The Food Desert Mirage

If you build a new supermarket in a food desert, will low income households go there to buy healthier food? Are Dollar Stores cornering the market in poor neighborhoods reducing options for healthy food choices?

There is a misconception, a mirage if you will, related to the relationship between proximity of super markets that sell healthy foods and actual consumption and health effects. As discussed in this New Food Economy article 'Is it time to retire the term food desert':

"The idea that supermarkets enter into food deserts and all of a sudden provide access to healthy food is a little bit of a misconception"

Public Health literature provides evidence that households in lower income neighborhoods tend to eat less healthy food. These neighborhoods are often characterized as being food deserts due to the lack of access to healthy groceries for a given geography. Policy and discussion involving food deserts is often colored by an implicit or assumed causal relationship between food deserts (lack of supply of healthy food options) and nutrition and health outcomes. Failure to better understand this causal relationship can lead to potentially bad policy decisions. According to this City Journal article 'Unjust Deserts'  some communities have essentially banned or greatly restricted Dollar General from operating their stores which provide a variety of low priced products. However, some research questions a relationship between food choices and the presence or absence of a Dollar General store.

In a Health Economics Review article (Drichoutis, 2015), using a combination of difference-in-difference and propensity score matched analysis authors looked at the relationship between BMI in children and the proximity of Dollar General Stores and failed to find a relationship.

The authors conclude:

"Combatting the ill effects of a bad diet involves educating people to change their eating habits. That’s a more complicated project than banning dollar stores. Subsidizing the purchase of fresh fruits and vegetables through the federal food-stamp program and working harder to encourage kids to eat better—as Michelle Obama tried to do with her Let’s Move! campaign—are among the economists’ suggestions for improving the nation’s diet. That’s not the kind of thing that generates sensational headlines. But it makes a lot more sense than banning dollar stores."

A paper from the National Bureau of Economic Research this past year took a very exhaustive look at the relationship between food deserts, poverty, and nutrition. "THE GEOGRAPHY OF POVERTY AND NUTRITION: FOOD DESERTS AND FOOD CHOICES ACROSS THE UNITED STATES." Working Paper 24094 (http://www.nber.org/papers/w24094).

This paper helps provide a very rigorous empirical understanding of these relationships that can be leveraged for more effective policy and interventions to improve nutrition and health.

They used a very rich dataset consisting of:

1) Nielsen Homescan data - 60,000-household panel survey of grocery store purchases

2) Nielsen’s Retail Measurement Services (RMS) data - 35,000-store panel of UPC-level sales data (this covers 40% of all U.S. grocery store purchases)

3) Nielsen panelist survey data on nutrition knowledge

4) Entry and location data for 1,914 new supermarkets by zip code

Among the many findings uncovered in this data source was the following:

"over the full 2004-2015 sample, households with income above $70,000 purchase approximately one additional gram of fiber and 3.5 fewer grams of sugar per 1000 calories relative to households with income below $25,000."

Their data reflects what has been found in the public health literature in relation to low income households and nutritional health. In addition, household food purchase data was transformed using a modified version of the USDA's Healthy Eating Index (HEI) based on dietary recommendations. These various sources were brought together to give a very rich picture of household choice sets, retail environment, consumption patterns, and nutritional quality.

Using a regression based event study analysis and a structural demand model they examine the impact of supermarket entry on the nutritional quality of changes in food purchases. They also are able to separate the main drivers explaining the differences in the measured nutritional quality index (HEI) of food purchases between low and high income groups.

They model household and income group preferences using both constant elasticity of subsitution (CES) and Cobb-Douglass utility specifications. They apply this model to the rich data sources mentioned above using a Generalized Method of Moments (GMM) framework and use the model estimates to simulate policies that allow households of different incomes to be exposed to similar prices and product availability. (i.e. to make apples to apples comparisons and determine what's driving healthy vs. unhealthy food choices among low income households in food deserts vs. wealthier households).

Key Findings:

1) When new supermarkets open in what was formally a food desert, they find most of the changes in consumption are related to shifting purchases from more distant super markets to the new local super market. The change in the healthy eating index or substitutions away from unhealthy purchases from convenience and drug stores to more healthy food was minimal. This is because even in food deserts among low income households, willingness to travel was quite substantial and mitigated the lack of access to local healthy food.

" households in food deserts spend only slightly less in supermarkets. Households with income below $25,000 spend about 87 percent of their grocery dollars at supermarkets, while households with incomes above $70,000 spend 91 percent. For households in our “food deserts,” the supermarket expenditure share is only a fraction of a percentage point lower"

"one supermarket entry increases Health Index by no more than 0.036 standard deviations for low-income household"

They conclude that access to supply of healthy food or lack thereof explains only about 5% of the difference in the healthy eating index between low and high income households. Access does not appear to be driving the nutrition-income relationship.

2) Most of the differences in healthy vs unhealthy food choices by income group are driven by demand factors...i.e. preferences. When faced with the same choices and same prices, lower income households simply made purchases with a lower HEI.

"The lowest-income group is willing to pay $0.62 per day to consume the healthy bundle instead of the unhealthy bundle, while the highest-income group is willing to pay $1.18 per day."

They find that wealthier households value fruit three times the rate of lower income households and twice the rate for vegetables compared to lower income households.

Policy Implications

The authors reference studies by Montonen et al (2003) and Yang et al (2014):

"consuming one additional gram of fiber per 1000 calories is conditionally associated with a 9.4 percent decrease in type-2 diabetes" and consuming "3.5 fewer grams of sugar per 1000 calories is conditionally associated with a ten percent decrease in death rates from cardiovascular disease."

Improvements of the HEI definitely could be a driver for better health. However focusing on access may not be the greatest way to lever change. Certainly the correlations between income, food deserts, and healthy eating hold in this study and can be great flags to predict or identify which populations may need intervention. However, as this study points out the intervention should be based on theoretical and causal relationships that go beyond the supply of healthy foods and focus on aspects related to food preferences and demand. The authors conclude:

"For a policymaker who wants to help low-income families to eat more healthfully, the analyses in this paper suggest an opportunity for future research to explore the demand-side benefits of improving health education—if possible through elective interventions—rather than changing local supply."

References:

Drichoutis, A.C., Nayga, R.M., Rouse, H.L. et al. Food environment and childhood obesity: the effect of dollar stores. Health Econ Rev 5, 37 (2015). https://doi.org/10.1186/s13561-015-0074-2

NBER. "THE GEOGRAPHY OF POVERTY AND NUTRITION: FOOD DESERTS AND FOOD CHOICES ACROSS THE UNITED STATES." Working Paper 24094 (http://www.nber.org/papers/w24094)

Grist puts a face on Big Ag

I have written before that many people  are confused 'big ag' and 'industrial agriculture.'  These terms typically are devoid of meaning and are shibboleths that revolve around a line of thinking that corporate interests (perhaps closely connected with government agencies like USDA,EPA etc.) control our food supply and as a result deliver food that is unhealthy and unsustainable. But this really amounts to some mixture of myth and conspiracy theory.  The reality is that when you follow your food back to its source, you find what 'big ag' really amounts to is a complex network of modern family farms, biotechnology companies, food processors, and retailers that cooperate to bring healthy and sustainable food to your table.

This story from Grist basically allows one to put a 'face' on the maligned 'industrial agriculture' that is often the brunt of these meaningless terms and less than honest advertising campaigns by retailers like Chipotle.

Think commodity farmers are evil?- Meet a few of them.

Greg Page on Globalism, Food, and Sustainability

This is an older article (from the Guardian) but has some good points by former Cargill CEO Greg page, that are consistent with other posts here before:

http://www.theguardian.com/sustainable-business/2014/dec/01/cargill-food-local-organic-agriculture

“This is Adam Smith and Hayek and Ricardo played out at very high speed,” says Page, citing classical liberal economists who argued that trade generates the prosperity much of the world enjoys today."

"Agriculture is “going to remain a very local business”, Page says, but if water and climate emissions are fully priced into the cost of food, it will likely become more global over time. One thing’s certain — it will never again be all-local. After all, aseconomist Russ Roberts has said: “We tried buying local once. It was called the Middle Ages.”

The Twisted Economics of Local Food

There was recently a really good article from Real Clear Politics requiring the fad/trend of buying local, 'Buying Local' is Really Bad Economics:

"Today, champions of the buy local movement often follow the same faulty economic reasoning: nobody wins unless somebody loses and "I'd rather have the person who looks like me, lives by me, and talks like me win, so I'm going to buy from him." What's sad about this thinking isn't just that it draws arbitrary moral distinctions between humans based on physical traits and location, but it undermines the openness to trade and commercial interaction that has made so many people better off."

The law of comparative advantage implies that things should be produced by those that can produce it with the lowest opportunity cost. For food this might imply utilizing more efficient and environmentally sustainable supply chains (created by companies like ADM, Cargill, Wal-Mart, CSXetc.). But economics also requires us to consider all benefits of a transaction, so even if a local product might have a higher price tag, or be more resource intensive to produce, it might have some unique intrinsic value (like the superior taste of a local beer) that outweighs these other concerns. The article itself is controversial because it implies that sometimes the 'intrinsic' value of buying local for the sake of buying local (a fad) can take on an elitist tone, impoverishing disadvantaged workers (often different races and cultures) in developing countries, and possibly impose greater costs to the environment just to satisfy the fad tastes and preferences of wealthy middle class Americans.

Environmentalists and social justice advocates are quick to condemn red meat or SUVs or other aspects of Western culture and consumerism, but some how give the 'buying local' movement a free pass. In fact, some even bend over backwards to argue that buying local is even actually better for the environment and promotes social justice, eliminates food deserts and makes healthy foods more affordable etc. Based on similar arguments, governments and school systems even utilize taxpayer dollars to source local food, or pass laws that promote consumption. That's pretty twisted economics.

But be clear, there is nothing wrong about having preferences toward local food or products. Economics has nothing to say about interpersonal comparisons of utility, and economists view each person as being the best arbiter of what's best for themselves. I have the opinion that the market will coordinate everyone's behavior to provide the optimal level of whatever types of food options individuals prefer, and local food certainly has a niche to fill. That's why I feel no sense of hypocrisy when I frequent the local farmer's market sporting a Monsanto cap. And, my favorite restaurants are local businesses that often source local produce and meats. If I had the time and resources, I might even start a beef operation that sources local beef to such places. But I would be in the wrong to force others to indulge my preferences through subsidies, taxes, or regulations.

The Oregon GMO Ban: Who is really harming who?

“Was the government to prescribe to us our medicine and diet, our bodies would be in such keeping as our souls are now” - Thomas Jefferson Notes on the State of Virginia

This past May two counties in Oregon voted to ban the production of GMO crops. Was this good policy?

For a moment let’s sidestep the fact that modern molecular applications of crop improvement are just as safe if not safer than conventional and organic methods.  Let’s also forget that using a democratic process to override other people’s choices may not be the optimal strategy for making the most of imperfect information and limited resources.

Often, this law is discussed in the context of property rights, and rightly so:

“This local effort is important because it’s a way for local growers to protect their property rights from genetically engineered pollen contaminating their seed crops.”

-Ivan Maluski, Friends of Family Farmers

The assignment and protection of property rights is an important role of government, and definitely serves a key function in dealing with what economists refer to as negative externalities, and what most people would think of when they think of nuisances or environmental pollution.  However, the GMO bans represent a very narrow and restrictive assignment of property rights.

Property Rights and Externalities

Basically a negative externality occurs when  a second party is harmed from an activity without their consent or compensation. In the context of the Oregon law, we might view genetic contamination as a negative externality.  In these cases, the principle of polluter pays is often the basis used to require polluters to either stop their activity, pay a fine, or perhaps levy a tax related to the level of pollution.  However, in 1960 economist Ronald Coase brought new insight in his Journal of Law and Economics paper “The Problem of Social Cost.”  Coase stated that in many cases, the issue of pollution or negative externalities was in fact reciprocal.  This can easily be understood in the context of the Oregon case. While banning GMOs certainly protects organic and conventional producers from the harms of cross-pollination it reciprocally imposes significant harm on most family farmers by limiting their ability to grow food in a way that is both profitable and sustainable.  The question becomes, who may harm who?

Put another way, who should get the right to grow the kind of crops they want? The answer is that the right should be assigned to the party that values it the most. According to what has come to be known as the Coase Theorem, the initial assignment of rights does not matter. With clearly defined property rights, the optimal level of GMO vs. non-GMO crops planted as well as optimal levels of cross-pollination can be determined through cooperative processes.  Of course in this case, we may not be assigning physical rights to property so much as we are assigning liability.

 If liability goes to the organic producers, and they want to restrict the planting of GMO crops, then they have to find a way to compensate GMO growers to reduce planting . If liability falls on GMO growers and the economic and environmental benefits of growing GMO crops exceeds the value that organic producers place on uncontaminated crops, then GMO growers can pay for damages (or buy insurance for such purposes), or compensate organic producers for shifting their crops to another location. They may also alter their GMO planting decisions in highly susceptible areas.

The assignment of property rights and the potential for bargaining results in behavior that is changed or altered to account for the negative impact our choices have on others, regardless of who holds the rights. This is the essence of what is known as the ‘Coase Theorem and sets a standard of morality and efficiency that the Oregon law falls tragically short of meeting and in fact egregiously preempts.

Positive Externalities

Positive externalities occur when one or more parties engage in some activity and actually benefit another party without getting compensated for it.  An example of a positive externality is the concept of herd immunity that can occur when most people are vaccinated for things like measles.  Government funding of vaccination programs is often justified on the grounds of positive externalities. An unintended side effect of the Oregon law banning GMOs is the elimination of positive externalities associated with the planting of GMO crops. Research has shown that genetically modified crops have improved the genetic diversity of beneficial pest populations and have provided external pest protection benefits to non-gmo crops worth billions of dollars annually. In addition, biotechnology has contributed to significant reductions in greenhouse gas emissions and reduced the use of toxic chemicals and pesticides.  The Oregon laws eliminate all of these positive externalities associated with GMO crops in effect harming organic producers and all consumers.

Are these options practical or realistic? Nothing I could put in print likely would be. Policy makers and economists are not in a situation to know exactly all of the margins that individuals consider in their decision making and the options available, which is another flaw in the Oregon laws which make this assumption.  Some assignment of property rights or liability that accommodates a cooperative space for individuals to live their lives would be superior to both no law at all, or one as draconian as the two counties in Oregon have adopted.

References:

The Problem of Social Cost. R. H. Coase. Journal of Law and Economics, Vol. 3 (Oct., 1960), pp. 1-44

Areawide Suppression of European Corn Borer with Bt Maize Reaps Savings to Non-Bt Maize Growers. Science 8 October 2010:Vol. 330. no. 6001, pp. 222 - 225 DOI: 10.1126/science.1190242W. D. Hutchison,1,* E. C. Burkness,1 P. D. Mitchell,2 R. D. Moon,1 T. W. Leslie,3 S. J. Fleischer,4 M. Abrahamson,5 K. L. Hamilton,6 K. L. Steffey,7, M. E. Gray,7 R. L. Hellmich,8 L. V. Kaster,9 T. E. Hunt,10 R. J. Wright,11 K. Pecinovsky,12 T. L. Rabaey,13 B. R. Flood,14 E. S. Raun15

Communal Benefits of Transgenic Corn. Bruce E. Tabashnik  Science 8 October 2010:Vol. 330. no. 6001, pp. 189 - 190DOI: 10.1126/science.1196864

Genetically Engineered Crops: Has Adoption Reduced Pesticide Use? Agricultural Outlook ERS/USDA Aug 2000

GM crops: global socio-economic and environmental impacts 1996- 2007. Brookes & Barfoot PG Economics reportOctober 2010:Vol. 330. no. 6001, pp. 189 - 190DOI: 10.1126/science.1196864

Greenhouse gas mitigation by agricultural intensification Jennifer A. Burneya,Steven J. Davisc, and David B. Lobella.PNAS  June 29, 2010   vol. 107  no. 26  12052-12057

Comparison of Fumonisin Concentrations in Kernels of Transgenic Bt Maize Hybrids and Nontransgenic Hybrids. Munkvold, G.P. et al . Plant Disease 83, 130-138 1999.

Indirect Reduction of Ear Molds and Associated Mycotoxins in Bacillus thuringiensis Corn Under Controlled and Open Field Conditions: Utility and Limitations. Dowd, J. Economic Entomology. 93 1669-1679 2000.

A Meta-Analysis of Effects of Bt Cotton and Maize on Nontarget Invertebrates. Michelle Marvier, Chanel McCreedy, James Regetz, Peter Kareiva Science 8 June 2007: Vol. 316. no. 5830, pp. 1475 – 1477

"Why Spurning Biotech Food Has Become a Liability.'' Miller, Henry I, Conko, Gregory, & Drew L. Kershe. Nature Biotechnology Volume 24 Number 9 September 2006.

The Economics of Local Food

I am very excited to see that on September 11,2013 the WKU  BB&T Center for the Study of Capitalism is hosting Pierre Desrochers (also a Mercatus Institute Fellow), co-author of The Locavore’s Dilemma: In Praise of the 10,000-Mile Diet.

Pierre Desrochers discusses his book here at this Cato book forum. 

I've written about local food before at my Economics Principles and Applications blog, but I thought I'd re post here. (also see more recent local food and sustainability related posts here.)

”It is a maxim of every prudent master of a family, never to attempt to make at home what it will cost him more to make than to buy.” - The Wealth of Nations

This is tied to the concept of comparative advantage and gains from specialization and trade, which lead to an increase in the size of the ‘economic pie’ which can be used to make everyone better off. Modern food supply chains, made possible by companies such as Cargill, ADM, and retailers like Wal-Mart, have helped to reduce our impact on the environment.

Below are some excerpts of articles related to local food:

The Inefficiency of Local Food
 Steve Sexton
11/14/2011

http://www.freakonomics.com/2011/11/14/the-inefficiency-of-local-food/

Forsaking comparative advantage in agriculture by localizing means it will take more inputs to grow a given quantity of food, including more land and more chemicals—all of which come at a cost of carbon emissions.....In order to maintain current output levels for 40 major field crops and vegetables, a locavore-like production system would require an additional 60 million acres of cropland, 2.7 million tons more fertilizer, and 50 million pounds more chemicals. The land-use changes and increases in demand for carbon-intensive inputs would have profound impacts on the carbon footprint of our food, destroy habitat and worsen environmental pollution.

It’s not even clear local production reduces carbon emissions from transportation. The Harvard economist Ed Glaeser estimates that carbon emissions from transportation don’t decline in a locavore future because local farms reduce population density as potential homes are displaced by community gardens. Less-dense cities mean more driving and more carbon emissions. Transportation only accounts for 11 percent of the carbon embodied in food anyway, according to a 2008 study by researchers at Carnegie Mellon; 83 percent comes from production. 

The locavore’s dilemma 
Urban farms do more harm than good to the environment
Edward L. Glaeser
http://articles.boston.com/2011-06-16/bostonglobe/29666344_1_greenhouse-gas-carbon-emissions-local-food/2
Berkeley graduate student Steven Sexton estimates that an American switch to more local corn production would require 35 percent more fertilizer and 22.8 percent more energy....But the most important environmental cost of metropolitan agriculture is that lower density levels mean more driving. Today, about 250 million Americans live on the 60 million acres of this country that are urban — which is about four people per acre....If halving densities also doubled distance to the metropolitan area center, this would add an extra 44 gallons of gas annually. Together, the increased gas consumption from moving less than a tenth of agricultural farmland into metropolitan areas would generate an extra 1.77 tons of carbon dioxide per year, which is 1.77 times the greenhouse gases produced by all food transportation and almost four and a half times the carbon emissions associated with food delivery.


From Marginal Revolution: Food Miles

"How far your food travels matters a lot less than what kind of food it is, or how it was produced. According to a recent study out of Carnegie Mellon University, the distance traveled by the average American’s dinner rose about 25 percent from 1997 to 2004, due to increasing global trade. But carbon emissions from food transport saw only a 5 percent bump, thanks to the efficiencies of vast cargo container ships. Should we minimize our “music miles” and boycott bands on tour?"

Eating Local and Climate Change link from National Geographic ("Eating Local" Has Little Effect on Warming, Study Says. Mason Inman  National Geographic News April 22, 2008)

"Being a "locavore" and eating foods grown near where you live may not help the environment as much as you might think, according a new study.When it comes to global warming, focusing simply on where food comes from will make only a small difference, the study's authors say."

Cited research: Environ. Sci. Technol. 2008, 42, 3508–3513

"Despite significant recent public concern and media attention to the environmental impacts of food, few studies in the United States have systematically compared the life-cycle greenhouse gas (GHG) emissions associated with food production against long-distance distribution, aka “food-miles.” We find that although food is transported long distances in general (1640 km delivery and 6760 km life-cycle supply chain on average) the GHG emissions associated with food are dominated by the production phase, contributing 83% of the average U.S. household’s 8.1 t CO2e/yr footprint for food consumption. Transportation as a whole represents only 11% of life-cycle GHG emissions, and final delivery from producer to retail contributes only 4%. Different food groups exhibit a large range in GHG intensity;on average,redmeat is around 150% more GHG intensive than chicken or fish. Thus, we suggest that dietary shift can be a more effective means of lowering an average household’s food-related climate footprint than “buying local.”

Although the authors above seem to suggest dietary shifts away from meat consumption, it is important to not forget the huge strides in sustainability that are occuring in the livestock industry that is largely technology driven and a major reason that conventional modern food supply chains are in fact more sustainable.

See beef and livestock related citations in the post Sustainable Agriculture Bibliography  and the accompanying video for more details.

See also:

Food miles, Kowalski's and that steak on your plate
MPR News

"That steak you bought at the farmers' market from the family operation down the road might have taken more fuel to get to you than the rib-eye from a steer slaughtered in Kansas."

Read the article here.

The actual research is here.

Comparing the Structure, Size, and Performance of Local and Mainstream Food
Supply Chains

USDA Economic
Research
Report
Number 99
June 2010

"Transportation fuel use is more closely related to supply chain structure and size than to the distance food products travel. Products in local supply chains travel fewer miles from farms to consumers, but fuel use per unit of product in local chains can be greater than in the corresponding mainstream chains. In these cases, greater fuel efficiency per unit of product is achieved with larger loads and logistical efficiencies that outweigh longer distances."

See also this entry from the EconLog blog:

 The Locavore's Dilemma: Why Pineapples Shouldn't Be Grown in North Dakota

In this post four arguments related to local food are discussed:
1: Buying Local Foods is Good for the Local Economy
2: Buying Local Foods Is Good for the Environment
3: Local is Fresher and Tastier
4: Local Food is Healthier and Should be Served in School

The authors conclude:

"Economists are a diverse bunch, but we have a few core principles, two of which are that there is a balance of payments and that there are gains from trade. These universal principles are as timeless as the law of gravity. If politicians and activists proposed to suspend belief in gravity, physicists would not cower. They would resolutely defend reality. So should we."

I, Chicken

“I was really shocked when I bought my first ever whole chicken tonight. Five bucks? For a whole chicken? KFC charges five bucks for one breast and one wing. How can a farmer breed, hatch, raise, feed, house, butcher, package, and ship a chicken for five bucks? Blows my mind.”

This was a very insightful observation made by a friend of mine. The subject of economics in a lot of ways is just a collection of stories consisting of observations and insights like this. This particular insight speaks directly to the concepts of comparative advantage from Ricardo and specialization and trade from Adam Smith- read more about these economists at the Library of Economics and Liberty.

Because of the principle of comparative advantage,  you choose to buy the chicken from the retailer at $5 as opposed to raising it yourself or even sourcing it locally at a much greater cost in terms of money, time, and perhaps the environment.  Because of the principle of comparative advantage we often don’t raise most of our own food or make our own cars or many of our own clothes or even source most of these things locally either. The concept of comparative advantage and the associated gains from specialization and trade lead to an increase in the size of the ‘economic pie’ which can be used to make everyone better off. 

Getting a chicken at your local retailer for $5 is also a testament to the market’s ability to solve the the fundamental problem of economics, the knowledge problem. This is a problem that exists because the necessary information for allocating scarce resources does not exist in concentrated or integrated form, but is incomplete and dispersed among individuals. Through markets, prices bring all of this incomplete and dispersed information together in a coordinated manner, producing a ‘spontaneous order’ as described by economist F.A. Hayek.

 We get $5 chicken because a spontaneous order comprised of specialized farmers, feed and nutrition specialists, veterinarians, pharmaceutical companies, breeders, packers, processors, supply chain managers, and retailers all cooperate to bring healthy, sustainable, and affordable food to your table. Modern food supply chains, made possible by companies such as Cargill, ADM, and retailers like Wal-Mart, have not only allowed us to get foods cheaper than we can produce ourselves or source locally, but may have also helped to reduce our impact on the environment.  

Another way to think about the knowledge problem and the concept of a spontaneous order in relation to $5 chickens is to admit that no single person really knows how to make a chicken any more than a pencil, as illustrated so perfectly by Leonard E. Read in his famous essay ‘I, Pencil.’ Milton Friedman does a good job summarizing the essay in 2 minutes in the following You-Tube video: 

 

It is also important to recognize that $5 chicken owes a great debt to entrepreneurial driven technological change and economic growth, and this is truly mind blowing. As economist Robert Lucas said “once you start thinking about growth it's hard to think about anything else.”

Think, “I’Chicken.”

Portlandia: True Food Democracy-Voting with Your Fork

Whatever the true intentions of this humorous scene from the IFC series Portlandia, one thing it illustrates (with a little embellishment) is how well market forces respond to the wide array of consumer preferences that exist.  Many people may  feel that so called 'corporate industrial agriculture' has dominated the food supply, and that only by democratizing the food supply can we get the politically correct form of agriculture (as in local, free range, organic, natural etc.) that we should want and deserve.

As discussed before, markets ( in a sense voting with your fork), provide a much better way to express food preferences than voting schemes. In a food democracy, the vast array of options the people in the video are after, and what most 'foodies' desire, would be limited to only reflect the limited knowledge and preferences of a few voters or bureaucrats. Instead of allowing the multitudes to express their food preferences as often and intensely as they desire through the market, input about food options would be limited to the untimely occasion of a blunt vote, with intense lobbying, protesting, and letter writing (to elected officials, newspapers etc.) in the interim. With food democracy we move away from a system that continuously captures everyone's input via the price system (perhaps imperfectly) to one that simply samples (even more imperfectly) it in the voting booth.  Of course some advocates of food democracy could argue that they are not advocating every calorie be put to a vote, but simply democratically setting some ground rules about how food is produced, processed, marketed, regulated, labeled, etc. and letting the market take over from there.

The analysis is still the same. Instead of allowing the multitudes to express their food preferences (in relation to about how food is produced, processed, marketed, regulated, labeled, etc.) as often and intensely as they desire through the market, input about these options would be limited to the untimely occasion of a blunt vote, with intense lobbying, protesting, and letter writing (to elected officials, newspapers etc.). The principle still holds that whenever we move away from allocating resources based on prices that reflect the knowledge and preferences of multitudes of free people, to democratically allocating resources, we shrink the pool of knowledge we are willing to consider in making these choices. The information we throw out is often the most personal and meaningful (unless of course your preferences exactly match those that get the most votes!)

Food Democracy *Not* Now or Ever

Are food choices something that should be determined by democratic decision making?  To understand this, it is important to understand the fundamental problem of economics known as the knowledge problem. The problem facing all forms of government including democracies is that centralized decision makers never have enough information or proper incentives to act on the information at hand. As Economist F.A. Hayek (1945) described it:

'the knowledge of the circumstances of which we must make use never exists in concentrated or integrated form, but solely as the dispersed bits of incomplete and frequently contradictory knowledge which all separate individuals possess'

The price system allows us to channel the imperfect knowledge of multitudes of imperfect people with imperfect incentives and utilize it to coordinate decisions. Democratic decision making on the other hand, allocates resources using command and control based on the more limited knowledge and preferences of a few voters, elected officials, or appointed bureaucrats. So, when we move from market based food choices to democratically based choices we are drastically reducing the amount of information we are willing to consider in making these decisions.

Many people complain about phone and cable bundling packages. Voting is the ultimate form of bundling, only worse, the voter often doesn't get to even choose the 'service.' As explained in article 'The Public Choice Revolution'  (Regulation, Fall 2004):

 "In our democracies, voters do not decide most issues directly. In some instances, they vote for representatives who reach decisions in parliamentary assemblies or committees. In other instances, they elect representatives who hire bureaucrats to make decisions. The complexity of the system and the incentives of its actors do not necessarily make collective choices more representative of the citizens’ preferences."

Voting also fails to capture the intensity of our preferences. When we vote, its just one vote, no matter how intensely we may care about an issue. With a price system, we can express our interests penny by penny and minute by minute (as we toil to earn an income).

Does that mean that we should leave the country or start a dictatorship? Of course not. We should however, limit democratic decision making and government involvement to as few areas of our lives as possible, which is what our founders had in mind when they created our Constitutional Republic.

So what does that mean for food choices? Food is an extremely personal and detailed consumption product. Of all areas of our life, food is an area where we would hope our choices can be expressed as precisely and intensely as possible, based on our own private knowledge, tastes, and preferences; not bundled with the preferences of others or subject to how some stranger may 'vote' about it or some politician or bureaucrat may dictate (Sorry Mayor Bloomberg).

In fact, the market does a pretty good job of providing consumers a variety of food choices, from non GMO organic, to local, to an array of modern sustainable choices made possible by companies like Cargill, ADM, and Monsanto. Food in a democracy should be food that we choose to consume, not food that we vote to consume. 

References:

'The Public Choice Revolution', Regulation Fall 2004. ( link ).

The Use of Knowledge in Society
F.A. Hayek
The American Economic Review Vol 35 No 4 (Sept 1945) p. 519-530

USDA Research: Food Miles & Local Beef

Comparing the Structure, Size, and Performance of Local and Mainstream Food
Supply Chains

USDA Economic
Research
Report
Number 99
June 2010

"Transportation fuel use is more closely related to supply chain structure and size than to the distance food products travel. Products in local supply chains travel fewer miles from farms to consumers, but fuel use per unit of product in local chains can be greater than in the corresponding mainstream chains. In these cases, greater fuel efficiency per unit of product is achieved with larger loads and
logistical efficiencies that outweigh longer distances."

This research compared 3 beef supply chains, one that markets local sourced beef via farmer's markets and community supported agriculture (CSA), one that is intermediately sourced to restaurants, supermarkets, and food cooperatives, and one that has a traditional supply chain that utilizes beef finished in the feedlot, slaughtered, processed, shipped, and sourced to restaurants. In terms of food miles, the local supply chain averaged 75 miles, intermediate 300, and mainstream 1645. However due to efficency and economies of scale,  it turns out that the most fossil fuel and energy intensive supply chain is local, averaging 2.18 gallons of fuel per cwt, vs. 1.92 for the mainstream feedlot finished supply chain.  In terms of carbon footprint, we should note that both the intermediate and local supply chains utilize grass fed beef, which would add even more to their environmental foot print in terms of global warming potential.

Eating Local

There is nothing wrong with wanting to grow or eat your own food, or get it from your neighbor, if that's your choice. We all should have to power to decide how we spend our money. More and more schools and government organizations are promoting and purchasing local food under the assumption that it is better for the environment and taking your taxpayer money to do it.

By doing this, policy makers can feel good about themselves at our expense.

The following post from the Marginal Revolution economics blog addresses eating local and the relationship between food miles and your ‘carbon footprint.’
Is there a tradeoff between how ‘local’ your food is and your impact on the environment?

Some say yes , but there is much debate about that issue, as you may find in the blog link or here in National Geographic.

Actual research related to this issue can be found here

Of course some of these take a shot at beef. They forget that cars are very necessary for transportation, and we know that they produce greenhouse gases, but we don’t stop driving altogether. We continue to produce more and more fuel efficient cars instead. The same can be said for beef production. Considering beef is a healthy and nutritious food source, we should not stop eating it altogether. Instead we should continue to produce more and more efficient cattle.

Today we get 185lbs more beef per head than we did just 40 years ago, and today's beef is a lot leaner and healther.

FARMERS' MARKETS

Do we need local governments to subsidize the development of farmers’ markets? Farmers in fact already have developed markets for their products-the CBOT (Chicago Board of Trade). More and more farmers are utilizing the risk management tools offered via futures markets. In addition direct contracting with buyers allows other firms to share market risk traditionally associated with agriculture.

According to the USDA, 40% of total agricultural production in 2003 (vs. just 11% in 1969), and 47% of livestock production, was accounted for by contract marketing. For small operations this accounted for 20% of their production and more than 50% of production with regards to larger operations.

Of course this mostly comprises major food staples like livestock, corn, wheat, and soybeans as opposed to produce. More so than farmers, city and local governments have stronger interests in local ‘farm’ produce markets for the sake of local tourism and to promote so called ‘green’, ‘sustainable’, or ‘organic’ agriculture (see also 'Is Organic Better').

The truth is, as agriculture has evolved into a heavily capitalized information driven industry, there are too many other profitable investment opportunities for producers to engage in as opposed to tomatoes and carrots. Investments in RTK (real-time-kinetics) technology or a GPS consulting service can save enough in production and energy costs to pay for itself sometimes within one season -and is a free market solution to environmental pollution (see 'Free Market Agriculture-Green Profits').

Livestock markets have overcome the equivalent to the age-old ‘lemon’ problem by using micro chip inserts. This technology can guarantee the identity, health, and genetics of livestock, allowing producers to receive a premium for better livestock.

It's likely that many of the ‘roadside pickup truck’ marketers are the weekend gardener types. Local governments and fad enthusiasts may be trying to capitalize on the romanciticism of old fashioned agriculture to promote tourism via pork barrel spending. I think this undermines those legitimate producers interested in transitioning from tobacco to produce, and tarnishes the image of the modern producer and the self-reliance that modern technology makes possible.