Understanding the Impacts of Food Consumer Choice and Food Policy Outcomes

The journal Applied Economics Perspectives and Policy just published a special issue in which  agricultural and applied economists provide their thoughts on how we might help tackle some of society’s most difficult problems and challenges.  I co-authored one of the articles with Jill McCluskey.  Here's the abstract:

“The food consumer plays an increasingly prominent role in shaping the food and farming system. A better understanding of how public policies affect consumer choice and how those choices impact health, environment, and food security outcomes is needed. This paper addresses several key challenges we see for the future, including issues related to dietary-related diseases and the efficacy of policies designed to improve dietary choices, trust in the food system, acceptance of new food and farm technologies, environmental impacts of food consumption, preferences for increased food quality, and issues related to food safety. We also identify some research challenges and barriers that exist when studying these issues, including data quality and availability, uncertainty in the underlying biological and physical sciences, and the challenges to welfare economics that are presented by behavioral economics. We also identify the unique role that economists can play in helping address these key societal challenges.”

Other contributions in the special issue include:

• "Agricultural and Applied Economics Priorities for Solving Societal Challenges" by Jill McCluskey, Gene Nelson, and Caron Gala
• "Economics of Sustainable Development and the Bioeconomy" by David Zilberman, Ben Gordon, Gal Hochman, Justus Wesseler
• "Sustaining our Natural Resources in the Face of Increasing Societal Demands on Agriculture: Directions for Future Research" by Madhu Khanna, Scott Swinton, Kent D Messer
• "Climate Change as an Agricultural Economics Research Topic" by Bruce McCarl and Tom Hertel
• "Big Data in Agriculture: A Challenge for the Future" by Keith Coble, Ashok Mishra, Shannon Ferrell, and Terry Griffin
• "The Economic Status of Rural America in the President Trump Era and beyond" by Stephan Goetz, Mark Partridge, Heather Stephens
• "Food Insecurity Research in the United States: Where We Have Been and Where We Need to Go" by Craig Gundersen and James Ziliak
• "The Farm Economy: Future Research and Education Priorities" by Allen Featherstone
• "A Research Agenda for International Agricultural Trade" by Will Martin
• "Energy Economics" by Wally Tyner, and Nisal Herath

Do consumers care how a genetically engineered food was created or who created it?

That's the tile of a new paper I co-authored with Brandon McFadden at University of Florida and Norbert Wilson at Tufts that was just released in a special issue of Food Policy, which is focused on genetically engineered food (aka GMOs).

In some ways, our paper is like three papers smushed into one: we tie several analyses together under one theme.  Here's part of the motivation:

“heterogeneity [in preference] across products or breeding technologies rather than people is important because a “GMO” is not a single thing, but rather represents a class of many possible foods and technologies that could have been created for many different reasons by different innovators. The ever-changing capability to modify genomes in new ways requires asking new questions. Understanding consumer reactions to different GE foods, technologies, and innovators is increasingly important as new technologies such as CRISPR or gene editing have
emerged which avoid transgenic manipulations. Additionally, new start-ups and non-profits have entered the space with new products that differ from those commercialized by large agribusinesses”

In addition to documenting whether concern for GMOs has increased over time (answer: they haven't), we study whether:

“(1) certain kinds of GE foods or plant breeding technologies are more acceptable to consumers, (2) consumers prefer that all biotech applications applied to food be regulated identically, and (3) preferences for GE food depend on the innovator. ”

We find that people are most supportive of regulations that focus on the outcomes from plant breeding rather than focusing on the particulars of which breeding method was used.  We also find that support or opposition to a GMO depends on who created the GMO.  Finally, concerns about the safety of GMOs are related to consumers' perceptions of who benefits from the GMO.  Here's one of the key figures.  

Who Says They Waste Food (and when)?

Applied Economics Perspectives and Policy just published a paper I co-authored with Brenna Ellison entitled "Examining Household Food Waste Decisions: A Vignette Approach."  Here is a summary of the paper:

“The purpose of this research is to examine household (consumer) food waste decisions. Because measuring food waste is fraught with difficulty, our first contribution is the application of vignette methodology to the issue of food waste. Our second contribution is to systematically determine how decisions to waste food vary with factors such as price, location, cost of replacement, and freshness, among other factors. The empirical analysis is concentrated on specific food waste decisions: one focused on leftovers from a fully prepared meal and a second related to a single product (milk). The empirical results show that decisions to discard food are a function of consumers’ demographic characteristics and some of the factors experimentally varied in the vignette design.”

In particular, each subject saw a description like the following (where they saw one of the values in each of the brackets): 

“Imagine this evening you go to the refrigerator to pour a glass of milk. While taking out the carton of milk, which is [one quarter; three quarters] full, you notice that it is one day past the expiration date. You open the carton and the milk smells [fine; slightly sour]. [There is another unopened carton of milk in your refrigerator that has not expired; no statement about replacement]. Assuming the price of a half-gallon carton of milk at stores in your area is [$2.50; $5.00], what would you do? “Pour the expired milk down the drain” or “Go ahead and drink the expired milk””

I suspect you won't be too surprised to hear that "smell" had a significant effect on consumers' decisions to waste or not waste.  Apparently food safety considerations are one key driver of household food waste decisions.  

We also had another vignette surrounding the decision of whether to keep a leftover meal.  The findings?

“In the case of meal leftovers, respondents were generally less likely to waste the leftovers when the meal cost was high, when there were leftovers for a whole meal, when there were no future meal plans, and when the meal was prepared at home. Many of these relationships have a very obvious time component. Leftovers can save individuals time when there is enough for a whole meal and there are no future meal plans; further, when a meal is prepared at home, there is already a time cost for that meal (albeit a sunk cost) that people do not want to discount by throwing the leftovers out. ”

Oh SNAP!

Multiple sources today reported an item in the president's budget that would replace a portion of the Supplemental Food and Nutrition Assistance Program (SNAP, aka "food stamps") with physical food deliveries.  Here is Politico: 

“The proposal, buried in the White House’s fiscal 2019 budget, would replace about half of the money most families receive via the Supplemental Nutrition Assistance Program, also known as food stamps, with what the Department of Agriculture is calling “America’s Harvest Box.” That package would be made up of “100 percent U.S. grown and produced food” and would include items like shelf-stable milk, peanut butter, canned fruits and meats, and cereal.”

The proposal is being pitched as a government version of Blue Apron that will save taxpayers hundreds of millions of dollars.  SNAP and consumer advocacy groups have expressed concern with the proposal; I haven't seen any overt advocates of the plan outside the administration.  

Economists have long favored unconditional (e.g., cash) to in-kind (e.g., food) transfers.  The basic idea is that an individual consumer has a better idea of what they'll like than an administrator deciding which foods to put in a box.  In other words, for the same budget, a consumer will be happier with cash than an equivalent dollar amount of food because the former provides more flexibility and freedom than the later.  This value of flexibility could, of course, be offset if the administrator could acquire foods at a substantially reduced price compared to the average food consumer.  But, this presumes the government administrators are more skilled in food acquisition than the Amazons, Walmarts, and Krogers of the world (or that these companies are taking in excess profits that could be passed directly to consumers).

There is another aspect to this issue that doesn't seem to be getting much attention.  In particular, at least for some people, it doesn't matter if you give them food or SNAP.  Here is Southworth writing in 1945 when earlier versions of SNAP were being debated:  

“‘If a family would buy two pounds of beans anyway, giving it up to two pounds of beans as a consumption subsidy merely relieves it of the necessity of that much expenditure on its own behalf. In effect, its income is increased by the value of two pounds of beans, and it may spend some or none of this increased income on additional beans”

In short, if a household already plans to buy beans, it doesn’t matter whether the household is given beans or an equivalent amount of cash – the final outcome is the same.

But, what if the household wanted rice and not beans?  Providing them beans means they are a little less happier than they would have been with an amount of cash (or SNAP benefits) equal to the beans that they then could use to buy rice.  

Maybe the idea is that this version of the SNAP program would be more beneficial to U.S. farmers. But, these aid programs are hardly efficient forms of farm support.  As I found in one analysis, for every $1 spent by taxpayers on SNAP, farmers benefit by only $0.01.  If the idea is to support farmers, we'd be better off just sending them the dollar.  

In the end, the purported benefits seem to hinge critically on the government's ability to deliver food at a price low enough that offsets the value of the loss of flexibility for the aid recipient.  

Factors Affecting Beef Demand

Glynn Tonsor, Ted Schroeder, and I recent completed a report for the Cattlemen's Beef Board on the factors influencing beef demand.  

One of the key factors that emerges from the analysis of the USDA price/quantity data is that beef demand appears to have become less sensitive to price-related factors.  In econ-lingo, beef demand has become more inelastic.  Moreover, changes in pork and poultry prices have fairly small impacts on beef demand.

As a result, we focused on several potential non-price demand determinants.  We find that emerging stories about climate change have adversely affected beef demand, but at the same time increased media focus on taste and flavor have more than compensated for those effects, pulling up demand since 2012.  

We also look at trends from the Food Demand Survey (FooDS) and how they relate to consumers' preferences and beliefs.  Here are some graphs on the relationship between a variety of factors and steak demand.

Here is the same but for ground beef demand.

Increases in income clearly increase steak demand, but ground beef is demanded similarly by all income categories.  Some of the biggest determinants of beef demand are "food values".  Here's what we have to say about how to interpret those results.

“While it may not be initially obvious, results in figure 4.5 [showing the relationship between steak demand and food values] can be interpreted as providing evidence about people’s beliefs about (or perceptions of) steak. Suppose an individual highly values taste. Figure 4.5 shows that such an individual will tend to choose more steak. As a result, it must be that steak is perceived to be highly tasty. By this line of reasoning, figure 4.5 suggests that consumers, on average, perceive steak to be convenient, tasty, attractive, and novel but they also perceive steak to be poor for animal welfare, nutrition, and environment while also being expensive. ”

There's a lot more in the report.