Want to Learn about Experimental Auctions?

Rudy Nayga, Andreas Drichoutis, Maurizio Canavari, and I are set to hold what is now the 4th summer school on "Experimental Auctions: Theory and Applications in Food Marketing and Consumer Preferences Analysis."

The last three years, the course has been in Italy (check out some of the photos here or here).  This year, with the help of Wu Xiao, we are moving the course to Xinjiang Agricultural University in China.  

If you have interest in attending, applications are now being accepted.

Experimental auctions are a technique to measure consumer willingness-to-pay for new food products, which in turn is used to project demand, market share, and benefits/costs of public policies.  The approach requires people to "put their money where their mouth is", and it represents an attempt to generate data about consumer preferences that is more accurate than what is often obtained from surveys.  The content is mainly targeted toward graduate students or early career professionals (or marketing researchers interested in learning about a new technique).

Longer School Lunch = Less Obesity?

A while back, I wrote:

. . . many school children have to eat lunch as early as 10am! In many schools (including my own kids’ school), children have to be run through the cafeteria so quickly they hardly have time to eat. Couple that with the new federal guidelines limiting the number of calories that can be served, and it is no wonder many kids are starving by the time school gets out and beg to go to McDonalds!

In addition all the above, I'd also add that because of increased curricula requirements, PE has been cut to the bone in most schools.

Alas, it seems most of the discussions I hear about improving childhood health in schools revolve around "sexier" headline-grabbing issues like serving more fruits and veggies, serving more local foods, zoning rules, banning sodas, teaching gardening, and so on. It may just be that the less "sexy" (and potentially less costly) issues like encouraging exercise, increasing cafeteria time or size, or giving a small afternoon snack, may be more promising.

Of course, we'd want empirical evidence that length of lunch had a substantive impact on dietary choice and weight.  I see one piece of evidence was just published in the Southern Economic Journal this month.  The piece is by Rachana Bhatt entitled "Timing is Everything: The Impact of School Lunch Length on Children's Body Weight."  The abstract

The large number of overweight children in the United States has prompted school administrators and policy makers to identify practices in schools that contribute to unhealthy weight outcomes for children and develop strategies to prevent further increases. Advocates for school nutrition reform have suggested that it is important for children to have an adequate amount of time to eat meals in school in order to maintain a healthy weight. This article examines whether the length of time children are given to eat lunch in school has an impact on their weight. I find evidence that an increase in lunch length reduces the probability a child is overweight, and this finding is robust across various econometric specifications, including a two-sample instrumental variable model and difference-in-differences model that account for the potential endogeneity of lunch length.

The paper indicates:

extending lunch length by 10 minutes is associated with a 1.2% reduction in BMI, and it reduces the probability a child is considered overweight for his/her age and gender by 2.4 percentage points.  

I'll be curious to see if these results hold up in randomized controlled trials.  

How high are the food companies standards?

"Big Food" is often vilified, and there are often calls for more regulation of food production and processing.  Is it possible, however, that private companies' food standards are actually "too high"?  Or, that food companies' standards are higher than government standards?  A recent paper in the American Journal of Agricultural Economics by Thijs Vandemoortele and Koen Deconinck sheds some light on these issues.  

They start with an interesting (if not widely mis-perceived) observation:

Empirical evidence shows that 70-80% of retailers assess their own private standards slightly or significantly higher than public standards

They offer several possible reasons for this phenomenon.  First,

private standards may reduce consumers’ uncertainty and information asymmetry about product characteristics such as safety, quality, and social and environmental aspects, thus increasing consumer demand.

Second, 

firms may use private standards as strategic tools to differentiate their products, thus creating market segmentation and softening competition.

Third,

firms may use private standards strategically to improve bargaining power over their suppliers.

Fourth,

private standards may also serve to preempt government regulations.

The authors construct a conceptual model, in which they argue that market power is a primary motive.  This is something of a counter-intuitive outcome: a "bad" (market power) creates a "good" (high standards).  As they point out, the political economy relationship between companies and government probably also has something to do with the extent to which private standards are greater than public ones.  So does consumer demand; if consumers want an are willing to pay for higher standards, there will be an incentive for companies to provide it.  But, as this article points out, high standards can also be used to create barriers to competition.

Want to legalize dope but outlaw transfats?

An editorial in Politico by William Bennett and Christopher Beach highlights the irony of the policy positions held by many people on the progressive left (something I also point out in the Food Police).

They write:

The very same year, for example, that Colorado legalized marijuana, the Colorado Senate passed (without a single Republican vote) a ban on trans fats in schools. Are we to believe eating a glazed donut is more harmful than smoking a joint? California has already banned trans fats in restaurants statewide, but now is on the brink of legalizing marijuana statewide come November. Former New York City Mayor Michael Bloomberg supported New York Gov. Andrew Cuomo’s effort to decriminalize marijuana in New York State, while at the same time supporting a ban on extra-large sodas. A 32-ounce Mountain Dew is bad for you, but pot isn’t?

The logic is dumbfounding. For many years, health-conscious liberals have waged a deafening, public war against cigarettes. Smoking bans in public places like restaurants and bars have been enacted in states all over the country. Recently, New York City, New Jersey and several other cities and states have extended those bans to include the newest tobacco fad—e-cigarettes. Yet, when it comes to smoking marijuana? Crickets.

What explains this obvious paradox?

They don't actually answer their own question - later saying simply that "The answer is not clear, and there may not be a good answer at all."  I think there is an answer.

One way to think about these sorts of issues is to turn to ideology scales.  A common view is that people's ideologies can be explained by where they fall on two dimensions related to views about economic freedom and personal freedom and willingness to use government force in these two areas.  In this framework, a "liberal" wants personal freedom (abortion, gay rights, etc.) but wants to restrict economic freedom (by, e.g., setting minimum wages).  Conversely, a "conservative" wants to restrict personal freedom (outlaw abortion and prohibit gay rights) but wants economic freedom (e.g., no minimum wage).  I think one has to augment this model to provide an account of what's going on in this case.   

Here we have two health-related issues: smoking marijuana and eating transfats.  What would possibly rationalize supporting the legalization of one and the prohibition of the other?  I think it has to with people's heuristic thinking about whether companies are good or bad and whether government is good or bad - or stated differently whether businesses or government is more likely to be corrupt.  I think many on the left see transfats as bad because they're sold by big-bad food companies who will kill us just to make a buck, whereas marijuana (at least at present) doesn't have ties to big business.  Thus, it is interpreted as a personal freedom issue by many on the left.  Conservatives, by contrast, are probably less likely to want to ban transfats because it is seen as an intrusion of "bad" government into the economics sphere.  Conservative's support for marijuana prohibition likely comes about from their willingness to use government force to regulate personal/social issues.

Interestingly, Bennett and Beach attempt to resolve their paradox in the Politico piece by seemingly arguing both transfats and marijuana should be banned.  The other seemingly logically consistent stance is to suggest both should be legal, which is the position of many libertarians. 

I suppose the economist could logically support one and oppose the other based on the results of a cost-benefit analysis or considerations of the extent of externalities, etc.  Stated differently, a consistent utilitarian (or the economist who will use cost-benefit analysis as the final word on whether a policy is "good") could very well end up supporting one of these issues and opposing another.  

The challenge, from the economic standpoint, is that many of these policies are advocated on paternalistic grounds - arguing that somehow people don't know what is in their own self interest, which seems to degrade the ability to know what is "best" from the consumers perspective, and thus the ability to even do a legitimate cost-benefit analysis.

My own view is that there is a legitimate role for government to play in researching and informing the public of the risks of smoking marijuana, eating transfats, etc.  But, to step in and decide which choice should be made goes too far.  It supplants the judgement of "experts" and politicians for the judgement of each person.  If we are willing to dismiss people's ability to decide whether to smoke dope or eat transfats, it seems a short step to say that they also can't be trusted to make their own health care choices, or decide where they should live or what job they should take.  Heck, why even allow these people to vote?  That might seem a bit extreme, but I'm simply following the chain of paternalistic thinking to its logical conclusion.

Obesity Stigmatization

A couple weeks, I engaged in a little kerfuffle over the role of personal responsibility in diet and health.

There I wrote:

But, didn't Moss just spend the preceding ~300 pages trying to convince us that our food choices are out of our control - that we are "hooked" - and that we are little match for the teams of scientists and advertisers employed by Big Food?  The implicit implication seems to be that consumers need a more powerful third party - the government - to constrain Big Food - because these are matters beyond our control.  

That's a story of helplessness - of victimization.  And whether they mean it nor not, narratives such as this can be demotivating.

To advocate people take personal responsibility for their food choices - as I have - is a message of empowerment.

Parke is right that some of the "food police" also encourage (and practice) personal responsibility, but I contend that much of their writing and their policy advocacy undermines their own message.

Today, I ran across an article in the Journal of Experimental Social Psychology  that provides empirical evidence related to the phenomenon I mentioned.  The abstract:

America's war on obesity has intensified stigmatization of overweight and obese individuals. This experiment tested the prediction that exposure to weight-stigmatizing messages threatens the social identity of individuals who perceive themselves as overweight, depleting executive resources necessary for exercising self-control when presented with high calorie food. Women were randomly assigned to read a news article about stigma faced by overweight individuals in the job market or a control article. Exposure to weight-stigmatizing news articles caused self-perceived overweight women, but not women who did not perceive themselves as overweight, to consume more calories and feel less capable of controlling their eating than exposure to non-stigmatizing articles. Weight-stigmatizing articles also increased concerns about being a target of stigma among both self-perceived overweight and non-overweight women. Findings suggest that social messages targeted at combating obesity may have paradoxical and undesired effects.