve
done lots of surveys like this over the years and one of the things I routinely
find is that people appear much more favorable of regulation and labels in
hypothetical surveys as compared to when real money is in the line. In
fact, I indicated at the end of the paper:
One important factor that our survey
did not address is whether public support for
food and agricultural policies will remain high when people are made more aware
of the specific costs of government action in this area. Many economists,
including myself, have been critical of many of the policies this sample of
consumers found so favorable, in part because it does not appear the benefits
outweigh the costs. Only time will tell whether economic analysis on these
matters will have any influence on the public’s ideologies with respect to food.
This insight is particularly relevant to the study
we released earlier this week on Californian’s desire for mandatory labeling of
genetically engineered foods. In that study, we found a whopping 76.8% of
likely voters said they intended to vote in favor of Prop 37 and the mandatory
labeling policy. Yet, when we followed
up and asked people if they would still be in favor if food prices increased as
a result of the policy, a different story emerged.
Below is a graph of the percentage of the percentage of Californians projected
to vote yes as the costs of the policy increase. Citizen’s support for regulation is indeed
price sensitive. As the graph shows, at
a food price increase of more than 11.9%, in fact, Prop 37 looses majority
support.
Our research has been covered in a varied of blogs and media
outlets (e.g.,here,
here,
and here). And a few stories, such as the one over at Take
Part, argue that the actual cost of Prop 37 will be far less than the 11.9%
“break even” point. As a result the
author posits that:
But perhaps the most important
detail—one that the survey didn't discuss and likely many voters don't know—is
that the cost of food prices will be much smaller than 25 percent, much closer
to a number which is almost negligible.
Could be. But it is it
is important not to confuse cost with demand.
We were not measuring the costs of Prop 37. We were measuring the price point at which
people would be indifferent. Those are
two different things. Though, the author
is correct to say that if you analyze the demand for Prop 37 at the low price
they assume (about 0.1%), then yes you’d still project strong support. The costs have be highly debated and it isn’t
particularly constructive to rehash those arguments here.
One thing I will point out in relation to the survey results
is that economic research on how people respond to surveys suggests that the
tend to over-estimate how much they are willing to pay for policies. One widely cited review study,
for example, showed that the amount people said they were willing to pay in
hypothetical surveys was about three times what they were actually willing to
pay when money was on the line. Applying
that insight to our analysis reveals that the “true” break-even price is
probably something closer to 11.9%/3 = 3.97%.
That said, we also have to remember that people don’t actually have to
pay the price of the policies they support at the poll like they do when they’re
shopping. The result is that the costs
of policies often get overlooked when people vote.
