Food Environment or Preferences?

Do poorer people eat unhealthily because they don’t have access to grocery stores and fresh fruits and vegetables (and are more easily able grab fast food or convenience store options), or is it because their preferences for healthy food differs from higher income households? In a sense, this is a question of nature vs. nurture applied to healthiness of food consumption, and it is a lively debate related to questions about food deserts, convenience store regulations, zoning, and more.

This interesting and rigorous paper (gated version here) on the topic by Hunt Allcott, Rebecca Diamond, Jean-Pierre Dube, Jessie Handbury, Ilya Rahkovsky, and Molly Schnell was recently published on the topic in the Quarterly Journal of Economics. I blogged about this paper a couple years ago, but I mentioned again now that it’s been revised and put through the rigors of the peer-reviewed process, and because the implications are quite important. Here’s the abstract:

“We study the causes of “nutritional inequality”: why the wealthy eat more healthfully than the poor in the United States. Exploiting supermarket entry and household moves to healthier neighborhoods, we reject that neighborhood environments contribute meaningfully to nutritional inequality. We then estimate a structural model of grocery demand, using a new instrument exploiting the combination of grocery retail chains’ differing presence across geographic markets with their differing comparative advantages across product groups. Counterfactual simulations show that exposing low-income households to the same products and prices available to high income households reduces nutritional inequality by only about ten percent, while the remaining 90 percent is driven by differences in demand. These findings counter the argument that policies to increase the supply of healthy groceries could play an important role in reducing nutritional inequality.”

These findings suggest efforts to eliminate food desserts or to constrain offerings of convenience stores are likely to have minimal effects. This paper shows, like some of my work, that higher- income households tend to eat healthier than lower-income households. Want lower income people to eat healthier? Then, we probably need to think about ways to increase their incomes. Another possible solution, albeit difficult to successfully and cost-effectively implement, is nutrition and health education.

Experimental Auctions - What's New?

It is hard to believe it’s been over a decade since my book with Jason Shogren on experimental auctions was first published. We’ve learned a lot and the field has evolved in the intervening years since this publication. As a result, I’m happy to announce a new review article, just released by the European Review of Agricultural Economics, on experimental auctions with Maurizio Canavari, Andreas Drichoutis, Rudy Nayga, and myself. Maurizio, Andrea, Rudy, and I have been hosting a summer school in various European locations on this topic ever since 2011, and our annual discussions have been very useful in thinking about works well and what doesn’t when conducting an experimental auction.

For readers of this blog who aren’t academic economists, you might be wondering: what, exactly, is an experimental auction and why would you want to conduct one? The motivation for the method comes from the widely known fact that people’s answers on surveys don’t always align with their behavior in a grocery store. A general rule of thumb is that the average willingness-to-pay one finds in a survey can be divided by two if one wants to know know what people will actually pay when money is on the line.

The problem is that we often want to know the value people place on times that aren’t regularly traded in a market, where real economic incentives are at play. An experimental auction solves the non-market problem by creating a market in a lab or online setting. An experimental auction involves people bidding real money to obtain (or exchange) real goods (typically food in my applications) in a type of auction with rules where people have an incentive to truthfully reveal their preferences.

Here’s the abstract:

“In this paper, we review recent advances in experimental auctions and provide practical advice and guidelines for researchers. We focus on issues related to randomisation to treatment and causal identification of treatment effects, design issues such as selection between different elicitation formats, multiple auction groups in a single session and house money effects. We also discuss sample size and power analysis issues in relation to recent trends in experimental research about pre-registration and pre-analysis plans. We position our discussion with respect to how the agricultural economics profession could benefit from practices adopted in the experimental economics community. We then present the pros and cons of moving auction studies from the laboratory to the field and review the recent literature on behavioural factors that have been identified as important for auction outcomes.”

For Ph.D. students, or anyone looking for a new idea to work on, I’ll note that the conclusions section has a slew of ideas for future research.

Time to give thanks for affordable and sustainable turkey

That’s the title of an article I just wrote for The Conversation.

Here’s the whole thing:

Americans will eat about 210 million turkeys this year, amounting to over 16 pounds per person. Much of that will be eaten on Thanksgiving Day.

Over time, our Thanksgiving meal has become considerably more affordable. Turkey will probably average about US$1.40 per pound across the country in November 2019, which is less than half the price consumers were paying for turkey in the 1970s in inflation-adjusted terms.

How has turkey become so much more affordable? It turns out there isn’t a single factor, but rather a web of innovations.

The truth about turkey

It’s worth dispelling a few myths about the turkey industry first.

All farm-raised turkeys are supposed to be hormone-free.

For one thing, turkeys aren’t given any added growth hormones – doing so is illegal. It’s also illegal to sell turkey with antibiotic residues.

Also, all turkeys are raised cage-free in large, open barns.

Why aren’t more turkeys raised free-range, which means they are allowed to move outside with some freedom? It might initially sound great for turkeys to live outdoors – unless it’s snowing or raining or above 100 degrees.

It might also be fine unless there are roaming hawks, coyotes, dogs – or even wild birds. In 2015, the turkey industry was devastated by avian influenza that cost producers $225 million. Many experts believe the outbreak was caused by the introduction and spread of the disease by wild birds.

Bringing turkeys indoors allows farmers to protect the animals from weather, predators and disease, and it also enables farmers to more closely monitor their diets and health.

Spending less, eating more

Due to innovations in housing and genetics, it now takes less time and less feed to grow a turkey to market weight than it used to.

In the 1970s, the U.S. raised an average of about 125 million turkeys per year and produced about 1.9 billion pounds of turkey meat each year, meaning each turkey produced a little over 15 pounds of meat. This year, the country is projected to produce almost 25 pounds per bird.

This has led to increased affordability for Thanksgiving meals, but it has also had important implications for sustainability.

Let’s suppose Americans want to enjoy the amount of turkey we will actually consume as a nation this year – about 5.3 billion pounds – but we wanted to do that using 1970s technology. How many more turkeys would we need today had we not innovated to increase the amount of meat per bird from 15 to 25 pounds?

The answer is 132 million more turkeys.

That’s 132 million more turkeys that would have emitted waste, created greenhouse gas emissions and required water and feed. Growing that extra feed would have required more land, fertilizer and pesticides.

We were able to save those extra 132 million turkeys because we were innovative and used scientific developments and trial and error to figure out how to satisfy the wants of a much larger population using fewer of our natural resources.

That’s something to be thankful for.

Milk - Differentiation and Substitution

This article in the Wall Street Journal has some interesting data and anecdotes about the rise of Fairlife Milk - an ultrafiltered, branded milk product that has more protein and less sugar than regular milk. Apparently sales of Fairlife are up 30% over the past year, and that’s in spite of some negative publicity about some animal welfare issues over the same time period. What’s interesting about the article is that we are likely to see similar trends in mean animal protein markets in the coming years - the push to differentiate and the rise of unexpected competitors.

As the article makes clear, the rise of Fairlife has been quick and surprising. Fairlife now commands about 3% of the dairy-milk market, just a bit less than Horizon, the largest organic milk brand, which has been on the market for 30 years and has a market share of 3.7%. I suspect not many would have guessed 5 to 10 years ago, that the hottest selling milk brand would make its mark based on a technology-enabled nutritional profile as opposed to sustainability/animal-welfare claims.

As for unexpected competition, I’m heard folks in the dairy industry complain about competition from plant-based sources such as almond milk and soy milk, but according to the article:

“... in the last four years, when milk sales fell by 330 million gallons, plant-based milk sales increased by only 60 million gallons.

The sector lost 270 million gallons elsewhere.

The likely culprit? Water.

“We’re losing over 50% to bottled water,” Mr. Ziemnisky said. “No. 2 is ready-to-drink coffee.” In addition, Americans are eating less breakfast cereal, accounting for about 25% of milk’s decline.”

Consumer beliefs about healthy foods and diets

That’s the title of a new article I just published in the journal PLoS ONE. This is an exploratory/descriptive study with the aim of probing consumer’s perceptions of the term “healthy” in relation to food. The study is motivated by the fact that the FDA regulates the use of the term on food packages, and is in the process of reconsidering the definition. Here are some of the key results:

“Consumers were about evenly split on whether a food can be deemed healthy based solely on the foods’ nutritional content (52.1% believing as such) or whether there were other factors that affect whether a food is healthy (47.9% believing as such). Consumers were also about evenly split on whether an individual food can be considered healthy (believed by 47.9%) or whether this healthiness is instead a characteristic of one’s overall diet (believed by 52.1%). Ratings of individual food products revealed that “healthy” perceptions are comprised of at least three underlying latent dimensions related to animal origin, preservation, and freshness/processing. Focusing on individual macronutrients, perceived healthiness was generally decreasing in a food’s fat, sodium, and carbohydrate content and increasing in protein content. About 40% of consumers thought a healthy label implied they should increase consumption of the type of food bearing the label and about 15% thought the label meant they could eat all they wanted.”

One part of the analysis focuses on parsing out the correlations between the healthiness rating consumers placed on different types of foods . Below are three dimensions of 15 food’s healthiness ratings as determined by factor analysis.

Here’s the portion of the text describing these results:

“The first factor (explaining 54% of the total variance), shown on the vertical axis of the bottom panel of Fig 3 shows all animal products with high values and other non-animal products with lower values, suggesting consumers use animal origin as a primary factor in judging whether a food is healthy. A second factor (explaining 31% of the total variance), illustrated on the horizontal axis of the top panel of Fig 3, has canned and frozen fruits and vegetables with the highest values, bakery and cereal items, candy, and fresh fruits and vegetables with mid-to-low values, and animal products with the lowest values, which seems to suggest consumers use degree of preservation as another dimension of healthiness. Finally, the third factor (explaining 22% of total variance), illustrated on the vertical axis of the top panel and the horizontal axis of the bottom panel of Fig 3, indicates freshness or degree of processing is another dimension to healthiness evaluations. These results indicate that healthiness is not a single unifying construct, but rather consumers evaluate healthiness along a number of different dimensions or factors. A food, such as beef or fish, can be seen as scoring high in some dimensions of healthy but low in another.”

There’s a lot more in the article.