Behavioral economics and the food system

The human mind is fascinating. Understanding how we make decisions, how we form preferences, how we think about the future is not only intellectually interesting, but can also help us understand the dynamics of national conversations and find solutions to some of today’s most pressing problems.

The national health care debate (or, all too often in August, temper tantrum) is one recent case where understanding the mental process can be helpful.  “Status-Quo Anxiety”, a recent column by New Yorker financial columnist James Surowiecki, shows how some findings from the field of behavioral economics apply to health care. Some of what he discusses is also applicable to our national conversation on food.

The first effect presented by Surowiecki is the “endowment effect”:  when we own something, we tend to overestimate its value. The effect has been shown in many experiments using everyday objects like mugs or event tickets, with the owners of the objects consistently charging far more than buyers are willing to pay.

The second effect is “status quo bias”: people desire stability and maintenance of current conditions even when that condition is bad for them. In general, people feel more pain from losses than they feel pleasure from gains, and so as the health care debate swirls, more are focusing on what might be lost when the health landscape changes than on what might be gained. In addition, they tend to overestimate the value what they might lose.

Surowiecki concludes his column with some suggestions on how reform advocates can use these effects to their advantage.  A more effective angle, he argues, would be that reform is necessary if you want to keep what you have, because the system is heading into chaos. Furthermore, the current insurance system allows all sorts of abuses in the name of higher profits, like rescission (the heinous practice of canceling an insurance policy once someone actually needs it), making it difficult for people with pre-existing conditions to get insurance, and rationing by insurance companies in the form of provider networks, treatment denials and so on.

I see the two effects in the column in our national discussion about food.

Consider the “endowment effect,” which has a somewhat tenuous connection to food. It’s likely that many people feel a sense of ownership of whichever food system they take part in — the industrial system for the vast majority, and various alternatives for a few percent. After all, we take part in our own customized food system many times a day by eating, shopping, or planning our meals.  And, through our demand for convenience and low prices, we helped make it happen (with a lot of help from the food industry telling us that cooking from scratch was for fools and from the government by subsidizing cheap calories).  And so we might overvalue the system itself: the convenience, low-prices (at the check-out anyway, since many externalities like water pollution and worker mistreatment are paid at another time or shifted to the future), think that it is worth far more than it should be.

The “status quo bias” is much stronger. Since people desire stability and overvalue loss, discussions about changes in the food system can cause people to overemphasize potential reductions in convenience, the hassle of adapting to new routines (cooking instead of getting take-out or pre-made items), the shock of trying new foods, reduced access to some foods, and much more. There is a certain amount of linkage with the endowment effect, especially as it relates to

These two effects — and many others that Surowiecki did not mention, like the inability of humans to think far into the future, the difficulty in getting our minds around a system that is opaque as the one that gets food from farms to our plates — probably need to be considered by those crafting messages about food system reform, as does the work on “framing” by linguist George Lakoff and others.

Highlighting the potentially positive results of food-system changes instead of talking about what people will need to give up could be one way to avoid being tripped up. Some examples include:  “Wednesday is vegetarian Indian food night” (a variation of the “Wednesday is Prince spaghetti day” campaign of the past), which offers the opportunity to explore the wonderful (and seemingly infinite) vegetarian cuisine of India. Or the “vegan before dinnertime” diet proposed by Mark Bittman, which was a significant change to the Times columnist’s diet for part of his day but resulted in him feeling more energetic, carrying around fewer pounds, and with less knee pain (as this post from the NY Times’ WellBlog indicates). And finally, cooking from scratch more often instead of getting takeout offers an opportunity for the comradeship and tasty meals of cooking with a friend. What positive messages are you spreading about food-system change?

6 Responsesto “Behavioral economics and the food system”

  1. Cherie says:

    Great article. My attempt at spreading the good word has to do with supporting small farms. When people ask me about going to Farmers Markets I always try to emphasize the sense of community you find there. Yes yes….some will tell me that its “less convenient” or even “more expensive” (which may or may not be true for them) but when I talk about meeting the farmers and friends I have made it usually makes them reconsider. People truly do thrive on connection.


  2. Bravo!  That’s a fantastic analogy.  Very well written.
    Don’t forget about the “glom” effect.  That’s when people have to gather all the free and cheap stuff they can before someone else figures out how cheap or free it is.  They’re “gloms”.

    Before I swore off the grocery store in favor of the Farmer’s Market exclusively, I was compelled to fill the shopping cart with as many bargains as possible.  Not quality, but quantity.  My shopping list was a house inventory of items I should keep on hand at all times.  What for, I’m not sure.   Probably, that’s how my Mother did it.  Instead of “glomming” discounted poisons into a wheely cart, I now go to the Farmers Market with one recyclable bag, and purchase ONLY what I’ll eat until the next time I go to the Farmers Market.  I don’t need to gather canned goods like war rationing because they’re 7 cents off today.

    To prove my point,  what happens when your electricity goes out because of a storm?  Your refrigerator doesn’t work for a few days, and you have to throw away 2 weeks worth of food!  Why do you have two weeks of food anyway? 

    Why would you give up your “endowment” of bargains in your cart, and go against the “status-quo” by shopping where the food is so much more expensive? 

    Because cheap food will cost you more in expensive healthcare, without a doubt.
    Put those two in your shopping cart together as you head toward your final checkout.

    I’m definately tweeting this fantastic article.
    Chef Todd Mohr

  3. Jennifer says:

    I just bought 1/8 of a cow from my neighbor. (Actually I’m buying 1/4 but am sharing half with my sister-in-law.) I met her for the first time at the school bus stop this September; one of her daughters is in my son’s class. Anyway, one day she mentioned that she grew up on a ranch & her dad was starting this kind of CSA for beef, and I signed up. Funny thing, whenever I mention it to people, they tell me oh, I did that once! Which is really interesting. So — to answer your question — perhaps you could call this Reminding Others How Good It Is To Buy a Share of a Local Cow.

  4. Is there a reason my comments aren’t being posted?

  5. This was a fantastic article that I’ve re-tweeted.

  6. Jason Chen says:

    What an interesting analogy. While I don’t necessarily agree with the concept that processed food or fast food  is cheaper(my argument is that per portion, it is less expensive to buy the ingredients and cook the meal), it is generally more time consuming in today’s society to cook rather than buy something.

    I would also suggest that the endowment effect may be stronger for food (unless I misunderstand it). Consider the following: if we overstate the value of things that we own, then surely we would also assign a larger of value on convenience because ot the time savings of fast/prepared food – we would “own” more time because of it; eating out or getting “convenient food” may in fact be the endowment effect at work. 

    Jason Chen