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.

How much do millennials like to eat out?

A recent article in Forbes discussed millennial's eating habits utilizing, it seems, a report from the Food Institute and USDA Economic Research Service Data.

The Forbes article writes:

“Millennials spend 44 percent of their food dollars – or $2,921 annually – on eating out, according to the Food Institute’s analysis of the United States Department of Agriculture’s food expenditure data from 2014. That represents a 10.7 percent increase from prior data points in 2010.

In contrast, baby boomers in 2014 spent 40 percent of their food dollars on eating out or $2,629 annually.”

It's a little hard from this article to really get a nice comparison of millennials food spending without controlling for differences in income and total spending on food at home and away from home.  Thus, I turned to the data from my Food Demand Survey (FooDS) where we've been asking, for more than three years, how much people spent on food at home and away from home.

Here is a breakdown on spending on food away from home (expressed as a share of total household income) by age and by income.  The black and red dashed lines are the two age groups that could be considered millennials.  The results show that for incomes less than about $80,000/year, millennials do indeed spend a larger share of their income on food away from home than do other generations; however, the same isn't necessarily true for higher income households.  People in the two oldest age categories spend a lower share of their income on food away from home at virtually every income level.  For each age group, the curves are downward sloping as suggested by Engle's Law: the share of income spend on food falls as income rises.   

The next graph below shows the same but for spending on food at home.  For the lowest income categories, the youngest individuals spend more of their income on food at home than do older consumers; however, at higher income levels, all age groups are fairly similar.  Coupling the insights from the two graphs suggests that, at incomes less than about $60,000, younger folks are spending more of their income on food (combined at home and away from home) than older folks.   

Finally, here is the share of total food spending that goes toward food away from home by age group and income level.  In general, as incomes rise, people spend more of their food budget away from home.  That is, richer people eat out more.  No surprise there. 

Generally speaking, consumers younger than 44 years of age spend more of their food budget away from home than do older consumers.  The 24-34 year old age group that is firmly in the millennial generation consistently spends more of their food budget away from home than other age groups at almost every income level.   

Food by Subscription

I was recently interviewed by the Atlanta Tribune for a story they were running on subscription-based services that deliver meal ingredients to your home.  

It was a bit ironic that this interview request came at this time because my family had recently been trying out one such service: HelloFresh.  Here's what I had to say about why we tried it out:

“My wife spent a large amount of time each week menu planning (i.e., figuring out what to cook for the week), and then even after getting the week planned out sometimes our local grocery store wouldn’t have all the items she needed. So, recently, she signed on to HelloFresh as a way to cut down on time spent searching for recipes and traipsing about town for different ingredients.”

Why is the market growing?

“In general, it’s hard to separate a short-term fad from a trend that has staying power. One thing to look at is the underlying economic forces and see whether there is reason to believe a larger market could exist.
...
Demand for convenience has grown. Demand for quality has grown. The subscriptions boxes offer convenience and quality, all in the comfort of one’s home. Typically one had to choose one or the other (e.g., I could have convenient but that would mean low quality or eating out), but boxes are an innovation that has broken down that traditional constraint. ”

On whether the market will continue to grow

“Hard to say. It will depend on the ability of the box services to continue to offer competitive offerings with grocery stores and restaurants, and it will depend on how these other food service outlets respond in turn. For example, restaurants already offer take out. And, what’s to stop Walmart or Kroger from offering their own boxes ready for pickup?”

Isn't this just a frivolous expense?

“Whether something is a “splurge” depends on one’s budget. . . The box service my family uses winds up costing us about $10 per person per meal. We could easily spend that amount if we went out to eat at a sit-down restaurant, and fast food is only slightly less expensive. Cooking from scratch would be less expensive in terms of food cost, but would require “hidden costs” in more time planning, shopping, and cooking. It’s unlikely that boxes are the best option for every family, but they’ll likely make sense for some families some of the time.”

Chipotle's Marketing

By now, I'm sure many of you have seen Chipotle's newest video release, the Scarecrow.  The video, released about a week ago, uses vivid imagery to decry "factory farming." Better still, there is an accompanying video game!

I like to eat at Chipotle, but this video comes across as a bit disingenuous.  The restaurant is now a multinational operation with 1400 stores.  Some of the images are downright misleading (e.g., chickens are not given growth hormones), and others are merely suggestive (e.g., that Chipotle is fundamentally different than other restaurant chains, when in many important respects it is not).  

I had a hard time distilling my thoughts on the matter, but fortunately the blogger (and hog farmer) Diana Prichard did all the hard work f in a series of thoughtful posts on the issue (part 1, part 2, part 3 is forthcoming).  

Her conclusion in part 2 was brilliant.

Why did it matter so much? Because Chipotle has exalted itself as an ethical corporation among the throngs of unethical corporations, but in The Scarecrow Chipotle sits atop a high horse of its own creation mocking the same qualities in others that its own behavior embodies. I don’t know about you, but I call that hypocrisy of the worst kind.

I chose the pictures in this post deliberately because green washing and transparency is a theme The Scarecrow broaches repeatedly. The Scarecrow stares at a factory wall painted to look like a farm, peers behind broken boards of an “all natural” poultry billboard to see a chicken being injected with… something. [Choptle's corporate spokesperson] himself told me that they’re interested in transparency in the food system, and argued they’re “not the ones championing “ag gag” laws that make it illegal to document what happens in our food system.”* Yet at the same time Chipotle is engaging in behavior we could easily coin “ethics washing.”

By elevating itself as an ethical company, but then turning around and only acting ethically when it benefits them Chipotle is ethics washing their own company and products. It would be more ethical to market their stores in such a way that is not blatantly inaccurate slander of farmers, but that won’t sell as many burritos so they have no interest. Not only is Chipotle misleading consumers on issues of agriculture and the food system, they’re misleading consumers on their own company’s principles and standards of conduct. Chipotle’s Scarecrow paints “a world of pure imagination,” indeed — one in which Chipotle is far more morally astute than they really are.

McDouble: The Cheapest, Most Nutritious Food in Human History?

That provocative claim was originally made bay a commentor at the Freakonomics blog. Freakonomics co-author, Stephen Dubner, turned the claim into an interesting podcast for NPR. Then Kyle Smith wrote an editorial on the topic for the New York Post celebrating the McDouble.  The Wall Street Journal picked up the story, and predictably, a number of outlets offered a counter-response.  It seems the story has gone viral.

If you care to hear my thoughts on the subject, I had to opportunity to briefly expound on it a bit this morning on Fox and Friends.  

The one thing I didn't say is that it is not necessarily true that more nutritious food is always more expensive.  The USDA published a report on this issue a few months ago. Basically, it comes down to how you measure it.  If you measure the cost of nutrition as the price per calorie, then lettuce is going to look really expensive because lettuce doesn't provide many calories.  But, if you measure the cost as the price per gram (or pound), then fruits and veggies don't look so costly compared to other foods.        

Some people point out that it is more expensive to order a salad than a McDouble at McDonald's.  Doesn't that prove it is more expensive to eat healthy?  Well, first, a McDonald's salad is not necessarily better for you.  It's important to actually look at the nutritional content of salads at McDonald's; you can easily eat more calories by ordering a salad - especially if you add chicken or use salad dressing.  But, even if the salad is more nutritious, it is likely more expensive because there is more volume to the salad than the burger (i.e., there are more oz in the serving of salad than burger) so you're getting more with the salad; also, there is the extra storage costs required with the bulkier packaging, not to mention the costs associated with keeping salads fresh and dealing with spoilage and waste.   

Finally, on this point, Adam Drewnowski - who was done a lot of research on this topic - sent me this recently published paper, where he calculated the cost of various fruits and veggies according to a nutrient score.  I pulled out the second figure from the paper and reproduced it below.  If I'm not mistaken, it looks like there is a positive correlation here: the higher the nutrient score, the more affordable the food is. 

One take-away from the figure: if you want inexpensive nutrients, eat sweet potatoes!