Tuesday, June 28, 2022

The Role of Identify Protective Cognition in the Formation of Consumer Beliefs and Preferences

Background

People pick and choose their science, and often they do it in ways that seem rationally inconsistent. One lens through which we can view this is Bryan Caplan's idea of rational irrationality along with a Borland and Pulsinelli's concept of social harassment costs. 

According to Caplan:

 "...people have preferences over beliefs. Letting emotions or ideology corrupt our thinking is an easy way to satisfy such preferences...Worldviews are more a mental security blanket than a serious effort to understand the world."

This means that:

"Beliefs that are irrational from the standpoint of truth-seeking are rational from the standpoint of utility maximization."

In a previous post, I visualized social harassment costs that vary depending on one's peer group. If these costs exceed a certain threshold (k), consumers might express preferences that otherwise might seem irrational from a scientific standpoint. For example, based on peer group, a consumer might embrace scientific evidence related to climate change, but due to strong levels of social harassment, reject the views of the broader medical and scientific community related to the safety of genetically engineered foods. 



See here, and here.

Identity Protective Cognition

In Misconceptions, Misinformation, and the Logic of Identity-Protective Cognition (Kahan, 2017) the concept of identity protective cognition adds more to the picture. Below are three aspects of identify protective cognition:

  1. What people accept as factual information is shaped primarily by their values and identity
  2. Identity is a function of group membership, i.e. it's tribal in nature
  3. If people choose to hold beliefs that are different from what the 'tribe' believes, then they risk being ostracized (i.e. they face social harassment costs)
  4. As a result, individual thinking and thought patterns evolve to express group membership and what is held to be factual information is really an expression of 'loyalty to a particular identity-defining affinity group.
Additionally Kahan discusses some important implications of this sort of epistemic tribalism. Additional education and more accurate information aren't necessarily effective tactics for addressing the problems of misinformation and disinformation. In fact, what Kahan's and others research have shown is that it can actually make the problem worse. 

'those highest in science comprehension use their superior scientific-reasoning proficiencies to conform policy-relevant evidence to the position that predominates in their cultural group....persons using this mode of reasoning are not trying to form an accurate understanding of the facts in support of a decision...with the benefit of the best available evidence....Instead they are using their reasoning to cultivate an affective stance that expresses their identity and their solidarity with others who share their commitments.' 

In this way, identity protective cognition creates a sort of spurious relationship between what may be perceived as facts and the beliefs we adopt or choices we make. It gives us the impression that our beliefs are being driven by facts when the primary driver may actually be cultural identity. 




This sort of tribalism can result in a sort of tragedy of the science communication commons - similar to the tragedy of the commons in economics where what seems rational from an individual standpoint (adopting the beliefs of the group to avoid punishment) is irrational from the standpoint of accuracy of beliefs and has negative consequences for society at large. As a result:

'citizens of a pluralistic democratic society are less likely to converge on the best possible evidence on threats to their collective welfare.'

Of course this has consequences for elections, the regulatory environment, and decisions by businesses and entrepreneurs in terms of what products to market and where to invest capital and resources. Ultimately this impacts quality of life and our ability to thrive in a world with a changing climate and bitter partisanship and social unrest. 

The Problem and the Solution

As discussed above, this sort of tribal epistemology is not easily corrected by providing correct information or education. In fact it drives one to seek out misinformation in support of one's identity while ignoring what is factually correct. The authors speak broadly about the role that 'pollutants' or 'toxins' in the science communication environment play in promoting this tribal mentality. One form of social harassment cost that may be driving this is cancel culture or call out culture. Cancel culture works like an immune system that scans the network of believers and seeks out non-conforming views, and tags it to be attacked by others in the group. This drives even the brightest to seek out misinformation instead of avoiding it. 




Another pollutant to the science communication environment is troll epistemology and related efforts to produce a 'firehose of falsehood' (see Paul and Matthews, 2016). Whether intentional or not, modern media technology provides the infrastructure to produce an effect similar to modern propaganda techniques pioneered in Russia.  This emphasizes flooding the science communication environment via high-volume and multichannel, rapid, continuous, and repetitive false or unsubstantiated claims with no commitment to objective reality or logical consistency. 


Authors conclude:

'the most effective manner to combat the effect of misconceptions about science and outright misinformation is to protect the science communication environment from this distinctive toxin.'

Related Posts and References

Borland,Melvin V. and Robert W. Pulsinelli. Household Commodity Production and Social Harassment Costs.Southern Economic Journal. Vol. 56, No. 2 (Oct., 1989), pp. 291-301

Frimer, J. A., Skitka, L. J., & Motyl, M. (2017). Liberals and conservatives are similarly motivated to avoid exposure to one another's opinions. Journal of Experimental Social Psychology, 72, 1–12. https://doi.org/10.1016/j.jesp.2017.04.003

Kahan, Dan M., Misconceptions, Misinformation, and the Logic of Identity-Protective Cognition (May 24, 2017). Cultural Cognition Project Working Paper Series No. 164, Yale Law School, Public Law Research Paper No. 605, Yale Law & Economics Research Paper No. 575, Available at SSRN: https://ssrn.com/abstract=2973067 or http://dx.doi.org/10.2139/ssrn.2973067

Paul, Christopher and Miriam Matthews, The Russian "Firehose of Falsehood" Propaganda Model: Why It Might Work and Options to Counter It. Santa Monica, CA: RAND Corporation, 2016. https://www.rand.org/pubs/perspectives/PE198.html.

Friday, June 17, 2022

The Limits of Nudges and the Role of Experiments in Applied Behavioral Economics

In a recent article in Nature, Evidence from a statewide vaccination RCT, authors found that eight different nudges previously shown to be effective for encouraging flu and COVID vaccination failed to show impact when tested on more reluctant populations. I think a knee jerk reaction is that maybe nudges aren't effective ways to increase vaccination after all. But that completely misses a very important aspect of nudges. Nudges work in most cases because humans can be sensitive to context. And applied behavioral design processes work to understand this context and test the impact of interventions to know if they are effective in a given context. At the highest level I think this paper is less about the ineffectiveness of nudges per say and more about the important role of changing context on behavior. 

I'd like to try to unpack more by focusing on the following: 

  • The importance of testing. You can’t blindly chuck nudges over the fence at your customers and simply assume they will be effective just because they worked in prior published studies or in other businesses. In this paper they tested 8 different nudges. If they had just scaled any or all of these without testing we would not have learned anything about effectiveness or the other lessons that follow relating to why they may not have worked. And vice versa - just because something failed to replicate in one context doesn't invalidate prior work or imply it won't work in yours. We just know findings are not generalizable across all contexts. The only way to really know about your context is to test. That is part of the value of business experiments.
  • Context matters. In the paper they discussed important differences in context between late stage COVID vaccination and vaccination earlier in the pandemic, as well as differences between flu and COVID.
  • The utility of behavioral personas and behavioral mapping to guide our thinking about why a given nudge may work or not. To take context a bit further, authors discussed differences in populations (age) and different challenges to flu vs COVID vaccinations and the differential impact related to how both logistical and psychological barriers may have been addressed in different populations and different contexts with different designs. All of these are things that we can point to or think about in the framework of behavioral mapping. Other issues related to 1) different kinds of hesitancy and changing norms over time, 2) whether some participants may have already been vaccinated (and not mentioned perhaps how prior infection may have changed the sense of effectiveness or urgency). These things may relate more to the kinds of personas that any given nudge may speak to. Although the paper doesn't discuss behavioral mapping or developing personas their utility here seems palpable.
  • Behavioral design frameworks. Additionally, authors discussed the impact of things like message saturation and novelty effects in addition to timing. These are things that I tend to think about in the context of Stephen Wendel’s CREATE action funnel as a design framework that speaks to issues like the importance of Cue and Timing. (Actually every aspect of CREATE speaks to almost all of the aspects of this messaging in some way).
  • The importance of operationalizing applied behavioral science through repeatable iterative cycles of learning. Even if one constructed behavioral maps and personas in the design of these nudges, the findings in this paper (and in many instances where we leverage experiments to test impact) dictate that we go back and revise our maps and personas based on learnings like these.

There has also been some recent discussion about the failure of nudges because they focus too much on individual behavioral (i-frame) vs. larger systemic issues  (s-frame). It seems to me that best practices in the 'diagnosis' phase of behavioral design process would be helpful in both of these areas if the behavioral lens is widened to include deeper thinking about the broader system (s-frame). As discussed in The Consitution of Knowledge: A Defence of Truth Jonathan Rouch discusses the challenges of changing behavior when beliefs and identity become tightly braided together. Sometimes people first have to be moved to a 'persuadable place emotionally' and their 'personal opinions, political identities, and peer group norms' have to be 'nudged and cajoled simultaneously, which is a long slow process.' To quote Jim Manzi, you can't test your way out of a bad strategy. It does not mean that we should give up on leveraging applied behavioral science to make a positive change in society, but it does make understanding of the larger ecosystem in the implementation of nudges all the more critical. 

As discussed in a recent article in The Behavioral Scientist:

"Our efforts at this stage will determine whether the field matures in a systematic and stable manner, or grows wildly and erratically. Unless we take stock of the science, the practice, and the mechanisms that we can put into place to align the two, we will run the danger of the promise of behavioral science being an illusion for many—not because the science itself was faulty, but because we did not successfully develop a science for using the science." 

The authors follow with 6 guidelines echoing some of the above sentiments above that are well worth reading. 

Reference: 

Rabb, N., Swindal, M., Glick, D. et al. Evidence from a statewide vaccination RCT shows the limits of nudges. Nature 604, E1–E7 (2022). https://doi.org/10.1038/s41586-022-04526-2

Chater, Nick and Loewenstein, George F., The i-Frame and the s-Frame: How Focusing on Individual-Level Solutions Has Led Behavioral Public Policy Astray (March 1, 2022). Available at SSRN: https://ssrn.com/abstract=4046264 or http://dx.doi.org/10.2139/ssrn.4046264


Monday, June 13, 2022

Agricultural Economics in the Healthcare Space

During the pandemic, it wasn't too uncommon to hear the criticism that economists should stay in their lane when it comes to issues related to health. So I thought I would write a short piece discussing what role I have had as an applied (agricultural) economist working in the healthcare space for almost a decade now. 

Economics is the study of people's choices and how they are made compatible. At a high level, agricultural economics focuses on choices related to food, fiber, natural resources, and energy production and consumption. This makes the intersection of food, health, and the environment an interesting space in agricultural economics. 

How do choices in this space impact health? What factors lead individuals to make healthy choices? In graduate school I specifically focused on why people seem to pick and choose their science and the role of evidence in food choices and attitudes toward food technology. What is the role of information and disinformation in the formation of consumer preferences and the choices they make? How can we design better policies, products, services, interventions, or choice architectures for better outcomes? How can we communicate science and risk more effectively? And, what are the best approaches in experimental design and causal inference to measure the impact in these areas? How do we bring this all together to make better decisions as individuals, business leaders, and as a society? At an applied level, which is where I work, this is not so much about making a novel contribution to the literature or advancing the field as much as it is about implementation - applying the principals of economics to develop solutions or provide frameworks to solve or better understand questions and problems in this space.

This line of reasoning has value not just in the context of food choices but for a myriad of behaviors related to healthcare at both the patient and provider level. From a business perspective, this is about how to identify opportunities to move resources from a lower to a higher valued use, and how we monetize behavior change. Of course applying this economic lens also requires bringing an ethical perspective to the table as well, which is important when we consider all of the tradeoffs involved in human decision making. 

When we are faced with wicked problems that may have alternative solutions, we can't just jump directly form the science to a cure, better policy, or product or service.  We learned from the pandemic the difference between having a vaccine and having people get vaccinated. At the end of the day there are no solutions really, only tradeoffs, and we need a framework for understanding those tradeoffs so we can make better decisions about food and health. That is squarely in the lane of theoretical and applied economists.

Related Posts and Readings

Why Study Economics / Applied Economics 

The Convergence of AI, Life Sciences, and Healthcare

The Economics of Innovation in Biopharma

Science Communication for Business and Non-technical Audiences 

The Value of Business Experiments

Statistics is a way of thinking not a toolbox

Causal Decision Making with Non-Causal Models

Rational Irrationality and Behavioral Economic Frameworks for Combating Vaccine Hesitancy 

Consumer Perceptions, Misinformation, and Vaccine Hesitancy

Using Social Network Analysis to Understand the Influence of Social Harassment Costs and Preferences Toward Biotechnology

Fat Tails, The Precautionary Principle, and GMOs

Innovation, Disruption and Low(er) Carbon Beef

Examining Changes in Healthy Days After Health Coaching. Cole, S., Zbikowski, S. M., Renda, A., Wallace, A., Dobbins, J. M., & Bogard, M. American Journal of Health Promotion. (2018)

Intrapersonal Variation in Goal Setting and Achievement in Health Coaching: Cross-Sectional Retrospective Analysis. Wallace A.M., Bogard M.T., Zbikowski S.M. J Med Internet Res 2018;20(1):e32

Monday, January 24, 2022

Innovation, Disruption, and Low(er) Carbon Beef

Is There Really Such a Thing as Low-Carbon Beef? That is the title of a recent article in Wired. The article was referring to a new USDA program that will allow beef to be labeled and marketed as having a lower carbon footprint based on a lifecycle assessment and audit of production practices. To be lower carbon it must be 10% lower. Here is a bit more detail:

"Verification of reduced greenhouse gas emissions in a group of cattle using a comprehensive life-cycle assessment model that incorporates impacts associated with management practices and cattle performance throughout the life of the animals.A qualified group of cattle must have life-cycle greenhouse emissions at least 10% lower than industry baseline based on the Low Carbon Beef Scoring Tables." 

Before getting into this further I will first answer the question posed by the title. Yes - on a relative global basis, beef produced and consumed in the U.S. is low carbon. Beef in the U.S. accounts for about 4% of total GHG emissions. But on a global scale, which matters most to climate change, overall, total GHG emissions related to U.S. beef consumption accounts for less than 1/2 of 1% (i.e. .5%) of GHG emissions (EPA GHG Emissions Inventory, Rotz et al, 2018). Additionally when compared to beef produced and consumed in other parts of the world, the carbon footprint of beef produced and consumed in the U.S. is 10 times or more lower (Herrero et al., 2013). There is no arguing against the fact  that when we look at the big picture, U.S. beef is low carbon beef. Of course it is fair to ask, within the U.S. can we improve our carbon footprint? Our history tells us yes we can and as I will discuss below, the new USDA labeling program cited in Wired may be one way to incentivize getting there. 

Will this new labeling and certification initiative be misleading as the article says? I am one of the first people to speak out against misleading food labels. Just see related posts below. There is currently a lot of confusion about the sustainability of our food choices,  and consumers are having to use a lot of proxies that are less than ideal to attempt to understand their carbon footprint. Examples include local, organic, 'hormone free', or non-GMO products (see my post about issue related to free-from food labeling). All of these options can in fact have higher carbon footprints, lead to more intense resource use, and have negative social and environmental consequences despite how popular some fads may be or what food marketers may imply about their product. By having a verified measure of carbon footprint associated with beef, the new USDA initiative should actually provide clarity to a confused and often misled consumer. Precisely the opposite of the concern raised in Wired.

Misleading or Realistic Recommendations?

The article in Wired quotes the following recommendation: "low-carbon certifications won’t fix the problems caused by beef consumption. “We need to substantially readjust our diets'

Another common suggestion to go along with this is to consume more plant based or cultured alternative meat sources. These suggestions suffer from two major drawbacks. From a behavioral science perspective, they are challenging behaviors to target. 

In a previous post, I discussed how we need to think about the problem we are trying to solve or outcome we are trying to achieve (climate change mitigation) and consider the behavioral map that relates all of the target actions we could take to achieve this outcome. Which solutions are technically correct but also the most impactful at scale from a behavior change perspective? Is a reduction in modern U.S. beef production or consumption the target behavior we should be trying to change compared to other options?

Paul Ferraro, Brandon McFadden, and Kent Messer take this head on using an auction experiment to measure 'plasticity' or the willingness of non-adopters to change behavior (Ferraro, et al., 2022).They find that targeting beef consumption might not be the most socially cost effective approach to mitigating climate change compared to other strategies for abatement (like carbon offsets or policies that encourage more technical innovations). They state:

 "Policy interventions are likely to provide the best return on investment when they target choices and behaviors for which abatement potential and plasticity are high enough to lead to meaningful reductions in GHG emissions....our estimates imply that it would cost at least $642 per tCO2e to reduce GHG emissions by inducing 50% of our study sample to eliminate beef consumption...currently the price to offset a tCO2e (based on existing markets for carbon offsets) is between $10 to $13." 

These costs are not only higher than market based estimates of the cost of carbon but also most estimates of the social cost of carbon as well even at the lower plasticity levels. They state: "in the U.S., a median estimate of the SCC is $48 per tCO2e."

The Fallacy of Disruption

The recommendations from Wired (and similar recommendations promoting cultured or alternative meats) may also suffer from what I am calling the fallacy of disruption. In his book Experimentation Works: The Surprising Power of Business Experiments, Steffan Thomke discusses what drives many important innovations as high velocity incrementalism. Not huge disruptive leaps:

"Even though the business world glorifies disruptive ideas, most progress is achieved by implementing hundreds of thousands of minor improvements that can have a big cumulative effect."

When looking at total economic growth, economists have estimated that 77% of economic growth is driven by existing products not via creative destruction associated with new products (Garcia‐Macia et al., 2019). While creative destruction is a well recognized and essential process in our economy, it is important to recognize there is a lot of progress to be made through high velocity incrementalism.  

The suggestion from the article that alludes to making huge technological disruptive leaps (like cell cultured meat alternatives) or behavior changes (making significant dietary changes) just isn't consistent with what we know about behavioral economics and the economics of innovation. As the work from Ferraro et al. has recently shown, even small changes in beef reduction aren't as practical as we might think. 

Internalizing Climate Externalities via Technological Change and Innovation

Climate change problems are what economists refer to as externalities, which at a high level are unpriced negative consequences of our behavior that fall on third parties or future generations. One way externalities are internalized are through technological innovations, which as discussed above, can result from incremental changes to the way we produce and consume goods and services. We have witnessed this in the beef industry over the last few decades. Thanks to advances in economic development, technological change, innovations in management, marketing, and pricing value in the beef industry (for just a few examples see here, here, here, here, and here), we've seen gains in beef production and quality. Additionally, in 2007 compared to 1977 we were able to produce the same amount of beef using roughly 30% fewer cattle and 30% less land. This represents a huge impact on global warming potential when we consider the implications of this in the context of methane emissions and the biogenic carbon cycle. As previously discussed, :

"when you get in your car to go to your favorite restaurant, the associated methane and CO2 emissions that result represents new and long lasting emissions. For the most part the steak or burger on your plate doesn't directly add any new warming potential to the atmosphere that didn't already exist, nor has any steak or burger you may have eaten in the last 30 years based on this data."

Feed and and water usage were also down between 15-20% with a 16% lower carbon footprint (Capper, 2007). All of these factors have culminated in a healthier, more nutritious, higher quality product with a lower carbon footprint. As noted above, compared to other places in the world, the impact of technological innovation is many fold.

It is important to note that these innovations were market driven. They entailed voluntary behavior changes by both producers and consumers that led to higher quality, more nutritious, and more environmentally friendly beef. In addition to helping provide more clarity to consumers compared to existing labeling schemes, the new USDA labels will only help incentivize this innovative process by effectively putting a price on carbon, in absence of any new regulatory frameworks, subsidies, permits, or carbon taxes. 

The history of food innovation in the beef industry tells us this trend of voluntary and market driven advancement will continue. While in the life sciences, the 'high velocity' part of high velocity incrementalism is more challenging than designing a search engine or smartphone app, with the convergence of big data, AI, and genomics,  innovations are happening faster. Current trends in ESG reporting and concerns about scope 3 emissions, along with advances in block chain and other source verification technologies will only further catalyze future advances. We just don't have this kind of momentum behind drastic dietary fads related to huge reductions in beef consumption, going vegan, or alternative proteins. 

Related Reading

Rational Irrationality and Satter's Hierarchy of Food Needs http://ageconomist.blogspot.com/2018/10/rational-irrationality-and-satters.html  

The 'free-from' Nash equilibrium 

The Challenging Tradeoff of Weighing Biased Consumer Preferences Against Marketing Food with Integrity. http://ageconomist.blogspot.com/2017/12/allenge-tradeoff-of-weighing-biased.html  

GMOs and QR Codes: Consumers need more than a label they need a learning path. 


References

HJ. L. Capper, The environmental impact of beef production in the United States: 1977 compared with 2007, Journal of Animal Science, Volume 89, Issue 12, December 2011, Pages 4249–4261, https://doi.org/10.2527/jas.2010-3784

Private costs of carbon emissions abatement by limiting beef consumption and vehicle use in the United States. McFadden BR, Ferraro PJ, Messer KD (2022) Private costs of carbon emissions abatement by limiting beef consumption and vehicle use in the United States. PLOS ONE 17(1): e0261372. https://doi.org/10.1371/journal.pone.0261372

Daniel Garcia‐Macia & Chang‐Tai Hsieh & Peter J. Klenow, 2019. "How Destructive Is Innovation?," Econometrica, Econometric Society, vol. 87(5), pages 1507-1541, September.

Herrero, M., P. Havlík, H. Valin, A. Notenbaert, M.C. Rufino, P. K. Thornton, M. Blümmel, F. Weiss, D. Grace, and M. Obersteiner. 2013. Biomass use, production, feed efficiencies, and greenhouse gas emissions from global livestock systems. Proc. Natl. Acad. Sci. 110: 20888-20893



Thursday, December 30, 2021

Facts, Figures, or Fiction: Unwarranted Criticisms of the Biden Administration's Failure to Target Methane Emissions from Livestock

Background

Methane has gotten a lot of attention recently in relation to fighting climate change:

"The oil, gas and coal industries are the largest source of human-caused methane emissions. An Environmental Defense Fund study found that cutting methane emissions now could slow the near-term rate of global warming by as much as 30%."

While these facts may be true, it takes theory to explain facts, and unfortunately bad theory leads to bad decisions even if we get the facts right. A recent article in Politico provides an example in it's criticism of the Biden administration's failure to target methane emissions from livestock to combat climate change:

"This creative accounting and the administration’s policies belittle the livestock industry’s role in the methane emergency. While Biden and other U.S. officials are preaching the importance of slashing methane emissions to prevent catastrophic warming and imposing tough new methane regulations on fossil fuel companies, they are allowing super-polluting meat and dairy corporations to continue to emit massive amounts of the same greenhouse gas with impunity."

Are all methane sources equal?

Accounting for methane is key, but there is a lot of nuance to understand about methane in order to account for it appropriately so that we take the right course of action when it comes to policy and food choices.

Let's start with a bigger picture looking at total GHG emissions by source:

Source: https://www.epa.gov/ghgemissions/inventory-us-greenhouse-gas-emissions-and-sinks 

When we drill into agriculture and focus on beef in the U.S. we find that it accounts for about 4% of total emissions. But on a global scale, which matters most to climate change, overall, total GHG emissions related to U.S. beef consumption accounts for less than 1/2 of 1% (i.e. .5%) of global GHG emissions (EPA GHG Emissions Inventory, Rotz et al, 2018). When we talk about methane emissions associated with eating U.S. sourced beef in the U.S., we are talking about a very thin slice of total global warming potential. 

When we zoom in on this slice of potential and focus on methane this is what we see according to the current administration's Methane Emissions Reduction Action Plan:

Source: https://www.whitehouse.gov/wp-content/uploads/2021/11/US-Methane-Emissions-Reduction-Action-Plan-1.pdf  

Enteric emissions account for all ruminant livestock emissions in the U.S. which would include both beef and dairy but that gives us a pretty good picture. Again, we have facts that are all true, but *how* should we interpret this? A naive interpretation would be to simply compare the pieces of the pie assuming that we can make apples to apples comparisons between each piece and choose a course of action based on the 'facts.'  But this would be misleading without understanding the underlying biology and data generating mechanisms giving rise to this data.

The crude infographic that I put together below sheds some light on this (See this video for a better illustration or Dr. Frank Mitloehner's more detailed explanation of the biogenic carbon cycle here; see also Allen, M.R., Shine, K.P., Fuglestvedt, J.S. et al., 2018). At the highest level, methane emissions produced by beef cattle are constantly recycled. The ultimate source of methane starts in plants and is consumed by livestock and later removed from the atmosphere in the form of CO2 by plants again to repeat. This can be visualized by a tank with water going in and eventually draining out. In this context methane is a 'flow' gas.

Methane sourced from natural gas and petroleum behaves differently. When we extract, refine, and burn fossil fuels the methane associated with this is released into the atmosphere, but absent any sort of mitigation it ultimately converts to CO2 where it remains to have a long lasting warming effect. This can be visualized by a tank with water going in but never draining out. 


In relation to the first tank representing enteric emissions from livestock, there are additional nuances. When we look at U.S. cattle inventories over the last 30 years what we see is that the rate of flow from the faucet has mostly been decreasing. We have not only been recycling the same methane in the atmosphere over and over the last few decades, but less of it. Thanks to advances in economic development, technological change, innovations in management, marketing, and pricing value in the beef industry (for just a few examples see here, here, here, here, and here), we've seen gains in beef production and quality. Additionally, in 2007 compared to 1977 we were able to produce the same amount of beef using roughly 30% fewer cattle and 30% less land. Feed and and water usage were down between 15-20% with a 16% lower carbon footprint (Capper, 2007). All of these factors have culminated in a healthier, more nutritious, higher quality product with a lower carbon footprint. We can't say the same about methane associated with fossil fuels and transportation which continues to flow at greater rates and doesn't get recycled. 


Source: https://www.nass.usda.gov/Newsroom/2021/01-29-2021.php 

So when you get in your car to go to your favorite restaurant, the associated methane and CO2 emissions that result represents new and long lasting emissions. For the most part the steak or burger on your plate doesn't directly add any new warming potential to the atmosphere that didn't already exist, nor has any steak or burger you may have eaten in the last 30 years based on this data! 

Are all sources of beef equal?

Why focus on U.S. beef production and consumption in this discussion? Because in the Politico article and in many conversations like this, the context is often subtly switched between consumers of U.S. beef and consumption of beef sourced in other parts of the world as if they are substitutes. This change in context ignores important differences between technological capabilities and production practices but also differences in incomes, tastes, and preferences. A lot of the criticism of U.S. beef may actually be true in relation to beef produced and consumed in other parts of the world. We are not burning down rain forests in the U.S. in order to produce and consume beef, and the indirect connection between U.S. beef production and consumption and deforestation in other parts of the world is very weak due to the way global beef markets function. However, there are opportunities to make beef greener in other parts of the world that should not be ignored and should be researched further (see Mrode et al., 2019; Silva et al., 2018; Gates, 2017).

Should we just ignore the very potent warming potential represented by methane emissions associated with U.S. beef consumption just because it represents a thin slice of the global pie that is relevant to climate change? No, but we should put it in the proper perspective, and think of the overall global portfolio of choices we make in our diets and daily lives and not get anchored on facts divorced from the proper context so we can actually make impactful decisions. 

Consumer fads and a climate friendly behavior change strategy

As discussed above, even if all U.S. consumers gave up beef tomorrow cold turkey, there is an upper limit on the impact we can have globally. Modest changes either reducing beef consumption or switching to alternative proteins would be even less impactful. However, we should still recognize that lots of small changes could add up to have a meaningful effect in the aggregate. Given the behavioral and nutritional challenges that make any meaningful reduction in beef consumption mostly impractical at a population level (and ignoring the elephant in the room that is transportation) it is an empirical question as to what other seemingly arbitrary lifestyle changes we could suggest to decrease our impact on climate - maybe that once a week trip to the grocer to buy in bulk instead of having the fleet of Amazon, UPS, and FedEx trucks down your street multiple times a week is one example. Other consumerist trends we've seen that could also be adding to our carbon footprint could involve the fads and infatuation with local, natural, and organic food consumption, and the notorious 'free-from' food marketing campaigns that tend to demonize climate saving technologies (see here, here, here, here, here, and here for related info). 

Putting the lens of behavioral science on this, we need to think about the problem we are trying to solve or outcome we are trying to achieve (climate change mitigation) and consider the behavioral map that relates all of the target actions we could take to achieve this outcome. What role does science literacy and misinformation and disinformation play in the trends and food fads noted above that could lead to hesitancy to adopt climate saving technologies? Which solutions are technically correct but also the most impactful at scale from a behavior change perspective? Is a reduction in modern U.S. beef production or consumption the target behavior we should be trying to change compared to other options? Maybe for some people but I'm not convinced it is a global solution. 

Getting the most nutritional bang for our climate buck

How do we know we are getting the most nutritional bang for our climate buck when thinking through this? In a 2010 Food and Nutrition Research article, authors introduce the Nutrient Density to Climate Impact (NDCI) index. Metrics like this could add some perspective. According to their work:

"the NDCI index was 0 for carbonated water, soft drink, and beer and below 0.1 for red wine and oat drink. The NDCI index was similar for orange juice (0.28) and soy drink  (0.25). Due to a very high-nutrient density, the NDCI index for milk was substantially higher (0.54) than for the other beverages. Future discussion on how changes in food consumption patterns might help avert climate change need to take both GHG emission and nutrient density of foods and beverages into account."

Authors Drewnowski, Adam et al. apply this more nuanced approach to 34 different food categories including meat and dairy:

"Efforts to decrease global GHGEs while maintaining nutritionally adequate, affordable, and acceptable diets need to be guided by considerations of the ND and environmental impact of different foods and food groups. In a series of recent studies, the principal sustainability measure was carbon cost expressed in terms of GHGEs (8, 14, 15). Testing the relation between nutrient profile of foods and their carbon footprint can help identify those food groups that provide both calories and optimal nutrition at a low carbon cost."


Just as combining trips and carpooling might be effective ways to reduce your carbon footprint getting the most out of every mile driven and gallon of gas used, to be truly impactful regarding climate change, we should be trying to get the most out of every bite we take and ounce we drink. 

Weighing efficiency and values

The previous discussion starts to sound a lot like a position related to optimization and efficiency which ultimately requires making value judgements that science and economics can't make.

As discussed in Heyne, Boettke, and Prychitco's text The Economic Way of Thinking:

"efficiency is essentially an evaluative term. It always has to do with the ratio fo the value of output to the value of input...in effect it depends on what people want done and how they value what they want done. It follows that the efficiency of any process can change with changes in valuations."

What I am getting at is that maybe people prefer to have sustenance from beef vs rice or other alternatives and we have to give weight to that in a policy framework. Physical and technical facts alone can never fully determine efficiency. That's what makes economics so powerful. Its the study of people's choices and how they are made compatible. It is way more than just the study of the technical allocation of resources because it forces us to consider each individual's preferences based on the knowledge of their specific circumstances of time and place.

Science and economics can't make value judgements for us, but we should strive get the facts right, and the stories we tell with the facts need to be true to the science behind them. 

Additional and Related References:

HJ. L. Capper, The environmental impact of beef production in the United States: 1977 compared with 2007, Journal of Animal Science, Volume 89, Issue 12, December 2011, Pages 4249–4261, https://doi.org/10.2527/jas.2010-3784

Rafael De Oliveira Silva, Luis Gustavo Barioni, Giampaolo Queiroz Pellegrino, Dominic Moran, The role of agricultural intensification in Brazil's Nationally Determined Contribution on emissions mitigation, Agricultural Systems, Volume 161, 2018, Pages 102-112, ISSN 0308-521X, https://doi.org/10.1016/j.agsy.2018.01.003.

Mrode, R., Ojango, J., Okeyo, A. M., & Mwacharo, J. M. (2019). Genomic Selection and Use of Molecular Tools in Breeding Programs for Indigenous and Crossbred Cattle in Developing Countries: Current Status and Future Prospects. Frontiers in genetics, 9, 694. https://doi.org/10.3389/fgene.2018.00694

C. Alan Rotz et al. Environmental footprints of beef cattle production in the United States, Agricultural Systems (2018). DOI: 10.1016/j.agsy.2018.11.005 

https://phys.org/news/2019-03-beef-resource-greenhouse-gas-emissions.html

What cowboys can teach us about feeding the world. Could a cattle ranch in Australia improve food security in Africa? Bill Gates. Gates Notes. July 18, 2017. https://www.gatesnotes.com/Development/What-Cowboys-Can-Teach-Us-About-Feeding-the-World?WT.mc_id=07_18_2017_10_AustralianCattle_BG-LI_&WT.tsrc=BGLI

Scarborough, P., & Rayner, M. (2010). Nutrient Density to Climate Impact index is an inappropriate system for ranking beverages in order of climate impact per nutritional value. Food & nutrition research, 54, 10.3402/fnr.v54i0.5681. https://doi.org/10.3402/fnr.v54i0.5681

Drewnowski, Adam et al. “Energy and nutrient density of foods in relation to their carbon footprint.” The American journal of clinical nutrition 101 1 (2015): 184-91 .

Allen, M.R., Shine, K.P., Fuglestvedt, J.S. et al. A solution to the misrepresentations of CO2-equivalent emissions of short-lived climate pollutants under ambitious mitigation. npj Clim Atmos Sci 1, 16 (2018) doi:10.1038/s41612-018-0026-8

Thursday, October 21, 2021

The Supply Chain Knowledge Problem

Our current supply chain struggles can largely be understood through the lens of the fundamental problem of economics, the knowledge problem. The knowledge problem was originally characterized by Hayek:

"The economic problem of society is not merely a problem of how to allocate given resources....it is a problem of utilization of knowledge which is not given to anyone in its totality."

This can be understood by recognizing that 'know how' and 'know what' are spread across many minds to paraphrase some of the work by economist Kenneth E. Boulding and as discussed in Peter Boettke's Living Economics. The knowledge problem is also exemplified in the words of Leonard E. Read's pencil in his essay I, Pencil, "Not a single person on the face of this earth knows how to make me."

This excellent YouTube video update of Read's essay provides a modern illustration:


"if I didn't already exist you might think that such a flowering of free cooperation, competition, and creation was either impossible or magical and yet here I am!"


How does this apply to our supply chain issues? Well because 'know how' and 'know what' are spread across so many minds, not a single person on the face of the earth knows how to make anything. As a result, no one has the knowledge to fix our supply chains. Our supply chains are the result of human action but not human design. Of course this is a feature and not a bug. As a result most consumers and policy makers usually remain comfortably blind to the knowledge problem and the role of the price mechanism that solves it.


Our economy is not analogous to an engine that will automatically restart after shutting down like the engine of a car at a traffic light. Instead of thinking of our economy and the supply chains that sustain it as a mechanical system that can be engineered by technicians, a better analogy is an evolving ecosystem. Each product we consume and its components have evolved to fit into very specific niches. We could think of our supply chains as habitats that have been threatened by COVID and our response to it.


Just as restoring an ecosystem after an environmental disaster requires an understanding of ecology, we must understand the ecology of our markets and supply chains in order to restore our economy and avoid an even worse ecological disaster. We must recognize that the knowledge problem post COVID is more challenging than pre covid made evident by recent price spikes and shortages that some people could be confusing for monetary inflation. We have to understand that our supply chains evolved over a number of years, even decades, and ‘regrowth’ will take time and things may not grow back to look like they did before.This could mean higher prices now and well into the near future for a number of goods, with some items reaching new higher equilibrium levels as tastes, preferences, and production practices may have changed post COVID. 


COVID and our response to it unfortunately destroyed the ‘know what’ and ‘know how’ that was spread across millions of minds and across decades of building our supply chains. There is no simple blunt monetary or fiscal policy that can substitute for the ‘know how’ and ‘know what’ it’s going to take to rebuild them. It’s going to take time. Prices have to search and signal for the ‘know how’ and ‘know what’ to rediscover and rebuild what was lost.


Our supply chains co-evolved over time with a number of prohibitions and frictions. We learned during the pandemic the potential of relaxing some prohibitions such as those in healthcare, which allowed supply to creatively meet demand using telemedicine. What other opportunities exist to help rebuild our supply chains?


Policy makers must think carefully about how to respond going forward and must be willing to allow new species to emerge as different sustainable patterns of specialization and trade evolve post COIVD. Because, they don't possess the ‘know how’ and ‘know what’ to fix it. If anything, COVID has reminded us all of the words of Frederick Hayek:"The curious task of economics is to demonstrate to men how little they really know about what they imagine they can design."



Notes and References:

Friedrich Hayek (September 1945). "The Use of Knowledge in Society" (PDF). The American Economic Review. 35 (4): 519–530

Living EconomicsYesterday, Today, and Tomorrow. Peter J. Boettke. 2012.


Sunday, August 08, 2021

Battling Vaccine Hesitancy: Asking and Not Telling?

We often hear that science and evidence rarely will change minds when it comes to biotechnology or climate change,  (or vaccine hesitancy). But some think maybe there is a strategy to get out in front of misinformation. In a previous post I discussed an article 'Finding a Vaccine for Misinformation.' The authors discuss 'inoculating' consumers through gamification so that they are less susceptible to misinformation. 

"Introne believes that he can use this approach to target the weakest links in false narratives and bring people closer to changing their minds. He says that if he can deliver information that doesn’t conflict with a person’s belief state but still brings them around to a more accurate point of view, “then I’ve got a pretty powerful thing.”

Thinking more about this I was reminded of an article in the Journal of the Federation for American Societies for Experimental Biology (FASEB) where Jayson Lusk and Brandon McFadden observed the following:

1) consumers, as a group, are unknowledgeable about GMOs, genetics, and plant breeding and, perhaps more interestingly

2) simply asking these objective knowledge questions served to lower subjective, self-assessed knowledge of GMOs (i.e., people realize they didn't know as much as they thought they did) and increase the belief that it is safe to eat GM food. 

So essentially, just asking skeptics the right questions appeared to mitigate the Dunning Kruger effect and decreased resistance to evidence based views on the safety of genetically engineered foods. Asking, rather than telling in this scenario seems consistent with the strategy of innculating consumers against misinformation and disinformation. 

References: 

News Feature: Finding a vaccine for misinformation.Gayathri Vaidyanathan. Proceedings of the National Academy of Sciences Aug 2020, 117 (32) 18902-18905; DOI: 10.1073/pnas.2013249117 https://www.pnas.org/content/117/32/18902

McFadden, B.R. and Lusk, J.L. (2016), What consumers don't know about genetically modified food, and how that affects beliefs. Faseb, 30: 3091-3096. https://doi.org/10.1096/fj.201600598

Thursday, August 05, 2021

Rational Irrationality and Behavioral Economic Frameworks for Combating Vaccine Hesitancy

Background and Introduction


Some previous work on vaccine hesitancy related to childhood vaccinations inspired by Caplan's notion of rational irrationality indicates parents willing to bear costs as high as $8,000 in order to avoid vaccinating their children. What is the associated willingness to pay (WTP) in order to avoid COVID vaccination? What kinds of intervention strategies are supported by various behavioral economic frameworks for combating vaccine hesitancy in the case of COVID19?


Social Harassment Costs and Imperviousness to Evidence


In a previous post, I discussed the role of social harassment as it relates to one’s worldview and the disutility associated with changing one’s mind or updating one’s prior about that worldview as a result.


 

 

(Figure 1)

 

Depending on one's peer group, and the level of social harassment, consumers might express preferences that otherwise might seem irrational from a scientific standpoint. For example, based on peer group, a consumer might embrace scientific evidence related to climate change, but due to strong levels of social harassment, reject the views of the broader medical and scientific community related to the safety of genetically engineered foods. 


Near Neoclassical Demand Curve and Rational Irrationality


Bryan Caplan's notion of rational irrationality might also explain these kinds of preferences:


"...people have preferences over beliefs. Letting emotions or ideology corrupt our thinking is an easy way to satisfy such preferences...Worldviews are more a mental security blanket than a serious effort to understand the world."


This means that:


"Beliefs that are irrational from the standpoint of truth-seeking are rational from the standpoint of utility maximization."


This can be modeled in the form of a kinked ‘near’ Neoclassical demand curve as depicted below. Caplan hypothesized that in many cases, the cost of holding irrational beliefs can be low or near zero and people make tradeoffs with regard to the level of rationality they consume.




(Figure 2)



Below Pa, people are willing to make tradeoffs between price and the ‘amount’ of irrationality they consume. It might then follow that if members of society are opposed to genetically engineered foods, they may be willing to pay up to Pa to avoid foods with GMO ingredients.


Implications for Combating Vaccine Hesitancy


So if the cost of holding antivax views (we can think of costs in terms of perceived risk of serious illness, loss of work, risk of quarantine, and other opportunity costs associated with not getting vaccinated) is below some level Pa, then one may be willing to make tradeoffs with regard to the level of irrationality they want to consume (we can think of the level of consumption as level of vaccine hesitancy or probability of getting vaccinated). This is represented by the portion Pa - Qa of Caplan’s near neoclassical demand curve representing rational irrationality.


Murphy (2016) extends Caplan’s model of rational irrationality to include applications where demand for irrationality occurs at prices greater than zero. In his paper he applies this theory to things like willingness to pay for ‘fair trade goods’ and vaccine hesitancy. 

 

For example, he calculates the willingness to pay (WTP) to avoid childhood vaccinations from the parent’s perspective as follows:

 

WTP = WTP to avoid 1 yr sickness × premium for child × increase in probability of 1yr of sickness

 

He looks at vaccines for pertussis, invasive pneumococcal disease, and varicella and based on certain assumptions calculates the WTP. 

 

“Using the median assumption that parents value the statistical life of their children 50% more than they value their own lives, the cost implicit in not vaccinating for these three diseases is US$8,420. As pointed out earlier, as many as ten percent of families exhibit this willingness-to-pay—and they do so repeatedly should they have more than one child. Under the influence of retracted evidence, thousands of parents retreat to the naturalistic fallacy, rejecting modern medicine they deem to be artificial.”

 

How might we apply this to combating vaccine hesitancy related to COVID? For instance, if these parents were offered more than their WTP to avoid vaccination then they may be willing to get their children vaccinated for the three conditions mentioned above. But what is the WTP to avoid COVID vaccination? $8000 is really high on an individual basis, and given the resistance and hesitancy we have seen to this point I would not expect a very low price point among the most staunch resistors. This may explain why some have concluded that offering lottery tickets to induce vaccinations may not have been as impactful as hoped:


“Our results suggest that state-based lotteries are of limited value in increasing vaccine uptake. Therefore, the resources devoted to vaccine lotteries may be more successfully invested in programs that target underlying reasons for vaccine hesitancy and low vaccine uptake”

 

The hope of the lottery was based on the idea that people tend to either overestimate or completely ignore low probability events. From a behavioral economic perspective we were hoping that those that were ignoring the risk of COVID might overestimate their chances of winning the lottery and be induced to get vaccinated. Apparently the expected values of the lottery did not exceed WTP in the case of COVID vaccination. There has been some recent interest in offering direct payments to people to get vaccinated. For instance the idea of paying up to $100 or even $1000 has been floated in the last year. 


Some have pushed back on this. Recently the Biden administration has apparently endorsed $100 payments.

  

Depending on an individual's relative WTP, paying folks to be vaccinated may or may not be promising. If social harassment costs (based on my framework) are an important factor, then this could also impact the optimal WTP to target with such an outreach.

 

We also have to recognize the role of externalities. While there are negative externalities associated with not getting vaccinated, the positive externalities are great. For instance, if we were doing a WTP calculation to encourage vaccination, we should add some premium to that payment to account for positive externalities associated with getting vaccinated to justify the costs and increase the effectiveness of the incentive. It is an important question if the WTP for the vaccine hesitant on average is so large that this becomes prohibitively expensive.

 

Alternatively, targeting WTP does not have to be shouldered by government. Private employers can also offer similar incentives to get vaccinated either in the form of direct payments or penalties.


But it is hard to say if these sorts of WTP calculations would be useful for targeting 'the right' payment to incentivize vaccination if that is even something we should be doing, or if it is cost effective especially given the heterogeneity of preferences and attitudes toward risk in the population. We would need to know more. But the concept itself is probably most useful as a way to think about and quantify the level of resistance and think of what kinds of communication strategies and nudges would work best to increase vaccinations. What things could we do to reduce WTP or increase the opportunity costs of refusing the vaccine. More below.

 

Other Approaches

 

In 'Finding a vaccine for misinformation'  (Vaidyanathan, 2020) authors address the challenges of misinformation as it relates to vaccine hesitancy and leverage some of the same behavioral economic frameworks.

 

They go on to explain that our worldview (pre-existing internal stories based on our our mental tapestry of culture, knowledge, beliefs, and life experiences) determines which gist is stored and resonates (and impacts our resistance to updating our priors with new evidence).

 

Part of their strategy for dealing with this is 'inoculating' consumers through gamification so that they are less susceptible to misinformation. 

 

"Introne believes that he can use this approach to target the weakest links in false narratives and bring people closer to changing their minds. He says that if he can deliver information that doesn’t conflict with a person’s belief state but still brings them around to a more accurate point of view, “then I’ve got a pretty powerful thing.”

 

In the rational irrationality and social harassment frameworks above, by circumventing or inoculating against misinformation and getting out in front of it you can combat hesitancy or dampen the the extent to which adopting worldview  v* lowers utility. Similarly, if we can deliver information in a way to get people to adopt v* without lowering utility, that would be a very impactful communication strategy. 

 

BE works has applied behavioral economics to understanding and responding to vaccine hesitancy. They identified four cognitive factors driving hesitancy including one factor related to valuing personal beliefs over evidence (which sounds a lot like the rational irrationality framework we have been discussing here). (See “COVID-19 Vaccine Hesitancy: A Behavioral Lens on a Critical Problem” ) They followed up with a report and recommendations on combating hesitancy based on these findings (BEACON: A Strategic Framework for Overcoming Vaccine Hesitancy). These reports and more are available from the BE Works website (https://beworks.com/covid-19/ )

 

One of the strategies highlighted in this work consistent with the rational irrationality and social harassment frameworks laid out above includes leveraging social capital:

 

"Communications aimed at sharing relevant vaccination-positive stories of people within the recipients’ peer groups, or other groups to whom an individual feels a strong social connection, could foster a positive view of vaccination and help them see it as a routine and valued step within their identified community...."

 

Communications from key people in a social network (i.e. figure 1 above) may accomplish this. So an outreach targeted at these people or enlisting their efforts could be an impactful way to get members to accept vaccinations without increasing related social harassment costs and lowering utility. These people might also be a way to deliver information that doesn’t conflict with a person’s belief state as discussed above (having the same impact on social harassment and utility).

 

Conclusion

 

While we may not be able to guess everyone's WTP to get vaccinated, we should diversify our approach to targeting it or equivalently raising the opportunity costs of not getting vaccinated such that P > Pa in the context of near neoclassical demand curve above. The most effective approach may be private sector initiatives such as vaccine requirements or bonus payments for getting vaccinated. There are also ways we might leverage behavioral economics and behavioral design frameworks to magnify our impact. Most of our learnings from combating misinformation and disinformation indicate that this takes more than communicating accurate information, it requires communicating with intent and influence. But in the case of vaccinations, even small wins can result in great improvements as Murphy points out in his article.

 

 “Economic education may struggle to sway the median voter; it may only move those with roughly correct priors regarding economic questions towards a more consistent, factual worldview. On the other hand, for each and every person convinced to vaccinate their children, the world is made better off. Some may dismiss these prescriptions, but they may have far more practical effect. Convince 300 individuals that free trade is good, the chance this changes trade policy is vanishingly small. Convince 300 individuals to vaccinate their children, and society tangibly improves. When it comes to persuasion on private markets, unlike politics, every- one is the marginal decision-maker for the irrationality present in their own lives.”

 

Similar to the swiss cheese model of non-pharmacological interventions in absence of a vaccine, a layered approach based on several behavioral economics frameworks seems most pragmatic for dealing with vaccine hesitancy.

 

See also:


Consumer Perceptions of Biotechnology: The Role of Information and Social Harassment Costs


Using Social Network Analysis to Understand the Influence of Social Harassment Costs and Preferences Toward Biotechnology


Consumer Perceptions, Misinformation, and Vaccine Hesitancy







References:

 

Borland,Melvin V. and Robert W. Pulsinelli. Household Commodity Production and Social Harassment Costs.Southern Economic Journal. Vol. 56, No. 2 (Oct., 1989), pp. 291-301

 

The Myth of the Rational Voter: Why Democracies Choose Bad Policies. Bryan Caplan. Princeton University Press. 2007


Johnson, N.F., Velásquez, N., Restrepo, N.J. et al. The online competition between pro- and anti-vaccination views. Nature 582, 230–233 (2020). https://doi.org/10.1038/s41586-020-2281-1

 

Murphy RH. The willingness-to-pay for Caplanian irrationality. Rationality and Society. 2016;28(1):52-82. doi:10.1177/1043463115605478


 News Feature: Finding a vaccine for misinformation.Gayathri Vaidyanathan. Proceedings of the National Academy of Sciences Aug 2020, 117 (32) 18902-18905; DOI: 10.1073/pnas.2013249117 https://www.pnas.org/content/117/32/18902