Do Food Consumers Vote Differently Than They Shop?

According to some research I just published in the Journal of Agricultural and Resource Economics with a former graduate student, Kate Brooks, who is now an assistant professor at the University of Nebraska, the answer is "yes."  

Our research suggests caution in using people's shopping behavior (as, for example, indicated by grocery story scanner data) to infer which public policies they may or may not support.  In the particular application we studied, people were willing to pay large premiums to avoid milk and meat from cloned cows when asked what they wished to buy when shopping in a grocery store.  One might conjecture from this behavior, then, that the consumers would approve of a government ban on use of clones in meat and milk production.  

According to our research, that conjecture would be wrong.  The majority of consumers did NOT favor a ban on cloning in food animals.  In fact, most people would demand compensation if a ban were enacted (rather than be willing to pay to have the ban).  This finding defies many of the explanations often given for differences in voting and shopping behavior, such as the consumer-vs-citizen hypothesis or the hypothesis that consumers perceive the existence of externalities.  The behavior is more consistent with the notion that people have an option value (they don't want to get rid of a technology that may produce some promising result in the future even if they don't want it now) or that people respect the freedom of others to arrive at their own choices even if they happen to be at odds with one's own preferences.     

The other interesting thing about our finding is that is exactly the opposite of what has been observed in other food issues.  For example, in California, 63.5% of voters voted in favor of Prop 2 in 2008 to effectively ban battery cages in egg production.  Yet, the retail market share of cage free eggs is less than 5%.  In this case, shoppers aren't willing to shell out the extra bucks for cage free eggs in the grocery store, but they enthusiastically voted to ban the product they normally buy in the voting booth.  Why?  Hard to say.  My feeling is that the costs are much more salient in the store than in the voting booth.  Another possibility is that the universe of voters is different than the universe of shoppers (all voters shop but not all shoppers vote).  There are, of course, other possible explanations.  

Gaining a better understanding why people behave differently when shopping and voting is a key area of future research for food economists.  And, the fact that people often behave so differently in the two environments represents a key challenge for food economists who conduct regulatory cost-benefit analysis and advise policy makers.  

How Reliable are Surveys of Public Opinion and Preference?

A day after the presidential election, it is useful to evaluate the usefulness of the surveys and polls that were used to predict election outcomes.  By and large, my assessment is that most of the polls got it about right.  Republicans complained a lot about state-level polls in Ohio and elsewhere saying that Democrats were being weighted too heavily, but in the end, it appears the pollsters had it right.  

Now turn to economics, where the latest issue of the Journal of Economic Perspectives just arrived in my inbox.  In the issue are three articles on the use of "contingent valuation", which is a survey method used to ask people how much they are willing to pay for some good - normally a public good (like the environment) that is not traded in a market setting.  The first two articles by Kling, Phaneuf, and Zhao and by Carson (here and here) are generally pro-contingent valuation, the last by Jerry Hausman at MIT is against.   

I've spent a lot of time studying contingent valuation and other consumer research methods.  The methods are far from perfect and they suffer from many well-known biases.  At the end of the day, however, my question is: what is the alternative?  

Here is Hausman's answer (footnote and references removed):

I am often asked what should be done given my view that contingent valuation should not be used. Should nonuse value be ignored? My view is that expert government agencies and Congress should make informed decisions and enact regulations that attempt to improve the economic allocation process . . . To the extent that contingent valuation is interpreted as an opinion poll about the environment in general, rather than a measure of preferences about a specific public project, regulators should recognize this concern. However, public policy will do better if expert opinion is used to evaluate  specific projects . . .

Here's my problem with Hausman's answer.  Experts are not unbiased.  They choose their areas of inquiry and expertise based on issues they perceive to be relatively important.  Experts are a non-random sample of the population whose values and judgments are unlikely to mirror the populations'.  Moreover, as this very issue of the Journal of Economic Perspective illustrates, experts often disagree about the meaning of the same set of facts.

Maybe the answer to determining the value of public goods isn't surveys, but while I value expert advice and opinion, I don't think it's a good idea to hand them over the decision making reigns.  The beauty of market-based decisions is that it allows people with competing preferences (defined by their choices) and beliefs to act on their own values and information in a decentralized process that adapts well to change.  Of course, the trouble with goods like the environment is the lack of markets to carry out this allocation process.

Nevertheless, the goal should be to try to find creative mechanisms that simulate what markets do well.  That's one thing I don't like about contingent valuation - it's static and does not allow people to learn and update their beliefs and preferences.  Figuring out how to create new mechanisms and institutions is where I think the future lies - not rehashing a twenty year old debate about contingent valuation.