Consumer Attitudes toward Big Food circa 1900

I've been reading an advanced copy of Maureen Ogle's new book, In Meat We Trust: An Unexpected History of Carnivore America .  I'm about half way through, and so far it is fantastic.  

In one section, Ogle writes about Americans' attitudes toward meat packers in the early 1900s:  

Americans insisted on access to cheap food, regardless of its true cost, but believed the worst of those who made that cheap food possible and abundant

Is it any different today?  By the way, when she's referring to "true cost" she doesn't mean externalities - she's talking about the material costs of raising beef and getting it to market, which the average consumer under-estimates.  

She also cited a magazine article written around the same time about by a journalist who actually understood the the effects brought about by the Swift meat packing company:  

“We make great outcry against the concentrated bigness of the packers, yet the probability is that we would make yet greater outcry if the modern system of food supply were suddenly cut off and we were put back on the basis of local butcher-shops.” He was right. in the United States, the mechanisms of food supply were so efficient that they had become taken for granted  —  and when it came to food, Americans took nothing for granted so much as low price. 

They say that the more things change, the more they stay the same.  Here we are a hundred years later, and it remains the case that the mechanisms of food supply are so efficient that they are taken for granted.

What Explains the Difference in the Way Americans and French (and Brits) Eat?

I ran across this fascinating paper entitled "Do Prices and Attributes Explain International Differences in Food Purchases" by Pierre Dubois, Rachel Griffith, and Aviv Nevo that is forthcoming in the American Economic Review (an earlier version of the paper is here; a gated forthcoming version can be found by searching here).

According to the paper, French consumers eat about 1777 calories every day.  Americans, by contrast, eat 2103 calories (UK falls in the middle at 1929).  The differences don't end there.  49% of our calories come from carbs; but for the French its only 38%.  A much larger share of French calories comes from fat than those of us in the US (46% vs. 37%).  When one digs a little deeper - it becomes clear why: The French eat more dairy and oils than Americans.

Now, here is the key question which Dubois and colleagues ask.  Why do people in the US, UK, and France eat so differently?   

The authors consider three possible explanations: 

1. differences in prices across countries,
2. differences in the food options available (and nutrient content of foods) across countries, or 
3. differences in what people like to eat across countries (i.e., differences in preferences).

Their data reveals a number of interesting findings.  For example, even though Americans eat more calories than the French, we spend less money doing so ($426/quarter vs. $466/quarter).  Part of the explanation is that food prices are generally higher in the France than the US, but interestingly, it isn't across the board in the ways one might expect.  Fruit and Veggie prices are similar in the US and France.  But, the prices for dairy, meats, oils, and prepared foods are 31%, 76%,  16%, and 18% lower in the US than France.  Interestingly, sweeteners and drinks are priced 39% and 43% higher in the US than in France.  So, one thing becomes apparent: the French are eating more dairy and oils than we are in spite spite of the higher prices.  They must either really like to eat those foods or there must be more of those kinds of foods in France to choose from (they also eat about the same amount of meat as we do - as a share of calories - despite meats being 76% more expensive it France).   

Ultimately,  Dubois and colleagues find that all the above factors matter.  The author's models predict that Americans consume an average of 2212 calories each day (slightly more than the "raw mean").  Then, the authors make some interesting projections.  They calculate that Americans would:

• eat 2158 calories if we were exposed to the same food options (or product attributes) as the French
• eat 1890 calories if we faced the same food prices as the French
• eat 1841 calories if we faced the same food options and prices as the French

The authors conclude:

The estimates allow us to simulate counterfactual quantities purchased by households with preferences from one country but facing prices and product attributes from another country. We use the simulations to learn about the relative importance of preferences versus the economic environment. We find that, the average US household when faced with French prices and product attributes, will purchase substantially fewer calories, bringing the level close to that of the average French household when faced with the same environment. However, the composition of these calories would differ. The simulated change is mostly due to price differences. In contrast, when we simulate the average US household’s food basket with UK product attributes this has a substantial impact on reducing calories, whereas changing relative prices in fact increases calories. From these findings we conclude that the economic environment makes a substantial difference on the consumption basket. However, in general, it is the interaction of preference, prices and attributes that explains the cross country differences.

I find these results interesting because there are many Americans who seems to subscribe to a view that the French have some kind of moral superiority when it comes to food and weight.  I read these results to say that the French are, in large part, just responding to the economic incentives they face.  And while they consume fewer calories than we do, it isn't all that clear they're better off given that they must pay more for many of the foods they desire than do Americans. 

I'm in Italy for the next two weeks. I wonder what I'll eat differently due to differences in food prices and availability?

Let Them Eat Ramen

Over at NPR, Eliza Barclay wrote an interesting story on Ramen noodles.  I shudder to think how much of my nutritional intake in college and grad school came from Ramen noodles.  Little did I know they might have such global importance.

Underpinning Barclay's story is the provocative question: Can Ramen noodles solve the problem of global hunger?

When I was recently on Fox and Friends talking about the cheapest-most nutritious food in human history, it appears the a better candidate might have been Ramen noodles rather than the McDouble.  Here is the NPR piece:

it's the multinational noodle companies' conquest of countries like Papua New Guinea, Nigeria, Brazil and Mexico that really interests the anthropologists: Frederick Errington of Trinity College, Tatsuro Fujikura of Kyoto University and Deborah Gewertz of Amherst College. And it's here that they make one of their most intriguing arguments: Instant noodles do good by alleviating the hunger of millions of people around the world. These supercheap, superpalatable noodles, they write, help the low-wage workers in rich and poor countries alike hang on when the going gets tough.

I also found this passage interesting:

The authors say that "real food" advocates like journalist Michael Pollan, who wring their hands over rising consumption of industrial food like ramen, raise important questions about its perils. But the authors also call ramen a "virtually unstoppable" phenomenon. And they foresee a world of 9 billion people "in which the affluent will be presented with too many food choices and [will be] called upon to use their survival skills to choose wisely, and in which the poor will have to use their survival skills to get by on cheap food" like ramen.

"I'd love to take Michael Pollan to a squatter settlement and have him deal with poor, hungry people in such circumstances, who have no choice of going back home to grow subsistence crops or be part of a regional food system," says Gewertz. "Subsistence agriculture is hard, dirty and hot work. People want out of it. It's not to be over romanticized."

Did I say after a decade-long hiatus from Ramen, they're back in our house - my kids love it!

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!

Most overpriced items in the grocery store

Yesterday I received a phone call from a producer for a major cable news station asking if I'd be willing to come on a show and talk about this story that appeared in Business Insider entitled: "5 Of The Most Overpriced Items In The Grocery Store".

After reading the story, I gave the following response to the producer (slightly edited here for the blog).  Although it would have been nice to have a little air time, I'm happy to report that they decided not to run with the story, at least as it was originally premised.

The story equates “overpriced” with the “percent markup”, which is pretty shaky.  There are a lot of good reasons why the percent mark-up may vary across products that has little to do with being “overpriced”.  For example, differences in demand for convenience and other characteristics, differences in costs of packaging, storage, transportation, etc. will cause differences in the percent markup.  

Nonetheless, let’s play along.

1) Bottled water.  On the surface, it does seem crazy that there is a 4000% mark-up for bottled water.  But, part of the reason for the high percent is that the price of water is REALLY cheap to begin with (so the percent will look very high though the actual dollar mark-up in absolute terms is small).  More importantly, how valuable is convenience to you?  A lot of people are willing to pay an extra buck to have more convenient water and not have to fiddle with refilling and refrigerating a re-usable water bottle.  Who am I to say that an extra $0.50 or $1 isn’t worth it to the person whose paying for it?  If it were really the case that bottle water sellers were ripping us off, why doesn’t some entrepreneur enter the market and start selling cheaper bottled water and corner the market?  The fact is that most of the cost is in the packaging, transportation, etc.  When you buy bottled water, you’re paying for packaging and convenience.

The same arguments apply even more forcefully for pre-cut produce.  Who cares if pre-cut carrots and onions are marked up 40%?  I’m not having to do the work!  That’s an extra $1-$2 I’m definitely willing to pay.  And if someone else can figure out a way to do it for less than 40%, you can bet they’d have my business.  Competition – in the long run- will eventually drive down prices to their approximate costs. 

2)   In general, I would characterize something as “overpriced” if people have mis-perceptions; if they believe they’re getting something from a product that they’re not actually receiving.  Two of the examples in the story potentially fit that criteria: name-brand spices and brand-name cereal.  One way to know whether you’re being fooled by marketing is to do a blind taste test.  It is often the case that our brain is more powerful in influencing how we think something tastes than our tongues.  So, with a neutral friend, try it out: can you REALLY taste the difference?  If not, you may be over-paying.

3)  In this light, there are a number of products that many people have “incorrect” beliefs relative to what scientific studies say – thus, they may be paying a premium for characteristics that they’re not actually recieving.  One example is food with a "natural" claim. A “natural” label is pretty vacuous, and I've previously touched on those issues here and here.  Another example is organic food.  People believe a lot of things about organic foods that just aren't true: that they’re pesticide free, that they support small farms, that they are more nutritious, etc.  I’m not saying there are NO benefits to organic, only fewer benefits than most believe.  A lot of the same arguments apply to local foods.  Chapters 5 and 9 in The Food Police have all the details and citations.