Insidious Consumption: Surprising Factors That Influence
What We Eat and How Much
Behavioral economics
reveals new possibilities for more healthful food
choices
Lisa
Mancino
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The
prevalence of obesity and diet-related
illnesses is rising, despite evidence
that Americans are aware of the positive
effects of a balanced diet and exercise.
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Standard
tools of economics can only go so far
in explaining these trends and may have
limited impact on improving consumers’
food choices. |
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Findings
from behavioral economics shed light
on several factors that could help economists
and policy-makers better understand
food choices. |
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This
article is drawn from . . . |
Could
Behavioral Economics Help Improve Diet Quality
for Nutrition Assistance Program Participants?
by David Just, Lisa Mancino,
and Brian Wansink, ERR-43. USDA, Economic
Research Service, May 2007. |
You
may also be interested in . . . |
Mindless
Eating: Why We Eat More Than We Think,
by Brian Wansink, New York: Bantam Dell, 2006.
“The
Price Is Right: Economics and the Rise in
Obesity,” by Jayachandran N. Variyam,
in Amber Waves, Vol. 3, No. 1, USDA,
Economic Research Service, February 2005.
“Obesity
Policy and the Law of Unintended Consequences,”
by Fred Kuchler, Elise Golan, Jayachandran
N. Variyam, and Stephen R. Crutchfield, in
Amber Waves, Vol. 3, No. 3, USDA,
Economic Research Service, June 2005.
“Improving
Food Choices: Can Food Stamps Do More?”
by Joanne F. Guthrie, Elizabeth Frazão,
Margaret Andrews, and David Smallwood, in
Amber Waves, Vol. 5, No. 2, USDA,
Economic Research Service, April 2007.
ERS Briefing Rooms on:
Diet
and Health
Food
Assistance and Nutrition Programs
Food Consumption
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A 2005 survey by the International
Food Information Council found that at least 89
percent of American adults sampled indicated that
they believe diet, exercise, and physical activity
influence health. These beliefs are reflected in
the popularity of books, magazines, and weight-loss
programs offering dietary and health advice.
Recent consumption statistics,
however, show that many of us are still choosing
diets that are out of sync with dietary guidance.
Many Americans eat too much sodium, saturated fat,
and added sugar yet too few fruit, vegetables, and
whole grains. And the prevalence of obesity and
diet-related illnesses continues to rise. Although
we may intend to have a healthy diet, other preferences
often beguile us into food choices that may eventually
harm our health.
To explain this growing pattern
of insidious consumption, economists are increasingly
turning to behavioral economics—a burgeoning
field within the dismal science. Findings from behavioral
studies point to a broader set of factors that help
determine food choices. These findings also provide
an opportunity to begin thinking of new ways to
encourage consumers to choose diets better aligned
with their own goals for future health.
Can Psychology Help the
Dismal Science?
To understand why so many of us
choose diets and lifestyles that lead to obesity
and ill health, economists typically focus on the
usual economic suspects—prices, income, dietary
information, and time preferences (the willingness
to forego a benefit now for an equal or greater
benefit tomorrow). Examination of each variable’s
role in promoting poor food choices and increasing
obesity rates, however, does not typically explain
the full story.
And even when standard economics
is able to identify the causes of poor food choices,
policymakers have few attractive options to reverse
these trends. For example, empirical evidence suggests
that rising obesity rates are at least partially
attributable to technological advances that have
made food relatively cheap, plentiful, and convenient
while making expending energy in our daily lives
less necessary. However, standard economic tools,
like using taxes to raise the relative price of
unhealthful foods, may have unintended consequences.
Taxes on food would disproportionately burden low-income
individuals who spend a greater share of their income
on food than wealthier consumers. Also, such measures
would impose an additional cost for everyone, not
just consumers who need incentives to make better
choices. For example, they would raise prices for
those who are in good health, but who may occasionally
enjoy some less nutritious foods.
So, what is an economist to do?
An increasing number are now looking to psychology
for answers. And for good reason—findings
from behavioral and psychological studies indicate
that people regularly behave in ways that contradict
some basic economic assumptions. Our responses to
prices and changes in income, for instance, are
not as cut and dry as we had thought. Experimental
studies of how we pay for various goods and services
(e.g., cash versus credit, flat rate versus pay
per use) show that payment options influence our
choices. Time preferences are not solidly fixed
either. The tradeoffs we make between now and the
future fluctuate with situations, stress, and other
distractions.
Behavioral experiments also reveal
surprising findings about how we use and process
information. Each day, we make thousands of decisions—should
you hit the snooze button once or twice? Do you
have time to eat breakfast at home? If so, what
should you have and how much should you eat? Rather
than brood over each and every quotidian task (and
make it to work on time), we use simple rules of
thumb. Given the sheer volume of information we
need to process daily, this is an efficient solution.
But it can lead to systematic reasoning errors that,
again, become more likely when we are distracted
or under stress.
Incorporating such idiosyncrasies
into economic analysis of consumer behavior can
expand our understanding of what motivates food
choices and health outcomes. This can help us think
of new ways to encourage all people to choose more
healthful diets. For USDA, which devotes considerable
resources to nutrition assistance programs like
food stamps or school meals, findings from behavioral
economics also offer alternative strategies that
could be applied to improving the diet quality of
program participants without restricting their right
to choose the foods they like. This exploration
of new ideas, however, is by no means a recommendation
or endorsement of any of them. A thorough analysis
of costs, benefits, and potential impacts would
be needed before any strategy could be considered
as a policy option.
Mentally, We’re
Not the Most Accurate Accountants
A tenet of standard economic theory
is that lowering the price of one good, say food,
will have both an income and a substitution effect.
With the income effect, individuals increase food
purchases in response to more room in their budgets.
A price change may also have a substitution effect,
where people change how they allocate expenditures
among broad categories. In this case, lowering food
prices may lead to only a slight increase in total
food purchases while generating a much greater rise
in expenditures on other items.
In contrast, mental accounting
supposes that, as one rule of thumb, individuals
categorize their income into mental accounts by
earmarking it for specific purposes or specifying
that it be used within a certain timeframe. This
behavioral economics concept predicts that one will
spend within a certain category until funds are
depleted. Thus, if one dedicates a portion of increased
income to current food spending, he or she may not
perceive lower prices in this category as loosening
the total budget but instead see it as a reason
to solely boost food consumption. In this case,
a lower price on an item may lead to more or even
too much consumption of that item, rather than substitution.
The idea of earmarking funds and
mental accounts may partially explain why several
studies have found that food stamp benefits, which
can be used only for food purchases, are more effective
at raising food expenditures than an equal amount
given as cash even when both benefits and cash are
used on food. This finding is contrary to the traditional
economic assumption of rationality, which predicts
that cash and benefits would have the same effect.
This concept also supports the idea that providing
further education or even targets for the proportion
of food stamp benefits that should go toward purchasing
healthful foods, such as fruit, dark-green vegetables,
and whole grains, may increase the purchase of more
healthful items among program participants.
Another consequence of mental
accounting is that individuals tend to exhibit a
“flat-rate bias,” where they prefer
to pay a flat rate rather than pay per item or use,
even though they ultimately pay more. For example,
researchers at the University of California, Berkeley
and Stanford University have found that choosing
an annual or monthly gym membership with unlimited
access is more common than paying for each visit,
even among infrequent exercisers. This implies that
when certain items can be selected only by using
prepayment, they will be chosen with greater frequency
compared with items that must be paid for on the
spot.
Using prepaid cards at food and
beverage retailers, most commonly coffee shops,
has become a popular alternative for many customers.
They are also common on college campuses and some
work cafeterias. Typically, one puts a dollar amount
on the prepaid card (either using cash or credit)
and uses this card for any item sold at the coffee
shop or cafeteria. Exploiting the flat-rate bias
to help customers make healthier choices, these
retailers could offer a “healthy” prepaid
card for purchasing only certain healthful menu
items. Other less healthful items would need to
be purchased with cash.
Grocery stores could also choose
to offer their customers the option of using a prepaid
“healthy” card that might, for example,
preclude purchases of snack chips, desserts, and
soda pop or only be valid on certain items, such
as fruit and vegetables. Accepting food stamp benefits
as payment for these “healthy” cards
would extend this opportunity to food stamp participants.
Prepaid cards at school cafeterias could be used
to place more guidance on foods that are not part
of the USDA school meal programs. For example, through
prepaid cards, parents and students could specify
what portion of a student’s total bill should
be spent on fruit, vegetables, dessert, or carbonated
beverages. Or, they could specify that less healthful
items, such as sodas or high-fat desserts, be purchased
only with cash.
Simple Commitment Devices
May Help Increase Self-Control
Standard economic theory typically
assumes that the value we place on future well-being
is less than the value of today’s well-being
and the value of each subsequent period decreases
at a constant rate. However, experimental and empirical
studies provide a number of examples showing that
actual consumer behavior cannot be reconciled with
this assumption. One frequently observed anomaly
is that individuals tend to behave more patiently
(by making choices that are consistent with their
future savings or health goals) when evaluating
tradeoffs that will occur at some point in the future
than they would if these same tradeoffs were to
occur more immediately. For example, even in the
absence of uncertainty, most individuals will prefer
$110 in 31 days over $100 in 30 days. Yet many of
these same individuals will also prefer $100 right
now over $110 tomorrow.
Repeated observance of time-inconsistent
preferences has led some researchers to relax the
more standard economic assumption. They use an alternative
framework in which decisionmakers lack self-control
and choose alternatives that are usually less desirable
or less valuable over some timeframe simply because
the alternatives are available sooner. This framework
has been used to show that individuals can improve
their longrun well-being through some sort of commitment
mechanism, such as a 401k plan, that sets limits
on current consumption levels.
Online grocery shopping and home
delivery could help people make choices that are
more in sync with their long-term health objectives.
By pre-ordering food, they are able to commit to
their purchasing decisions before being tempted
in the store with less healthful food options. Expanding
opportunities for pre-ordering groceries for home
delivery among food stamp participants might help
to improve their food choices.
Another commitment mechanism would
be to allow grocery shoppers to specify that certain
less healthful foods be ineligible for purchase
with their own prepaid store cards. Or, they could
specify their own personal “sin tax.”
For example, someone who wanted to discourage his
or her own consumption of potato chips could impose
an additional tax on these foods. The revenue from
this tax would go back to one’s prepaid store
card for future purchases. An individual could also
specify which items could be purchased with this
revenue—it could be earmarked for fruit and
vegetable purchases, for example. Again, accepting
food stamp benefits as payment for prepaid grocery
cards would extend this opportunity to food stamp
participants.
Increasing the frequency of food
stamp benefit disbursements could also function
as another commitment mechanism. Behavioral economic
research shows that any individual with self-control
problems will likely spend too much for current
consumption at the expense of future consumption.
Giving food stamp participants the option to receive
smaller benefits amounts more frequently, while
leaving the total payment amount unchanged, might
help some participants avoid impulsive behavior
and make better long-term choices.
Within the school meal programs,
students may be more likely to choose foods that
promote better health if they choose foods well
before they actually consume their meals. Alternatively,
parents or children could devise a commitment mechanism,
such as making certain foods off limits. Through
prepaid lunch cards, such mechanisms are currently
increasing in popularity. Some schools allow parents
to track the menu items their children purchase
at school and even specify that their prepaid card
preclude the purchase of specific items, such as
sodas or high- fat desserts.
Judging a Serving by Its
Container
For
people trying to manage health and weight, choosing
the right amount of food may be just as difficult
as choosing the right types of foods. According
to ERS data, the average calories available daily
in the U.S. food supply increased by more than 500
calories per capita between 1970 and 2004. Experimental
studies have found that choosing what to eat and
how much may be controlled by separate psychological
mechanisms. Again, we use simple rules of thumb,
like eating one bowlful or drinking one full glass,
as cues to gauge appropriate consumption volumes.
The increase in portion sizes
over the past 25 years or so is often cited as contributing
to the rise in obesity in the United States. Experimental
research shows that people do eat more when presented
with larger portions or packages. They are also
less accurate in assessing their own intake: they
underestimate their own consumption more when eating
from larger packages than smaller ones.
Brian Wansink, a professor of
food marketing and economics at Cornell University,
finds that the shape of bowls, plates, and glasses
can also significantly influence how much we consume.
People tend to fill tall thin glasses with less
liquid than short wide glasses that hold the same
volume. In another experiment, he found that when
people were randomly given bigger serving bowls
or ice cream scoops, they unknowingly served themselves
(and ate) significantly more ice cream than people
given smaller bowls or scoops.
The presentation and variety of
food can also lead to greater consumption volume.
Even expanding the aspects of variety not associated
with taste or nutrition can significantly raise
quantity consumed. Just adding more colors or changing
their arrangement can get us to eat more M&M
candies and jelly beans. People presented with 10
versus 7 different colors of M&M candies consumed
43 percent more candy. Another experiment presented
one set of subjects with an identical number and
variety of jelly beans. However, while one treatment
group received the jelly beans sorted by color,
the other received the assortment mixed. Those who
received a mixed assortment ate 69 percent more
on average.
There is also evidence that other
alterations in food packaging or presentation may
make it easier to gauge how much we consume. Introducing
more intermediate packaging within larger packages
of chips and cookies, such as individually wrapped
sets of cookies within a bag, seems to draw attention
to how much has been eaten and make it easier for
individuals to determine an appropriate stopping
point.
For school cafeterias, offering
a greater variety of vegetables or fruit within
a single salad may help boost intake of healthful
foods. Changing the shape of containers could also
promote consumption of certain foods and beverages
relative to less healthful foods. Larger bowls could
be used for fruit and vegetables, while small plates
and dishes could be used for desserts or other less
nutritious foods. Finally, placing packaging restrictions,
such as 100-calorie packs, in vending machines and
a la carte lines in cafeterias is another way to
help students (and teachers!) to gauge their own
consumption amounts within the schools.
Making Changes, by Default
Another idiosyncrasy of consumer
choice frequently observed in experimental studies
is that individuals exhibit an asymmetry in how
they value gains relative to losses. This asymmetry
gives rise to anomalous behavior, where individuals
are willing to pay much less to acquire an item
than they are willing to accept to part with it.
It also makes them much more likely to choose the
default options, even when the costs of switching
to an alternative are low or even zero. For example,
participation in 401k plans is much higher among
employees who are automatically enrolled than it
is among employees who are not automatically enrolled.
Relating this concept to our food
choices, we are much more likely to choose a side
of french fries over a fruit salad when the former
is the status quo. The corollary to this, however,
is that making the default option more healthful
could help us make healthier choices. It is also
not difficult to imagine how this concept could
be extended to the food stamp or school meal programs.
For example, a default food stamp package could
be more restrictive by specifying that a minimum
percentage of the benefit be allocated to purchase
whole-grain foods, vegetables, and fruit. However,
recipients would still have the option to choose
the current, nonrestrictive food stamp benefits.
Within the school meal programs, a healthy meal
(or side) would be the default offering.
Seeing the Glass Half
Full
Findings from behavioral economics
provide insights into why we all make food choices
that, on occasion, may appear irrational to economists.
These insights offer the opportunity to explore
more nuanced policies that can improve diet quality
without limiting freedom of choice. And unlike more
traditional interventions, such as changing prices
or banning specific food items, many of the proposed
changes could be targeted to those consumers who
feel they need extra help making choices that are
more harmonious with their own long-term health
objectives.
More innovative strategies to
improve food choices can also be applied to USDA’s
nutrition assistance programs. Incorporating some
of these findings—such as providing smaller,
but more frequent distribution of food stamp benefits—into
the existing programs would require some augmentation,
and would have costs shared by both State and Federal
partners. Other options, like using prepaid debit
cards or providing participants an option for self-imposed
restrictions on food stamp benefits, may be relatively
more costly or complicated both in technology and
policy impact.
An important next step would be
to design experiments and pilot programs to gauge
the efficacy, cost, and feasibility of these possible
options as well as the potential change in behavior.
Comparing results of these experiments against estimated
costs and benefits of more traditional approaches
to nutrition assistance would also clarify the merits
of these ideas relative to other strategies.
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