Understanding the Impacts of Food Consumer Choice and Food Policy Outcomes

The journal Applied Economics Perspectives and Policy just published a special issue in which  agricultural and applied economists provide their thoughts on how we might help tackle some of society’s most difficult problems and challenges.  I co-authored one of the articles with Jill McCluskey.  Here's the abstract:

“The food consumer plays an increasingly prominent role in shaping the food and farming system. A better understanding of how public policies affect consumer choice and how those choices impact health, environment, and food security outcomes is needed. This paper addresses several key challenges we see for the future, including issues related to dietary-related diseases and the efficacy of policies designed to improve dietary choices, trust in the food system, acceptance of new food and farm technologies, environmental impacts of food consumption, preferences for increased food quality, and issues related to food safety. We also identify some research challenges and barriers that exist when studying these issues, including data quality and availability, uncertainty in the underlying biological and physical sciences, and the challenges to welfare economics that are presented by behavioral economics. We also identify the unique role that economists can play in helping address these key societal challenges.”

Other contributions in the special issue include:

• "Agricultural and Applied Economics Priorities for Solving Societal Challenges" by Jill McCluskey, Gene Nelson, and Caron Gala
• "Economics of Sustainable Development and the Bioeconomy" by David Zilberman, Ben Gordon, Gal Hochman, Justus Wesseler
• "Sustaining our Natural Resources in the Face of Increasing Societal Demands on Agriculture: Directions for Future Research" by Madhu Khanna, Scott Swinton, Kent D Messer
• "Climate Change as an Agricultural Economics Research Topic" by Bruce McCarl and Tom Hertel
• "Big Data in Agriculture: A Challenge for the Future" by Keith Coble, Ashok Mishra, Shannon Ferrell, and Terry Griffin
• "The Economic Status of Rural America in the President Trump Era and beyond" by Stephan Goetz, Mark Partridge, Heather Stephens
• "Food Insecurity Research in the United States: Where We Have Been and Where We Need to Go" by Craig Gundersen and James Ziliak
• "The Farm Economy: Future Research and Education Priorities" by Allen Featherstone
• "A Research Agenda for International Agricultural Trade" by Will Martin
• "Energy Economics" by Wally Tyner, and Nisal Herath

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.

Is bigger safer?

The answer to the question in the title, at least in the context of consolidation and food safety, seems to be "no" according to this article by Anne Kim in Washington Monthly.

The subtitle of the article indicates:

“A consolidated food industry brings you salad and chicken nuggets cheaper—and spreads deadly food-borne pathogens farther.”

And later in the article:

“In other words, the same hyperefficient distribution system that brings you convenient and affordable salad greens and all the chicken nuggets you can eat can just as efficiently deliver E. coli, salmonella, and other dangerous bugs to your plate. Moreover, today’s industrialized food production processes carry other public health risks. ”

The article contains several interesting stories and interviews, but lacks solid evidence supporting the article's main premise that a less consolidated food system would be a safer one.  Yes, there has been consolidation in agriculture.  Yes, when a large firm has a food safety event, it affects more people.  But, what we don't know is whether, overall, a food system with many smaller firms is safer than one with fewer larger firms.  Indeed, the author even acknowledges the following:

“According to the CDC, no evidence suggests that smaller or larger producers have an inherent advantage on food safety. “It has to do more with your practices than your size,” says the CDC’s Matthew Wise. ”

What is not mentioned is that large size can sometimes lower the average (or per unit) cost of investing in certain food safety technologies.  

I touched on this issue in my book, Unnaturally Delicious, when talking to Frank Yiannas, the Vice President of food safety at Walmart.  Here's an excerpt:

“More than 120 million Americans (more than a third of the U.S. population) shop at Walmart every week. Does the sheer scale of the operation make the U.S. food system riskier? If Walmart has an outbreak, multitudes would be sickened. Yiannas replied: “One out of every four dollars spent on food are spent at a Walmart. We can make a big difference. Large organizations like Walmart result in a safer food system.” He points out that when Walmart makes a change, it affects the whole system. Sure, smaller companies might have outbreaks that affect fewer people, but when lots of small companies are having lots of small outbreaks, the problem is more widespread. A downside to small companies, said Yiannas, is that they can’t easily invest in improving the system as a whole. While Walmart often attracts negative attention because of its size and scale (e.g., Do they pay workers fairly? Do they hurt local mom-and-pop businesses?), at least in the world of food safety, their size has significant benefits for its customers, and as I’ll soon discuss, even for non-customers. ”

Yiannas went on to talk about the value of protecting Walmart's brand, the fact that their internal safety standards far exceed government minimums, and he presented evidence that the food safety initiatives that they've implemented have improved safety for the whole country (because of their size). You'll have to read the book for all the details.  

I'll also point out research by Marc Bellemare (here's his piece on the topic in the New York Times) showing a relationship between food safety outbreaks and the prevalence of farmers markets (you know, those places with many small farms and processors).  

I'm not saying that larger IS unilaterally safer, but I am saying there is no solid evidence to support the broad premise behind the Washington Monthly article.  There are a lot things to like about small producers and we ought to think about ways of lowering barriers to entry that are sometimes created by food safety regulations, but doesn't mean we should cast undue fear about our present food system, which is among the safest in the world.  

Food Demand Survey (FooDS) - June 2016

The results from the June 2016 edition of the Food Demand Survey (FooDS) are now in.  

In terms of the monthly tracking portion of the survey, willingness-to-pay (WTP) decreased for all food products in June compared to May. This is the third month in a row that WTP has fallen for steak, chicken breast, and chicken wing, and the fourth month in a row that WTP has fallen for pork chops and deli ham. 

There was a sizable increased in awareness of GMOs in the news this month, as was also the case for battery cages and beta-agonists.  The largest percent increase in concern was for bird flu and farm animal welfare. The largest percent decrease in concern was for cancer and meat consumption, antibiotics, and E. coli. 

Several new ad hoc questions were added this month.

First, I followed up on some questions I'd previously asked in response to some research conducted by Marc Bellemare at University of Minnesota on food safety and farmers markets. In particular, participants were asked: “Have you or anyone in your household bought and eaten food from a farmers market in the past two weeks?”

Approximately 67% of participants stated they have not purchased food from a farmer’s market in the past two weeks. Less than one third of participants stated they have purchased food from a farmer’s market in the past two weeks. 2.31% of participants stated they did not know if they have purchased food from a farmer’s market in the past two weeks.

Here comes the interesting part.  The people who shopped or ate at farmers markets were much more likely (20% vs. 2.5%) to say they had food poisoning in the past two weeks than people who did not eat or buy food at a farmers market. I'm surprised the difference is so large, but the results are perfectly in line with Marc's research.  

There are other demographic differences as well.  People who shopped or ate at farmers markets were more likely to be male (55.6% vs. 26%), to be on SNAP - aka food stamps - (24.1% vs. 14.5%), not be from the Midwest (90% vs. 80%), to have higher incomes ($91,167 vs.
$67,607), be younger (39 vs. 20 years of age), and be more liberal (3.4 vs. 2.9 on a 1 to 5 scale) on average than are people who did not shop at farmers markets. 

Next, a couple questions were added on food waste.  Participants were asked “Of all the food you buy at grocery stores and supermarkets, what percentage would you estimate is thrown away uneaten?” 

About 80% of respondents said they throw away some portion of food that has been uneaten. Only about 20% said they threw away no food. About 60% of the sample said they throw away 10% of the food they buy or less. Only about 10% of respondents said they threw away 50% or more of the food they purchased. Across all respondents, the average percentage of food purchased that was eventually thrown away was estimated at about 17%. 

Finally, there's been a lot of hand wringing on the possible effects of different sell-by, use-by, and expiration dates on food waste (e.g., witness this report from The Harvard Food Law and Policy Clinic (FLPC) and the Natural Resources Defense Council (NRDC).

To explore this issue, respondents were randomly split into four groups and asked: “Supposed you found a package of food in your kitchen that had the following label <<label>>.  What would you do?"  Participants responded on a 5 point scale: 1 = I’d definitely eat it, 2 = I’d probably eat it, 3 = I’m not sure whether I’d eat it or throw it away, 4 = I’d probably throw it away, or 5 = I’d definitely throw it away.

Respondents randomly saw one of the following four labels:

• "Expiration Date June 9"; 
• “Sell by June 9”; 
• “Best if Used by June 9”; or 
• “Use by June 9”.

Note that the survey was purposefully fielded on June 10, one day after the date used in the question.

The most common answer across all categories was “I’d probably eat it”. The percent saying they’d definitely or probably eat the food was 60%, 73%, 68%, and 64% for the expiration date, sell by, best if used by, and use by labels. Less than 10% of respondents answered “I’d definitely throw it away” for all labels. The sell by label generated the least food waste, and it was the only label that generated less waste than the expiration date label. The differences in stated food waste was not particularly large for the four labels considered.

Millennials' Food Values

I've given a couple presentations recently on food trends, and in each instance I was asked whether the so-called Millennial generation thinks differently about food issues than older generations.  I haven't spent a lot of time delving into this question because a lot of the willingness-to-pay research I've been involved with over the years suggests demographics don't tend to explain a lot of the variation in willingness-to-pay.

But, given the interest in the subject, I thought I'd take a quick look at some of the data from the monthly Food Demand Survey (FooDS) I've been running for over three years now.  In particular, I pulled the data we ask on so-called "food values."  The question shows respondents 12 issues (randomly ordered across surveys) and asks respondents which are most and least important when buying food.   Respondents have to click with their mouse and drag four (and only four) items in the “most important” box and then do the same for the “least important” box. 

A scale of importance is created by calculating the proportion of times (across the entire
sample) a food value appeared in the most important box minus the proportion of times it
appeared in the least important box. Thus, the range of possible values for a food value is from -1 to +1, where a higher number implies more importance (a +1 would mean the particular food value was placed in the most important box by 100% of respondents). This is a zero-sum scale, and it only reveals relative importance (e.g., how importance taste is compared to price) not overall importance.   

Ok, so here's a graphical illustration of the food values by age group (I've pulled the data over time, so each age group has several thousand observations, yielding margins of error of around +/- 0.025 importance points).

Except for the oldest group, there is agreement in ranking at the top: Taste>Safety>Price.  In the middle-range of importance, there is far less agreement.  Both the 18-24 year old group and the 25-34 year old group could be considered Millennials according to most definitions I've seen.  The Millennials place less relative importance on nutrition than the 55 and older crowd.  However, the top four issues (taste, safety, price, and nutrition) are way more important than the other issues regardless of the generation under consideration.

The Millennials place less importance on appearance but more relative importance on naturalness, animal welfare, convenience and environment than do older generations, particularly the 65 and older group, which compared to the other age groups, places the lowest importance on naturalness, animal welfare, and environment.  There is a big divide when it comes to the importance of origin: the 65 and older group places quite a bit more importance on origin than do people who are 24 years and younger.  

The biggest gap is for origin (there is a 0.30 spread on the -1 to +1 scale) between the youngest Millennials and the oldest group.  The next biggest gap is for naturalness (there is a 0.22 spread on the importance scale) between the oldest group and the 25-34 year old Millennials.  The most agreement is for "fairness."

It might also be instructive to compare all this along another demographic category: gender (margin of error here is +/- 0.014).  

Women place more relative importance on safety, animal welfare, and naturalness than men. Men place more importance on convenience and novelty than women.  The biggest gap is for animal welfare (a 0.19 point difference on the -1 to +1 scale) and then convenience (a 0.16 difference).