Links on the Economics of GMOs

Since my piece with Henry Miller on biotech wheat appeared in the New York Times, I've had several requests for good sources on the economics of agricultural biotechnology.  Here are a few.

1) Agricultural biotechnology: the Promise and Prospects of Genetically Modified Crops in the Journal of Economic Perspectives in 2014 by Barrows, Sexton, and Zilberman

2) The Economics of Genetically Modified Crops in 2009 in the Annual Review of Resource Economics by Matin Qaim 

3) The USDA Economic Research Service has several good papers.

In particular, see The First Decade of Genetically Engineered Crops in the United States

4) A book chapter on Consumer Acceptance of Genetically Modified Food by yours truly in 2011

Are Sugar-Sweetened Beverage Taxes a Cost-Effective Means of Reducing Weight?

That was the title of a short paper I just published (ungated version) in the Canadian Journal of Diabetes.  The piece was written in response to a prior article by Buhler et al. arguing that a consensus had been reached on the need for soda taxes.  I pointed out that their consensus didn't include any economists.

 A few snippets:

More fundamentally, one must ask what conceptual basis is being used to assert that SSB taxes will increase consumers' welfare? Presumably, some consumers already consider health impacts when they choose what to eat and drink. More generally, taxing food or SSBs is analogous to reducing consumers' real income, which almost certainly harms the consumers (9 ). . .If the argument is that people do not understand the risks of SSBs, then the appropriate policy response is information provision, not a tax.

and

One of the most common assertions is that SSB taxes are required because one individual's choices impose costs on others because of the existence of public healthcare programs. However, forgotten in such claims is the fact that many of the obesity-related costs are private, not public (12). Moreover, the costs to the public health programs are actually transfers among people in an insurance pool, not an economic deadweight loss to society that reduces Pareto efficiency (12). 

In conclusion:

In sum, Buhler et al (1) are correct that obesity is a complicated and multifaceted issue. So too are the consumption, weight and economic-welfare effects of SSB taxes. SSB taxes often appear to be a simple (if partial) solution for a big problem but, as witnessed by Denmark's recent decision to rescind its versions of the “fat tax,” the consequences and impacts of such taxes are anything but simple.

Genetically Modified Wheat

An editorial I coauthored with Henry Miller is set to be published at the New York Times on Monday.  In the piece, we argue that wheat, as a commodity, and wheat farmers as a consequence, have lost competitive ground to crops like corn, soy, and canola that have - unlike wheat - adopted generic engineering.  To be sure, this is a complicated issue and there are many factors at play.  But to sustainably meet the needs of a growing world population, all tools, including biotechnology, should be on the table.  Whether an individual farmer decides to adopt or a miller chooses to accept GE wheat is of course, their choice to make.  Right now that choice doesn't exist.

By the way, I'll remind readers of what I'm sure to be accused of: I do not work for Monsanto nor do I have any financial connection to them.  

Those interested in reading more on biotech and agriculture might find Chapter 6 of The Food Police useful.

The Food Police: A Well-Fed Manifesto About the Politics of Your Plate

By Jayson Lusk

Buy on Amazon

Coming to a Grocery Store Near You: A New Nutrition Facts Panel

According to this story from the AP:

After 20 years, the nutrition facts label on the back of food packages is getting a makeover.

and

The FDA has sent guidelines for the new labels to the White House, but Taylor would not estimate when they might be released. The FDA has been working on the issue for a decade, he said.

and

The revised label is expected to make the calorie listing more prominent, and Regina Hildwine of the Grocery Manufacturers Association said that could be useful to consumers. Her group represents the nation's largest food companies.

Hildwine said the FDA also has suggested that it may be appropriate to remove the "calories from fat" declaration on the label.

It's not yet clear what other changes the FDA could decide on. 

Personally, I think it is a good idea to bring research to bear on the design of the nutrition facts panel.  I've been critical of certain aspects of the implications people draw from the research in behavioral economics.  But, here is an area where the research is useful and has direct relevance.  

The government is going to provide nutrition information anyway (and has been doing it for 20 years), and as such, shouldn't it at least be presented in a way that is most understood by the consumer?  It is impossible to believe that the current little black box with dozens of horizontal lines is the most effective format.  

How do we know which type of information is "most effective"?  Effective, of course, could have many meanings.  One definition could relate to the extent to which the information is accurately understood by the consumer (I'd prefer that over whether the label causes some change in behavior desired by particular nutritionist).  Another way is to see what types of information arise in markets (i.e., what information consumers demand and how companies provide it).  For example, I've notice cereal boxes with color coded labels on the front of the package in the upper left-hand corner.  Similar private initiatives abound.

I'm  sure interest groups on all sides - from food companies to health activists - will want a say.  I just hope solid consumer research is brought to bear on the issue as well.

Is More Information Always Better?

Last year, I wrote a report for the Council on Food, Agricultural, and Resource Economics (C-FARE) on the value of USDA data products.  There, I reviewed much of the literature on the value of providing information about market conditions, and discuss the ability of information provision to resolve some asymmetric information problems.

Thus, I was interested to see this paper published in the American Economic Journal: Policy by Sacha Kapoor and Arvind Magesan (earlier ungated version here).  They write:

We find that although countdown signals reduce the number of pedestrians struck by automobiles, they increase the number of collisions between automobiles. They also cause more collisions overall, implying that welfare gains can be attained by hiding the information from drivers. Whereas most empirical studies on the role of information in markets suggest that asymmetric information reduces welfare, we conclude that asymmetric information can, in fact, improve it.

Asymmetric information improving outcomes?  That is an interesting result - I wonder whether there are examples in markets where something similar is at play?  

I should note that it is possible to imagine other situations where more information isn't always better.  In a paper I published last year with Stephan Marette, we wrote:

In a one-good case with unlimited attention, we show consumer welfare is always improved with the provision of accurate information. However, in a two-good case with limited attention, we show that consumer welfare is not always improved with the provision of accurate information. When attention is constrained, welfare may fall with information provision policies irrespective of their costs. The results suggest information and labeling polices may sometimes be counterproductive when attention is limited