A short lesson on experimental auctions

One of the most robust findings from the research on what consumers are willing to pay for non-market goods (for example, foods made with new technologies that are not yet on the market) is that people tell researchers they are willing to pay more than they actually will when money is actually on the line.  One review showed, for example, that people tend to overstate how much they are willing to pay in hypothetical settings by a factor of about three.  That means if someone tells you on a survey that they're willing to pay $15, then they'd probably only actually pay about $5.

One way to deal with this problem of hypothetical bias is to construct experimental markets where real money and real products are exchanged.  The key is to use market institutions that give consumers an incentive to truthfully reveal their values' for the good up for sale.  I wrote a whole book with Jason Shogren on the subject of using experimental auctions for this purpose a few years back.

I recently filmed a short primer on the consumer research method for an on-line course being created by my colleague Bailey Norwood.  He graciously put it up online for anyone's viewing pleasure.  

Funniest Food Paternalism Video

This clip from the Comedy Central show, Workaholics, is perhaps the funniest example of food paternalism that I've run across (HT Bailey Norwood)

The lead-in to this scene is on the Comedy Central website.

If people want it, the government must subsidize it

A recent report from the Australian government argues that consumers are taking more responsibility for their health (HT Ellen Goddard).  The evidence used to bolster this claim is the fact that Australians are spending more money on over-the-counter medicines that are not subsidized by the government.  

That use of these unsubsidized "complementary" medicines is on the rise is apparently all the reason that is needed to now subsidize them.  

“The growing contribution of complementary medicines needs to be seen by the government as the impetus for fostering the appropriate proactive policies and for recognising complementary medicines as vital part of a comprehensive Australian health care system.””

This seems to be another example where any government intervention in the name of "public health" is justifiable by definition because it is intended to improve public health. So, the logic seems to be: if people are voluntarily willing to spend more money on an item through the market, then this is evidence that the government needs "appropriate proactive policies" to help people buy the item.  

It is a strange day when one sees the market working well at providing people what they want as evidence that more government intervention is necessary.

Even the Amish grow GMOs

Last week, I was in the grocery store looking for popcorn.  I ran across a brand I'd never seen before that advertised "Amish popcorn."  I gave it a try and it tasted just as good as the heathen brands.

While munching on the tasty treat, a question came to mind: do the Amish use GMO crops?  As far as I know, there are no genetically engineered popcorn seeds on the market, but all those reality shows I see advertised on A&E, Discovery, and the like show hardy field corn and tobacco plants growing alongside the homes of the Amish.

Sure enough, a quick internet search turned up story after story after story revealing that many Amish farmers indeed plant genetically engineered corn or tobacco.  

It seems the Amish have turned the tables on conventional wisdom.  Most consumers are very pro-technology and innovation when it comes to things like cell phones, TVs, and cars, but are often technology-averse when it comes to agriculture. It seems that at least some of the Amish hold exactly the opposite position.  

There is a deep irony in the fact that the Amish farm is something many people idealize - small, family-run operations - that uses a technology that frightens many consumers.  In part it reveals the disconnect between romanticized images of farm life and the reality of the choices made by the flesh-and-blood people who work there.

While it might do well if more people understood more about production agriculture, it seems I could have known a bit more about the Amish before writing this paragraph at the end of a chapter on biotechnology in the Food Police:

“Perhaps we Americans can afford to give up a few comforts and pay more for more “naturally” grown food. But, this return to nature is pure fantasy. Human interactions with nature have altered animals and vegetation in a way that our ancient ancestors could scarcely imagine. The food elite’s vision of the world would return production agriculture to its state a hundred years ago; to a time when food was far less plentiful and in which those who did the back-breaking work of farming lived a meager existence. We might like to visit the Amish but few are clamoring to convert.”

It seems that the at least some of the Amish are more technologically progressive than I gave them credit for.  In fact, in this one dimension, they are more technologically progressive than many Americans.

What drives ingredient-based food fears?

That was the question asked in this article just published in the journal Food Quality and Preference.  The authors, Brian Wansink, Aner Tal, and Adam Brumberg surveyed over 1,000 mothers to study which food ingredients they found fearful, and they consider how such fears can be alleviated.  

The abstract:

“This study investigates food fears that are ingredient-based, focusing on the case of high-fructose corn syrup. The results of a national phone survey of 1008 U.S. mothers offer five preliminary sets of observations: first, consumers with a fear of a specific ingredient – such as high-fructose corn syrup – may exaggerate and overweigh perceived risks. Second, such consumers may often receive more information from the internet than from television. Third, they may be partly influenced by their reference group. Fourth, ingredients associated with less healthy foods mainly hurt evaluation of foods perceived as relatively healthy. Fifth, food fears may be offset when an ingredient’s history, background, and general usage are effectively communicated. These findings suggest new insights for understanding how public health, industry, and consumer groups can more effectively target and address ingredient fears.”

From the conclusions:

“When health risks exist, food fears are merited. In other cases, ingredient fears and avoidance may be wrongly based on the stigmatization of an ingredient or on misinformation. These results offer new preliminary insights about who is most prone to ingredient avoidance, where they receive their information, what types of ingredients are most susceptible to being feared, and how fears might be mitigated.

There appear to be at least two non-mutually exclusive motivating factors behind ingredient avoidance. First, some individuals may overweigh the perceived risks of the avoided ingredient. Second, some individuals who avoid ingredients may have a greater need for social approval among their reference group than those with a more moderate view (though such effects were small in our sample). This is a key contribution to the literature on risk because it underscores a novel potential motivation – akin to the Prius Effect – behind ingredient avoidance. ”