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February 2012 Archives

Food Prices and Obesity

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Last Friday afternoon The Food Industry Center and the Department of Applied Economics had the privilege of hosting Dr. Laurian Unnevehr of the USDA Economic Research Service for the 2012 James P. Houck Lecture on Food and Consumer Policy. Her presentation, Evidence Driven Policy for Addressing Obesity: What Does Economics Contribute? was an insightful look into what the field of economics is, and should be contributing, to the obesity epidemic.

Dr. Unnevehr started by talking about the costs and causes of obesity. She reported that the CDC estimated the direct health care costs of obesity to be about $147 billion in 2008, or 9%-20% of all health care costs. About half of this is paid by Medicaid or Medicare, making obesity a public problem. There are many causes of obesity including too many calories, an abundance of energy dense foods, and too little activity along with many structural reinforcements such as the availability of junk food in the hardware store. The difficult part of resolving the obesity issues though, is people know they should be eating healthier, yet changing their eating behavior is hard.

When addressing the obesity problem, there are 2 components: intervention and prevention. Much of the economics research about obesity has centered around interventions; one of the most popular being focused on prices and taxes. Dr. Unnevehr reported the evidence shows food demand is inelastic. This means you would need to drastically increase (decrease) prices on unhealthy (healthy) food to make a meaningful change in diet. The evidence has shown that input taxes (when sweetener that is added in the processing of a product is taxed rather than the product being taxed at the consumer level) are more effective. For example, a 10% reduction in sweetener consumption would require a retail tax of 40% or an input tax of 27%-43%. Input taxes have less of an impact on consumer surplus as well. Research has also shown taxing calories is most efficient because it accounts for substituted products.

However, she was sure to remind us the battle for prices is not over. In a graph of the Consumer Price Index of fresh produce and of cupcakes, cakes, and cookies you could see that "It's getting more expensive to do the right thing." She also showed a map of price ratios and regions where milk was more expensive than soda, noting high levels of obesity in these areas. Dr. Unneverhr reported that prices do matter in the long run and some studies have shown that higher prices for soda led to reduced BMI and higher prices for fresh fruits and veggies led to increased risk of diabetes. Since we don't know what effect prices have on obesity in the long term, there are still many questions that need to be asked including why the relative price of healthy alternatives varies across the United States and what would reduce the relative price of these healthier alternatives?

To view Dr. Unneverhr's entire presentation check out The Food Industry Center's Past Events web page to watch her entire presentation.

*Dr. Unneverhr also talked about food access, information, and standards in her talk. Check back in the near future to learn more about these topics!

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School Lunches with Dr. Elton Mykerezi

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Late last year we talked about the challenges the National School Lunch Program faces in supplying healthy school lunches. It is only half the battle though. Once healthy food is in the schools, students still need to make the choice to eat it. Researchers and schools are trying many creative ways to nudge students into making healthier choices. Dr. Elton Mykerezi from the University of Minnesota Applied Economics program along with Marla Reicks, Joseph Redden, Traci Mann and Zata Vickers did just that in a new study that put pictures of vegetables on lunch trays.

The article Photographs in Lunch Tray Compartments and Vegetable Consumption Among Children in Elementary School Cafeterias was recently published in The Journal of the American Medical Association. We 'sat down' with Dr. Mykerezi to talk about the study which was conducted with about 800 students at a Richfield, MN elementary school.

*Questions from The Food Thought Blog in bold.

Hi Sadie,
Thank you for the opportunity to discuss our study with you.

What was the motivation for your study? How was it different than what people have done before?
The motivation was to increase vegetable consumption in school cafeterias. The idea, to make subtle changes in the choice environment in order to guide choices, is both old and new. I say it is old because it has been long known to behavioral scientists that, very often, individuals make choices in an automated or semi-automated manner. In many cases this is a positive thing, as life is filled with millions of little choices, and investing significant cognitive resources into each of these can be exhausting. Consider, for instance, the way in which you open doors. On your way in, you'd likely encounter a handle and you'd pull. A flat surface on your way out signals a push. The average person would likely not be able to recall the last time they stopped in front of a door and pondered on exactly how to get it open, yet we go through dozens of doors each day. Well-designed doors and our automated responses to them, save us considerable time and trouble.

I think what lies at the heart of behavioral economics is the insight that automated decisions are made daily and we need to seriously think about how to isolate instances when humans are most likely to make choices in a less than fully rational and deliberate manner and to incorporate these into our models of human behavior. Research has shown that choices related to food (what, when and how much we eat) are near the top of this list.

The team is composed of faculty in Food Science, Nutrition, Marketing, Psychology and myself (an Applied Economist). We were funded by a USDA seed grant intended to create collaboration between interdisciplinary research teams and schools to investigate how nudges can be used to improve choices in school cafeterias. So the novelty in our project was in finding ways to collaborate with the school staff in order to identify changes in the cafeteria choice environment that are feasible, unobjectionable and effective (in altering behaviors and costs of implementation). These efforts put some formal research behind choices that the cafeteria staff has to make anyway, but with the explicit purpose of increasing vegetable consumption.

We tested several strategies, but I think using images of vegetables was particularly elegant. Improving nutrition in cafeterias is an on-going battle. However, reform involving menu changes has multiple stake holders and, not surprisingly, has resulted in heated debates (sometimes even on how to define vegetables). Placing images of vegetables in the tray compartments that are intended for vegetables seems rather natural. I think it is extremely unlikely to spur any debate or objection, yet it affected choices in a meaningful way. One additional point to make is that national data show that despite the fact that the overwhelming majority of schools serve vegetables daily, only half of the children consume one on any given day. The school we worked with faired much worse; only about 10% or the children took vegetables, on average. So this strategy supplements other efforts to improve school nutrition rather nicely!

How did the results compare to other similar 'nudges'? Did you find them to be more or less successful?
Actual field experiments using 'nudges' in cafeteria settings are relatively rare, especially in elementary schools, so it is difficult to say how our results compare to those of other researchers. Traditional education-based approaches to increasing vegetable consumption in schools have produced mixed results. Ours were comparable to a number of these (but the strategy is likely less costly). There are some examples of nudges causing increases in fruit and vegetable consumption among children and college-aged young adults. I would say we found pretty substantial effects, but our findings are quite consistent with most studies. The fact that we were working in an environment where very few children took vegetables (so there is much room for increases) may also be a noteworthy factor in interpreting our findings.

You say in the article that the experiment needs to be repeated to learn of its sustaining effects. Do you think this is a tactic that could 'stand the 'test of time'?
I will start by stating that there is no substitute for a well-designed long-term study to provide an answer to this question. But I will indulge in some educated guessing and say that I honestly expect the tactic to stand the test of time. I base this on the following facts. First, whether or not to pick up a vegetable from the lunch line is a decision that is made within a few seconds, often while also looking over all the other items that are available and perhaps chatting with peers and thinking about where to sit once one is through the line. This setting has all the ingredients of a "nudge-friendly" choice environment. Pictures of vegetables on trays likely suggest a "social norm", i.e. "people put vegetables here". In instances of quick decisions such as the present we (children and adults) tend to rely quite heavily on social norms, i.e. on the implied behavior of others, to determine what the right course of action is. So there is good theoretical reason to expect that the strategy will stand the test of time. Secondly, I think two of our empirical findings supply hints. Loosely speaking, think of three groups of children; the definite takers (likely the roughly 12% of children who took carrots even without the nudge), the definite non-takers (likely the 63% of the children who didn't take carrots with or without the nudge), and the "marginal choosers", those who could take it or leave it on any given day. The 26% who were affected were likely to be marginal choosers. So the strategy didn't "fool" people into taking something they'd never eat, it just nudged the ones who were "on the fence". Indeed they ate what they took. Even among the children who only took vegetables when nudged there was virtually no increase in waste in green beans and a minimal increase in carrots! So while I think there may have been some "novelty effect" (a reaction to a change in the way the tray looks) captured in this pilot experiment, I expect the bulk of the effect to persist.

Did you or the other researchers find anything that surprised you?
Honestly, the absence of a change in waste per child who took vegetables was a bit of a pleasant surprise to me.

Anything else? Are you working on any other ideas to get kids eating healthier?
One of our other experiments involved making vegetables available first, as children waited to enter the lunch line. The pilot produced substantial increases in the amounts of vegetables eaten, and we are currently applying for funding to further study the generalizability and long-term effects of this strategy.

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Are People Willing To Pay for Milk Production Attributes?

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As consumers become more interested in how their food is produced, the demand for new research has presented many opportunities. Published in the January 2012 issue of the American Journal of Agricultural Economics, Glynn Tonsor and Christopher Wold talk about the Effect of Video Information on Consumers: Milk Production Attributes. The authors were interested in whether watching You Tube videos about milk production in the United States affected consumers perceptions of conventional milk. The survey of 800 consumers was conducted online and designed to ask consumers what percent of conventional milk they thought came from cows given growth hormones, given antibiotics, that were fed organically, had access to pasture, lived on farms with less than 50 cows, and lived on farms that cared about the well-being of their animals.

The perceptions of consumers who watched the first video, "Happy Cows" developed by California Milk Advisory Board changed for the better. The percent of conventional milk they thought came from cows that were fed organically, allowed to pasture, and had owners that cared about their well being all increased (3.2%, 4.2%, and 4.2% increases respectively). The PETA video "Unhappy Cows" had the exact opposite effect in the same three categories(2.6%, 8.5%, and 4.8% decreases respectively). The last video from Farmers Feed Us, created by The Center for Food Integrity, had the greatest impact. After seeing the video, consumers thought less conventional milk came from cows that were given hormones and antibiotics (4.5% and 5.2% decreases) and came from small farms of less than 50 cows (2.5% decrease). Their perceptions of what percent of conventional milk was from cows who were organically fed and had owners who cared for their well-being went up (6.8% and 5.8%).

The other part of the study was an evaluation of the willingness to pay for these attributes. Although perceptions of how conventional milk characteristics changed in many categories after watching the videos, Tonsor and Wold found no difference in the willingness to pay for various attributes after watching the videos. This lack of a willingness to pay for these attributes represents challenges both for niche markets looking to expand and for producers in states who are facing new ballot measures with animal welfare initiatives.

*We spoke with Dr. Tonsor and since the publishing of the article the video "Happy Cows" is now longer available. A very similar video can be found here.

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Market Incentives for Animal Welfare

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On Valentine's Day McDonald's controversially announced that it would require its pork suppliers to phase out the use of gestation stalls in a move intended to improve a sow's quality of life. While the Humane Society praised the move, the National Pork Producers Council claims that pens and gestation stalls have the same quality of life impact on the animal. This came not long after the July announcement that the United Egg Producers and The Humane Society teamed up to create new quality of life standards in the egg industry.

Animal welfare issues have been a longstanding debate in the United States, and they continue to be. Policy changes elicit different reactions and cause financial distress to all producers, but especially small producers. Jayson Lusk, from the Department of Agricultural Economics at Oklahoma State, discusses the lack of current market incentives and potential future ones in The Market For Animal Welfare, published in the April 2011 issue of Agriculture and Human Values. Lusk talks about how the market price of a product does not reflect the social cost when an externality exists. In economics, the social cost includes the cost society bears in the transaction. In this case, some believe animal suffering is considered to be a negative externality in the production of animal products, and therefore is over supplied. Rational choice theory assumes this is because those involved in the transaction only consider personal costs, which are less than the social costs. In this example, the cost to the animals well-being may be ignored.

Lusk states the traditional solution to deal with a negative externality is by levying a tax on producers and consumers to reflect the true cost of production. In this case, however, he argues taxation would not curb meat consumption and thus, wouldn't increase animal welfare. A tax, he states, focuses on the quantity of animals rather than the quality of their lives. The article also states that implementing policy bans on certain practices often has counter-intuitive effects, as new regulations often don't specify what kind of alternative system must be adopted. Lusk also talks about how labeling is ineffective since it is only the 'compassionate carnivores' who will pay for the negative externality and their market is too small to compensate for the social costs.

The solution Lusk offers is 'a market for animal welfare.' This would give farmers certain amounts of animal well-being units (AWBUs) that they could buy or sell outside of the meat market. It is argued that AWBUs would not have the same problems as taxes and policy bans because instead of the government determining the social costs, the market would determine them in a dynamic way, adjusting as demand changes. Those who want more animal welfare can pay for it if they value it (i.e. vegetarians and 'compassionate carnivores'). He also says the market would be directly tied to the well being of the animal, unlike forced policy changes.

The foundation of the AWBU system is using the power of the market to achieve a means. Lusk argues that while AWBUs seem strange, "as an economic concept it differs little from the standard economic approach that has been successfully used to mitigate environmental pollution." He hopes that one day producers and activists can use the market rather than courtrooms and ballots to settle their differences.

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Time is Money

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We've all heard the proverbial phrase "time is money." What does it mean for food consumption patterns though? When looking at the research about food affordability, most projects just look at the monetary cost of food. Even the Thrifty Food Plan (TFP), which almost all nutrition assistance is based on, serves as a standard for eating a healthy diet at an affordable cost, but neglects to look at the time cost of food.

Time is a meaningful part of eating though. According to the ERS Eating and Health Module of the American Time Survey, on an average day Americans over 15 years old spent 67 minutes eating and drinking as a primary activity. They also spent 23.5 minutes eating and 63 minutes drinking beverages while doing something else. Using data from this same survey, George Davis and Wen You of Virginia Tech published their article Not Enough Money or Not Enough Time to Satisfy the Thrifty Food Plan? A Cost Difference Approach for Estimating a Money-Time Threshold in the April 2011 issue of Food Policy, answering the question: Is time or money more constrictive to eating a healthy diet? The focus of their study is single headed households.

Davis and You used Recipes and Tips for Healthy, Thrifty Meals published by the USDA and designed to meet the TFP's budget and nutrition standards for their time estimates. The authors show that time, not money is more constraining when trying to reach the Thrifty Food Plan goals as individuals spend more than enough money, but 2-8 hours less in food preparation than necessary. When the cost of time is included the "average household needs 40% more money to meet the TFP guidelines," and only 13% of individuals were meeting them. The authors recommend the best way to meet these goals is to develop recipes for the TFP that take less time to make, as encouraging people to spend more time preparing food is unlikely to be successful.

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Can I Eat That?

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In early January, Coca-Cola told the FDA that they found traces of carbendazim, an illegal fungicide for citrus in the United States, in samples of its orange juice that had been traced to Brazil. No recalls have been issued and growers in Brazil have agreed to phase out their use of the pesticide on citrus exported to the United States, but the event has put food safety concerns in the news.

When we go to the supermarket, we expect the food we buy to be safe to eat. After all, the naked eye can't see Salmonella or E. coli. We rely on producers, government, and retailers to provide us with disease-free food. Despite industry safety standards, government testing, and private certifications there are still hundreds of food recalls every year. In fact, the USDA estimates that 1 in 6 Americans get some form of food sickness each year. Most of these are minor cases, but of these 47.8 million people, about 128,000 are hospitalized and about 3,000 die each year from food borne illnesses.

Using the outbreak of Hepatitis A from green onions in 2003 as a case study, economists Linda Calvin, Belem Avendano, and Rita Schwentesius evaluate the Economics of Food Safety in a report for the USDA. The authors found the main reasons growers do not adopt safer practices is they don't receive a higher price for their product and the costs of adopting the standards is often high. If there is an outbreak, even those following higher safety standards may be affected from decreased demand and prices. In the case of Mexican green onions, the price of green onions peaked at $18.30 for 48 bunches the day before the announcement of the outbreak and two weeks later prices were down to $7.23 a box. Due to the high costs and low payoffs of providing food safety, it is often under supplied.

There is market incentive for growers to adopt food safety measures though. Many willingly do, and the most likely reason given in the case study was to conform to third party certifications of Good Agricultural Practices (GAPs), allowing them to maintain market access. Their investment in food safety may have paid off. While the price of green onions drastically decreased, those with GAPs certification saw almost no decrease in the volume of their sales of green onions and no decrease in their sales of other products. Those with no GAP certification saw their volume of green onion sales down 50% and other products sales were down about 30%. In addition to market incentives, the Food Safety Modernization Act passed in 2010 hopes to institute efficient and effective means of providing consumers safe affordable food.

Looking for more information on food recalls and their impact? Check out The Food Industry Center's 3 case studies on food recalls.

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About this Archive

This page is an archive of entries from February 2012 listed from newest to oldest.

January 2012 is the previous archive.

March 2012 is the next archive.

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