Food Demand Survey (FooDS) - March 2017

The March 2017 edition of the Food Demand Survey (FooDS) is now out.

Some items from the regular tracking portion of the survey:

• Willingness-to-pay (WTP) decreased for steak, pork chops, and especially deli ham. WTP increased for chicken breast, hamburger, and chicken wings. WTPs for all meat products are lower than one year ago, except for hamburger.
• Consumers expect higher beef, chicken, and pork prices compared to one month ago. Consumers plan to buy slightly less chicken and beef compared to last month.
• The largest percentage increase in concern was for bird flu and the largest decrease in concern was for farm animal welfare.

Several new ad hoc questions were added to this month’s survey that mainly dealt with knowledge of farm production practices.

Participants were first asked: “Have you ever worked on a farm or ranch?”. About 17% of participants answered “yes.” Participants who answered “yes” were then asked “which of the following best describes the kind of farm you worked on?” Respondents were provided with six options and they could check all that applied.

Of the 17% who said they had worked on a farm, 43% checked “A farm that produces commodity crops (e.g. corn, wheat, soybeans, cotton, or rice)” followed by 40% who checked “A farm that produces commercial livestock (e.g. cattle, swine, or poultry).” “A garden in your backyard” was picked by 38% and “A chicken coop in your backyard” was picked by 23%. 20% checked “other” (and provided responses such as working on a dairy farm or a horse farm or on school farms such as FFA), and 12% checked “A community garden”.

Secondly, participants were asked: "Which of the following animal production industries use added growth hormones?” Over half of participants stated that believed beef, pork, poultry and dairy industries use added growth hormones. Over 75% of participants indicated that they thought that the beef cattle industry uses added growth hormones. Over half of the respondents stated they believe the swine and poultry industries to uses added growth hormones. In reality, the swine and poultry industries do not use any added growth hormones. About 57% of participants stated they believed added growth hormones are used in the dairy industry.

Third, participants were asked: “What percentage of dairy cattle in the U.S. are treated with rBGH?” Overall participants perceive a much greater use of rBGH in dairy cattle than what is actually used. About 20% of participants believe that 50-59% of dairy cattle are treated with rBGH. 5.7% believe that 90- 100% of dairy cattle are treated with rBGH. Only, 10.9% of participants stated that less than 10% of dairy cattle are treated with rBGH. In reality, less than ten percent of all dairy cattle in the U.S. are treated with rBGH.

Lastly, participants were asked: “To what extent do you agree or disagree with the following statements?” Individuals responded on a 5-point scale: 1=strongly disagree, 2=somewhat disagree, 3=neither agree nor disagree, 4=somewhat agree, 5=strongly agree.

The most common answer for each item was “neither agree nor disagree”, except for the statement all milk contains natural hormones where the most common answer was “somewhat agree”. The statement “all cow’s milk contains natural hormones” was agreed upon most, whereas the statement “hormones are never given to dairy cattle” was agreed upon least.
About 38% of participants answered “somewhat agree” or “strongly agree” that it is healthier to consume milk labeled rBGH free. Approximately 30% of participants answered “somewhat agree or “strongly agree” that conventionally produced milk contains unsafe levels of hormones. Only 5.6% of participants selected “strongly disagree” that milk containing rBGH tastes different.

Food Demand Survey (FooDS) - February 2017

The February 2017 edition of the Food Demand Survey (FooDS) is now out.  

From the regular tracking portion of the survey, we find that (compared to one month ago) willingness-to-pay (WTP) decreased for all food products, but most especially for chicken wings and the two non-meat products.  For some historical context, I thought I'd also show changes in WTP for steak and ground beef over time and show how they compare with changes in retail prices as reported by the Bureau of Labor Statistics (BLS).  

The above graphs reveals three things.  First, WTP is not the same thing as a price.  WTP is (at least in theory) a "pure" measure of demand, but prices can be affected by demand and by supply-side factors.  Second, despite the above statement, it appears there is some relationship between the two measures as the correlations between WTP and prices are 0.44 for ground beef and 0.55 for steak.  Third, WTP as measured by FooDS is much more volatile from month-to-month than are prices.  

You can read the whole report for the results from the other tracking portions of the survey.

Several new ad hoc questions were added this month to investigate how consumers respond to information about the herbicide glyphosate.  Working with one of my Ph.D. students, Trey Malone, we picked this topic because it is one we thought consumers were unlikely to have much knowledge about but for which there had been many news stories written.  We were interested, in particular, about forms of confirmation bias - where people seek out information that may confirm their prior beliefs, and by the research in cultural cognition, which suggests we choose information to believe based on our "tribe."  

We asked respondent’s willingness-to-pay for organic vs. non-organic apples and granola bars before and after receiving information about glyphosate at GMOs. Respondents were randomly
allocated to one of five treatments. Respondents in the first four treatments were provided an article to read from one of four sources: The Pulse of Natural Health Newsletter, Food Babe, National Review, or Science Magazine. So far this would be a pretty standard study on the effects of information.  Then, in the fifth treatment, respondents were allowed to pick which of the four sources of information they wanted to read (they were given the name of the source and the title of the article).

We will report the full results associated with the effects of information on willingness-to-pay later, however, I will note that the “negative” information about glyphosate from Natural Health and Food Babe had a much bigger effect than the “positive” information from National Review and Science Magazine.

We asked all respondents, “How trustworthy or untrustworthy do you consider each of the following news sources for information regarding food?” They responded on a scale from -5=very untrustworty to +5=very trustworthy. Science Magazine was the most trusted with a mean response of 1.8. Next was National Review at 1.33 followed by Natural Health at 1.28. Far behind (and statistically significantly lower) was the Food Babe at 0.55.

Despite the fact that the Food Babe was the least trusted source of information, in the treatment where individuals could chose which information they wanted to read, 25.4% chose to read the article from the Food Babe. The only source chosen more often was Science Magazine (picked by 40.5% of respondents). Natural Health was picked by 19% and National Review by 15.1%.

TASTE TRUMPS HEALTH AND SAFETY: INCORPORATING CONSUMER PERCEPTIONS INTO A DISCRETE CHOICE EXPERIMENT FOR MEAT

That is the title of a paper I just published with Trey Malone in the Journal of Agricultural and Applied Economics.  

Here are some of the key results:

“Our participants also indicate that they perceive chicken breast to be the healthiest option in our sample. Both beef products would generate substantial changes in WTP by increasing their perceived healthiness to that of chicken. For example, if hamburger had the same average health perceptions as chicken breast, WTP for hamburger would increase by $0.69. Deli ham, however, would experience an $0.83 increase in WTP if consumers were to believe it was as healthy as chicken breast. Even chicken wings would experience a $0.52 increase in WTP through a perception change.”

and

“The nonmeat options are actually perceived as safer than the meat options. As such, if the average participant perceived hamburger to be as safe as beans and rice,WTP would increase $0.34. Of all products, deli ham would benefit the most by an increase in perceived safety to the level of beans and rice. In fact, our sample indicates that pork products are not very highly appreciated. As noted, deli ham is perceived to be the worst tasting, least healthy, and least safe alternative in the choice set. Those negative perceptions are costly. If participants were to perceive deli ham as equal to chicken breast in taste and health, and equal to the perceived
safety of beans and rice, WTP for deli ham would increase by more than $2.”

You can read the whole thing here.

Where do people eat the most meat?

It seems a fairly simple question: In which U.S. states do people eat the most meat?  Yet, there is surprisingly little good, publicly available data on this question.  Yes, there are fun maps like this one at Slate, but they are far from scientific or data driven.  

I thought I'd try to partially fill this void by turning to data from my Food Demand Survey (FooDS) that has been running now for almost four years.  Because I've surveyed over 1,000 people in the U.S. for about 44 months, that means I have responses from over 44,000 people spread all across the country that I can use to help look for geographic differences.  

In FooDS, each person is told "Imagine you are at the grocery store buying the ingredients to prepare a meal for you or your household.  For each of the following nine questions that follow, please indicate which meal you would be most likely to buy."  Then, they are presented with nine questions that look like the one below.  The only differences across the questions are the prices assigned to each item and the order of the items.      

For sake of simplicity, I counted the number of times each person chose steak, how many times they chose chicken breast, etc.  Thus, the maximum possible "score" a person could have for each item is 9 and the lowest is 0.  To be clear, this isn't a measure of consumption, but rather it is an index of demand.  It is a measure of how much people "like" each of the choice options relative to all the other choice options.  For point of reference, across all the people in my sample, the most frequently chosen option was chicken breast (chosen on average 2.43 times out of 9) followed by ground beef/hamburger (chosen on average 1.33 times out of 9).  The least popular meat items were pork chop and ham, chosen on average 0.80 and 0.68 times, respectively, out of 9.

I won't go into all the hairy details here (email if you want to know more), but I then estimated some statistical models to infer how often, on average, consumers in each state chose each of the meat options.  Then, I calculated how different (in percentage terms) each state was from the mean number of choices, and I created maps.

I'll start with one that has a very obvious regional pattern: chicken wings.

Chicken Wing Demand by State

Demand for chicken wings is highest in the southeast US, where people chose this option 15% to 44% more often than in the average person in the US.  Consumers in western states like Oregon, Idaho, and Arizona chose wings 15% to 27% less often than the average consumer nationwide.

For other products, there is less of a regional pattern.  Below is the map for beef steak.  Demand for steak is highest in California, Nevada, Washington, Oklahoma, Minnesota, Illinois, Florida, and New York.  Steak demand is lowest in Idaho, Utah, Missouri,  and the Appalachian regions, Tennessee, Kentucky, and West Virginia.

Beef Steak Demand by State

While we are on beef, here is the map for hamburger/ground beef.  For ground beef, demand is generally highest in the upper midwest and is lower on the coasts.

Demand for Ground Beef by State

A somewhat similar pattern emerges for deli ham (shown below), although the location of heaviest demand moves a bit south and east relative to that for hamburger.  

Deli Ham Demand by State

Below is the map for pork chops.  This map is interesting in the sense that there are several instances where some of the highest demand states are situated adjacent to some of the lowest demand states (e.g., Oregon next to California; Oklahoma next to Texas; etc.)  However, one thing to note in the case of pork chops is the scaling: there isn't much difference across any of the states.  Consumers in Missouri have the highest pork chop demand, but only chose pork chops 2.7% more than the average consumer.  Consumers in California have the lowest pork chop demand, but only chose pork chops 3.3% less than the average consumer nationwide.  

Pork Chop Demand by State

The last individual meat product is chicken breast.  As shown in the map below, chicken breast demand is generally highest in the west and the northeast.  I'm not at all surprised to learn that chicken breast demand is near the lowest in my home state of Oklahoma (at -4.5%), trailing only North Carolina, Missouri, and Mississippi.  

Chicken Breast Demand by State

Finally, to round things out, here is a map associated with overall meat demand.  This figure was calculated by determining how many times a person chose any of the six aforementioned meat products (recall there were nine total options, three of which were non-meat).  On average people chose a meat option 7.03 times out of 9 total choices.  However, as the map below shows, there is some heterogeneity across states.  Overall meat demand is highest in the Midwest: consumers in Illinois, Indiana, and Iowa chose any meat option 1%+ more often than the average consumer.  Lowest overall meat demand was in places like California, Arizona, Maryland, Utah, New Jersey, and Massachusetts, where consumers chose a meat options at least 1% less often than the average consumer.  

Overall Meat Demand by State

Do you plan to spend more or less eating out in the next two weeks?

The title of this post is based on a question I ask of food consumers every month in my Food Demand Survey (FooDS).  If I had to guess your response, I'd go with "spend less."  Why?  Because every month, for almost four years, that has been the average response to the question (the exact question is: "Do you expect to spend more or less on food bought during grocery shopping in the next two weeks as compared to the previous two weeks?" and response categories are: "I plan to spend about . . . 10% less, 5% less, the same, 5% more, or 10% more").   

Here is the problem with the above results.  They are almost certainly false.  If people are continually, month after month, saying they plan to spend less on food away from home, the cumulative effect would ultimately be a negative amount of spending.  

Moreover, another question I ask on the survey relates to how much the respondent says they spend (in dollars) on food away from home (exact question wording: "What has been you (or your household's) usual WEEKLY expense for meals or snacks from restaurants, fast food places, cafeterias, carryout or other such places?"  The response categories are: less than $20, $20-$39, . . . $140-$159, $160 or more).  

In the most recent issue of FooDS, we estimate the average level of spending on food away from home in January 2017 was $53.26/week.  The average answer from the previous month (December 2016) was $50.89/week.  So, in terms of stated expenditure, there was a $53.26-$50.89=$2.37 increase (or a (2.37/50.89)*100=4.66% increase). Yet, (and here is the problem), In December 2016, people said they planned to reduce spending on food away from home by, on average, -0.59%, and in January 2017, they said they plan to reduce spending on food away from home by, on average, -1.47%.

Here is what I get if I calculate "actual" changes in reported levels of spending on food away from home against people's stated plans to increase or decrease spending (the blue bars are the same blue bars as in the above graph, they just look different because the vertical axis has been re-scaled).       

So, what is going on here?  One possible answer is that consumers suffer from a type of self-control problem.  We tell ourselves we want to reduce the amount we're spending on food away from home in the future.  But, when the future arrives, we forget our plans and have fun eating out with our friends and keep spending as usual.  If this is correct, eating out is a sort of "guilty pleasure" - something we enjoy but wish we could force our future selves to cut back on.     

The propensity of an individual to say they plan to reduce spending on food away from home relates to a variety of demographic variables (even after controlling for the month-to-month effects that may be driving changing spending patterns).  Income is a major determinant.  Lower income people are much more likely to say they plan to reduce spending on food away from home than higher income respondents.  Indeed, for the highest income households, there is no consistent upward or downward bias in planned spending patterns for food away from home.  Other (smaller) determinants include gender, age, and participation in food assistance programs with women, older, and SNAP participants being more likely to say they plan to reduce spending on food away from home.

A less nefarious explanation for the above phenomenon might be that our survey is conducted in the middle of the month, and if people are paid at the beginning of the month (or at the end of the previous month), then there might be less remaining in the food budget for "splurges" like spending on food away from home by the time the middle of the month arises and they rationally plan to spend less in the following two weeks.  

I doubt this is true for two reasons.  The first is that results from other surveys back up the "self control" explanation.  For example, this article in the Wall Street Journal a couple years ago pointed to a survey of higher income consumers that asked what kept them from saving more money each month.  The most common answer, given by 68% of respondents, was "dining out".  The second reasons is that we observe no such phenomenon in our survey for stated changes in spending on food AT home.  Here is the average response each month for how consumers expect to change spending on food at home.  As can be seen, the value goes up and down and is neither consistently negative or positive.     

If you have other explanations for why people consistently say they plan to spend less eating out next month, I'd love to hear them.