Why do people waste food?

The author and celebrity chef Dan Barber had an op-ed yesterday in the New York Times that touched on food waste.  Oddly, he seems to associate waste with large-scale specialized agricultural grain operations.  In fact, these are the crops that are most easily stored and transported, and it is these larger farms that have easier access to storage facilities and technologies to prevent waste.  

In any event, I'd say Barber's editorial is fairly representative of the larger literature on food waste.  That is to say, food waste is seen as something akin to a "sin" or to a "mistake" that we must stop at any cost.  Take for example, this quote from a National Geographic article:

“Ethically, food waste is bad. ”

I suspect most economists have a hard time with this sort of reasoning.  The decision to discard food is a decision like any other economic decision.  Deciding to discarding food is "bad" only to the extent that there is some sort of market failure.  To be sure, there may be some un-priced externalities associated with waste, but these aren't often well articulated by advocates of food waste reduction.  Even still, it isn't the decision to discard that is "bad", what is "bad" is the lack of a market to price the externality.

A useful starting point is to go back to first principles and understand the economic factors that "reasonably" or "rationally" lead people to discard food in the first place.  That is precisely what Brenna Ellison and I have tried to do in a new short paper that was just published in the journal Applied Economics Letters.

The paper constructs a mathematical model of consumer behavior based on the notion that people take prices and wage rates as given and then choose how much time to spend working, how much time to spend in food preparation, and how many raw food ingredients to buy so as to maximize their well-being (which is defined by the meals they eat and the amount of time in leisure).  In this so-called household production model, consumers are also producers: they combine their time with raw food inputs to produce meals, which are the ultimate source of value for the consumer.

It is actually hard to conceptualize "waste" in a model like this (or any economic models of optimization).  I've heard heated debates between some of my fellow agricultural economists over this matter, and there is a camp that would argue (quite persuasively I might add) that there is no such thing as waste.  In that view "waste" really would represent a mistake or an arbitrage opportunity.  If someone valued my trash more than I did, they ought to be willing to pay to take it from me; if no one does, then (as I actually do) I pay someone else to remove it, who finds no other economical use for it other than to bury it and let nature take its course.  In this more strident view, we might "discard" items, but a well functioning economy doesn't "waste" items.  

All that is to say, in a mathematical model like ours, one has to have some way of defining waste.  We define it as the the inverse of the amount of meals produced per unit of raw food input.  A cynic might say: you've just redefined the marginal productivity as raw food inputs as waste.  Guilty as charged.  If you have a better solution, I'm happy to hear it.  

In any event, this set-up allows us to view waste as a function of economic variables.  We show that:     

“Differences in market prices for raw food ingredients, p, or differences across food
consumers in the opportunity cost of their time, w, might thus explain differences in food waste. It is also possible that education, background, or cooking ability can lead to different marginal productivities of time used in meal preparation. ”

The nice thing about this approach is that one can also assume that people combine their time and food inputs to produce other things (in addition to meals) like human capital or health.  If so, it is also possible to show that if consumption of a meal lowers health (e.g. by consuming a spoiled or raw ingredient), a larger amount of waste might be optimal.

If one is willing to accept some assumptions about the mathematical relationships involved, the model produces some testable hypotheses.  Namely:

• individuals with higher wages will have more food waste,
• individuals with higher non-wage income will have less food waste,
• individuals with greater talents/ability/education at turning raw food inputs
  and time into meals will waste less,
• the amount of waste will depend on the extent to which people prefer leisure to meals.

Importantly, in this framework waste is not a "mistake" nor is it "unethical" - it is the best thing for the consumer to do given their income, prices, and preferences.  For waste to be a "bad", my decision to discard food would have to affect other people not involved in my decision.  One could imagine situations like this and this sort of frameworks provides a starting point for thinking about costs and benefits of policies and initiatives aimed at reducing waste.

I'll conclude by noting that even the Onion knows there are "rational" reasons to discard food that aren't "bad" or "unethical".  Here are few of their humorous suggestions to cut down on food waste.

“Avoid impulse buying by only going to the grocery store for one ingredient at a time.

Hire an impoverished family to sit at your dinner table and guilt you into eating every last morsel.

Make sure to eat the oldest items in your fridge first, as listeria will deter you from additional grocery purchases for the next seven to 10 days.

Instead of buying a whole tub of strawberries and an entirely new can of whipped cream, use the remaining half can of tomato paste, last serving of chicken piccata, or whatever other leftovers you have in the fridge to spice up your love life.

Try not to prepare more food than you can eat, unless you are entertaining the Lady Carroway for supper and must impress her with your bounty.

Make use of expired food by reaching out to any neighborhood kids who can be dared to eat it for a few bucks.”

Pew Survey on Consumers, GMOs, and Trust in Science

About a week ago, the PewResearchCenter released a new report (report summary here) on GMOs, organic, and trust in food science.  The report has already been covered quite a bit in the media, but I thought I'd share a few observations on the study's headline results.  

First, the study finds:

“Four-in-ten Americans (40%) say that most (6%) or some (34%) of the foods they eat are organic. ”

It's hard to know what to make of this claim as "some" is a pretty loose category.  One important point to keep in mind here is that USDA data reveal that, except for a few exceptions like lettuce or carrots, for most foods the percent of production that is is organic is typically far less than 5%. 

The study also finds:

“The minority of U.S. adults who care deeply about the issue of GM foods (16%) . . . are also much more likely to consider organic produce healthier”

The finding is consistent with prior research showing that WTP for organic is heavily influenced by the desire to avoid pesticides and GMOs.  In fact, there was a lot of attention given to the organic industry's support of the new mandatory labeling law for GMOs, which allowed disclosure via relatively innocuous QR codes.  The organic industry has worked to make sure people know non-GMO is not synonymous organic.  In other words, these two attributes (organic and non-GMO) are likely demand substitutes for consumers, and the organic industry knows this.  

One of the highlighted conclusions from the study is:

“The divides over food do not fall along familiar political fault lines. ”

I'm not so sure.  While I agree things like concern for GMOs or preferences for organic don't have strong correlations with political ideology, the same can't be said for people's desires to regulate GMOs (say via labels or bans) or subsidize organics .  See, for example, this paper entitled "The political ideology of food" I published in Food Policy in 2012. From the abstract:

“Food ideology was related to conventional measures of political ideology with, for example, more liberal respondents desiring more government involvement in food than more conservative respondents . . .”

As I've written about in the past, I think it is important to separate "food preferences" from "policy preference", and on this last issue, there are big partisan and ideological divides.   

Much of the news coverage I saw about the report focused on the results related to American's trust in scientists and GMOs.  The study reports

“Americans have limited trust in scientists connected with genetically modified foods.”

 The study also reveals only about half the respondents think scientists think GMOs are safe to eat.  Well, Pew's other research shows us that it is more like 88%.  Thus, people under-estimate scientists beliefs about the safety of GMOs.  One might think then, that the answer is to just tell people about the scientific consensus regarding GMOs.  However, my research with Brandon McFadden suggests this probably won't have much affect.  In our study, the biggest determinant of how an individual responded to information about the science on GMOs was their prior belief about the safety of GMOs.  In fact, about a third of the people who thought GMOs were unsafe prior to information said they thought GMOs were even more unsafe after receiving statements from the National Academies of Science, the American Medical Association, etc. indicating GMOs were safe (we called these folk "divergent"); the plurality of people who thought GMOs were unsafe just ignored the scientific information indicating GMOs were safe.  This behavior is a form of motivated reasoning that Dan Kahan has discussed extensively in his work on cultural cognition.  We look for the information that supports our prior beliefs and ignore or discount the rest.  

On this issue of trust in scientists and GMO foods: it is important to note that trust in virtually ALL institutions is down over time.  Gallup has been tracking trust in about a dozen institutions since the 1970s.  Aside from a few exceptions (like the military and police), trust is way down for most institutions.  For example over 65% of people had a great deal or a lot of trust in "church or organized religion" in the 1970s, whereas today the figure is 41%.  For "public schools", confidence was running about 60% in the mid 1970s, but today is only 30%.  Newspapers went from around 40% to now around 20%.  "Big business" from around 30% to now around 18%.   "The medical system" from 80% to 39%.  Similar trends exist for congress, the presidency, organized labor, banks, and so on.   

As a result, it is important to ask how much trust is there in scientists . . . compared to what?  I haven't asked this question specifically in regard to GMOs in particular or food science in general, but a while back I asked on my monthly Food Demand Survey (FooDS):  “How trustworthy is information about meat and livestock from the following sources?” Fifteen sources were listed (the order randomly varied across respondents), and respondents had to place five sources in the most trustworthy category and five sources in the least trustworthy category. A scale of importance was created by calculating the proportion of times a meat and livestock information source as ranked most trustworthy minus the proportion of times it was ranked least trustworthy.

We found:

“The USDA and FDA were reported as most trustworthy with 50% more people indicating the source as most trustworthy than least. A University professor from Harvard were seen as slightly more trustworthy than one from Texas A&M, but both were viewed as less trustworthy than interest groups like the Farm Bureau, the CSPI, or the HSUS.

News organizations, and particularly food companies, were viewed as least trustworthy. Chipotle was the seen as the least trust worthy organization studied – the restaurant chain was placed in the least trustworthy category 69% more often than in the most trustworthy category.”

While individuals scientists at either Harvard or Texas A&M were less trusted than some others perhaps it was because it was phrased a single professor rather than a group of professors.  Indeed, the four top groups are all collections of scientists (among other people).  A subsequent survey asked how much people knew about each of these individuals and institutions, and while CSPI is trusted, it isn't well known.  I suspect people were responding to the word "science".  So, I think there is good reason to suspect people trust scientists as much or more than other societal institutions.

The issue of trust and acceptance of GMOs has been researched quite heavily in the academic literature (e.g., see several studies by Lynn Frewer).  In this paper,  she and coauthors show that people's response to information on GMOs doesn't depend on how much they trust the source per se, but rather it's the other way round: people trust the sources giving them the information that fits with their prior beliefs.  So, again we're back to motivated reasoning.  Still, we should acknowledge some research that shows "information matters."  I've done work on this topic, as has Matt Rousu, Wally Huffman and Jason Shogren.  This last set of researchers show, for example, that relatively uninformed people are influenced by information by interested and third party sources.

There is a lot more in the Pew report, but I think I'll leave it here for now.

Farm Size and Animal Welfare

When I published this piece in the New York Times a couple months ago arguing the large farms can, and often are, good for the environment, one of the most common comments/criticisms I received was something along the lines of: "well surely this isn't true for 'factory farms' and animal welfare."  It has been hard to say much about this because the evidence was limited on relationship between farm size and animal welfare.  However, I was recently alerted to this new review article published in the Journal of Animal Science by a group of researchers at the University of British Columbia.  

Among their many conclusions are these:  

“Farm size and animal welfare exhibit no consistent relationship”

and

“Our review does not support the contention that there is a consistent relationship between farm size and welfare on dairy farms or, indeed, other times of livestock farms. Moreover, the differences that do exist are unlikely to be caused directly by size but by other factors associated with size such as economic viability, staffing level, awareness of and exposure to emerging issues, and access to resources (e.g. time, capital, expert consultants, scientific information, etc.)”

What do cows want?

As many of you know, I've worked a lot on animal welfare issues over the years (e.g., see this book with Bailey Norwood).  One of the biggest challenges is knowing what changes will make a farm animal better off, particularly given the fact changes in housing conditions often improve one dimension of animal welfare while lowering another (e.g., giving animals more space and room might also expose them to aggression from other animals; providing access to outdoors might involve exposure to predators or more variable temperatures).  

It's too bad that animals can't tell you want they want.  Or can they?  Probably because the approach is so similar to the way economists model human behavior, I'm a big fan of a stream of the animal behavior research that looks at what animals choose to infer what they want.  

To illustrate, consider a a variation on the experiment in this 1977 paper by Marian Dawkins.  Imagine an egg laying hen that is given the choice of entering one of two pens with different flooring materials: wire or straw.  

What would the hen choose?  Not surprisingly, hens prefer straw to wire.  So, when presented with this choice, hens will choose to enter the pen with straw flooring.  

But how much do the prefer straw to wire? Well, we can try to make the wire cage a bit more attractive by adding something to it that we know hens like: food.  Now, the hen's choice is as follows:

Now it's not quite as obvious which option is preferable: the wire floor with good tasting food or the straw floor?  Let's suppose our hen still chooses the straw floor.  What now?  Well, we can continue to try to make the wire floor more attractive by adding more food:

We keep adding food until the hen switches from straw to wire, and the amount of extra food required to get the hen to switch from straw to wire is their minimum willingness-to-accept (WTA) compensation for living on a wire floor.  But, the units are in terms of food rather than in dollars.  But this doesn't mean it's not a useful metric.  Once we know the hen's WTA, we can compare the WTA (in units of food) for wire vs. straw floor to WTA (in food) for other things like outdoor access vs. no outdoor access to get a sense of what is most important to the hen.  Heck, because food has an economic value (in dollars) in the human word, we can even convert the hen's WTA to dollars if we really wanted to make comparisons in monetary units.  

Now let me ask a different question: what would you think of a law that required dairy farmers to milk their cows more often?  My presumption would have been that this would reduce milk cows' welfare.  However, this quote in a post from Tyler Cowen at Marginal Revolution suggests cows think otherwise: 

“There’s something very interesting in someone else’s vantage point, which might have a truth to it. For instance, the tagging of cows for automatic milking machines, so that the cows can choose when to milk themselves. Cows went from being milked twice a day to being milked three to six times a day, which is great for the farm’s productivity and results in happier cows, but it’s also faintly disquieting that the technology makes clear to us the desires of cows – making them visible in ways they weren’t before. ”

So the next time you wonder what an animal wants, you might conjure up a creative experiment to let them tell you.

BTW, economists have been studying animal choice behavior for a long time, and it seems animals' behavior is often quite consistent with our "rational" economic models (e.g., see this book by Kagel, Battalio, and Green)

The Benefits of Mandatory GMO Labeling

I ran across this post over at RegBlog which notes that the USDA will have to do a cost-benefit analysis of the new mandatory labeling law for GMOs.  The post relies heavily on this paper by Cass Sunstein written back in August.  Sunstein's article discusses the fact that regulatory agencies typically do a very bad job at quantifying the benefits of mandatory labeling policies (and identifying when or why those benefits only apply to mandatory rather than voluntary labels).

Sunstein argues that, in theory, consumer willingness-to-pay (WTP) is the best way to measure benefits of a labeling policy.  I wholeheartedly agree (and have even written papers using WTP to estimate the benefits of GMO labels) but I want to offer a couple important caveats.  

The issue in ascertaining the value of a label isn't whether consumers are willing a premium for non-GM over GM food.  Rather, as emphasized in this seminal paper by Foster and Just, what is key is whether the added information would have changed what people bought.  If you learn a food you're eating contains GMOs (via a mandatory label) but you're still unwilling to pay the premium for the non-GMO, then the the label has produced no measurable economic value.  Thus, a difference in WTP for GMO and non-GMO foods is a necessary but not sufficient condition for a labeling policy to have economic value.  

The Foster and Just paper outlines the theory behind the value of information.  Here's the thought experiment.  Imagine you regularly consume X units of a product.  Some new information comes along that lowers your value for the product (you find out it isn't as safe, not as high quality, or whatever).  Thus, at the same price, you'd now prefer to instead consume only Y units of the product.  The value of the information is the amount of money I'd have to give you to keep consuming X (the amount you consumed in ignorance) in spite of the fact you'd now like to consume only Y.  Given an estimate of demand (or WTP) before and after information, economists can back out this inferred value of information.      

But, here is a really important point: this conception of the value of information only logically applies in the case of so-called "experience" goods - goods for which you know afterward whether it was "high" or "low" quality.  Just and Foster's empirical example related to a food safety scare in milk.  In their study, people continued to drink milk because they didn't know that it had been tainted.  By comparing consumer demand (or consumer WTPs) for milk before and after the contamination was finally disclosed, the authors could estimate a value of the information.  In this case, the information had real value because the people would really have short and long term health consequences if they kept consuming X when they would have wanted to consume Y.

It is less clear to me that this same conceptual thinking about the value of information and labels applies to the case of so-called "credence" goods.  These are goods for which the consumer never knows the quality even after consumption.  Currently marketed GMOs are credence goods from the consumers' perspective.  Unless you're told by a credible source, you'll never know whether you ate a GMO or not.  So, even if a consumer learned a food was GMO when they thought it was non-GMO, and wanted to consume Y instead of X units, it is unclear to me that the consumer experienced a compensable loss.  

Expressing a view with which I'm sympathetic, Sunstein also notes that mandatory labels on GMOs don't make much sense because the scientific consensus is that they don't pose heightened health or environmental risks.  Coupling this perspective with the credence-good discussion above reminds me a bit of this philosophical puzzle published by Paul Portney back in 1992 in an article entitled "Trouble in Happyville".  

“You have a problem. You are Director of Environmental Protection in Happyville, a community of 1000 adults. The drinking water supply in Happyville is contaminated by a naturally occurring substance that each and every resident believes may be responsible for the above-average cancer rate observed there. So concerned are they that they insist you put in place a very expensive treatment system to remove the contaminant. Moreover, you know for a fact that each and every resident is truly willing to pay $1000 each year for the removal of the contaminant.

The problem is this. You have asked the top ten risk assessors in the world to test the contaminant for carcinogenicity. To a person, these risk assessors - including several who work for the activist group, Campaign Against Environmental Cancer - find that the substance tests negative for carcinogenicity, even at much higher doses than those received by the residents of Happyville. These ten risk assessors tell you that while one could never prove that the substance is harmless, they would each stake their professional reputations on its being so. You have repeatedly and skillfully communicated this to the Happyville citizenry, but because of a deep-seated skepticism of all government officials, they remain completely unconvinced and truly frightened - still willing, that is, to fork over $1000 per person per year for water purification.”

What should the Director do?  My gut response to this dilemma is the same as what my Ph.D. adviser Sean Fox wrote in a chapter for a book I edited a few years ago:

“It’s a difficult question of course, and the answer is well beyond both the scope of this chapter and the philosophical training of the author.”