From Vegan to Hunter

I'm a fan of Siddhartha-esque journeys. In Siddhartha's case, he explored the entire spectrum of religion, from starving as an ascetic to engaging in high-stakes gambling, only to settle down on the river, in the literal and figurative middle.

The Mindful Carnivore: A Vegetarian's Hunt for Sustenance is same for food, as we watch the author, Tovar Cerulli, embrace veganism and then become a hunter over the course of many years.

For me, eating meat was always a cognitive dissonance. I like meat, eat if often, but am only occasionally reminded of its gruesome origins. We dote on our cat, Apollo, buying him endless toys, making sure to mentally stimulate him, paying someone to come check on him daily when we're out of town, and feeling guilty if we are out for dinner or drinks and miss his feeding schedule by a few hours. Imagine the horror that would occur in my household if I took out our sharpest knife from the kitchen, grabbed Apollo, and slit his throat. Sharon would instantly divorce me, and I might even end up in jail. Yet week after week, we bring home meat from the grocery store, dissociated from its former animal, "a gaping chasm between field and table," as Cerulli writes. Why are some animals endeared and others mindlessly eaten? This is a topic also covered in depth in the book Some We Love, Some We Hate, Some We Eat.

As an economist, I've never much bought into the categorical imperative: "Act only on that maxim through which you can at the same time will that it should become a universal law." Sure, maybe I could adopt a lifestyle that involves veganism or diligent recycling, but even if I do, the aggregate impact on the world is squat. In fact, I might be more easily persuaded to vote a citywide ban on plastic grocery bags than I would be to use reusable bags on my own, as the latter has so little impact. Thinking through the supply chain for food -- from farmer to wholesaler to stores and restaurants -- it's hard to prove that a lifetime of veganism would save even a single animal.

Cerulli also comes to the realization that being a vegan and growing his own food aren't harmless. This is a man who buys Christmas trees near power lines, figuring that they will be cut down anyway, and who has an ethical dilemma over killing an insect. Yet as he tried to grow his own food, he kept having his crops ravaged by gophers and deer. After failed attempts to quell the problem by capturing and relocating the gophers and building more elaborate fencing, he came to the realization that he needed to start shooting them with his BB gun. He then learned from others farmers about how many deer need to be killed to protect their crops. The growth of non-meat foods still involves plenty of indirect death. So he starts thinking about the cycle of life and death more deeply, a journey that progresses until he himself becomes a hunter in order to come face to face with the act of killing an animal for meat.

The resolution may come for one innovations that I'm most hoping for in the coming years: synethic meat. Hopefully someday, we can get the same taste, pleasure, and nutrition without the death.

One other loose end from the book that I found interesting: The campaigns for eating vegetables and curbing animal cruelty were initially totally separate. There were ads in the early 1900s about how vegetarian diets helped the University of Chicago football team play so well and be so manly.

Is Weird Stuff Smaller at Costco?

As an economist, it's hard for me to shop at Costco. Everything in life is subject to diminishing returns, so while the first pack of trail mix might be great, I'll probably be sick of it by the time I get to pack 18.

I often find myself thinking: Even if half of this item goes bad, it would still be a good deal. Plus, as someone who lives in a relatively small apartment, it's sometimes difficult to make the size-price tradeoff.

Above is 5 pounds of butter and 16 ounces of lobster spread, the only size available for either product. At a normal supermarket, these products would be about the same size. Yet Costco's lobster spread container doesn't even seem to be comically bigger than its mainstream counterpart, as most items at Costco do.

Costco can get away with selling staple items like paper towels in huge portions, because people figure they will use them all eventually. However, this is less true for more specialized items. We picked up the lobster spread after trying a free sample; if it had only come in a 5-lb. container, we probably would have seen that as too big of a commitment.

Wine from a Machine in Pennsylvania

One of Mancur Olson's principal points in "The Rise and Decline of Nations" is about the dangers of special interest groups imposing costs on the rest of society in order to win a larger share of economic profits.

This seems to describe perfectly the wine lobby in Pennsylvania (Associated Press):

HARRISBURG, Pa. (AP) -- Swipe your driver's license, look into the camera, blow into the breath sensor and - voila! - you have permission to buy a bottle of wine from a vending machine.

Pennsylvania, which has some of the most Byzantine liquor laws in the nation, recently introduced the country's first wine "kiosks." If the machines are successful in their test run inside two grocery stores, the state Liquor Control Board could place the high-tech alcohol automats in about 100 others.

...

The vending machines are a testament to both the wonder of technology and the obscurity of Pennsylvania's complicated liquor laws.

Individuals can buy wine and liquor for home consumption only in state-owned stores staffed by public employees. Private beer distributors sell cases and kegs only. Licensed corner stores, delis, bars and restaurants can sell beer to go, but only up to two six-packs per customer.

Hat tip to Neatorama.

Grocery Store Waste Is Good

CC photo from Steve Hopson on Flickr.

Farmers, restaurants and supermarkets throw away millions of tons of edible food each year at a time when a growing number of Californians struggle to put food on the table.

State studies have found that more than six million tons of food products are dumped annually, enough to fill the Staples Center in Los Angeles 35 times over. Food is the largest single source of waste in California, making up 15.5 percent of the Golden State’s waste stream, according to the California Integrated Waste Management Board.

The above figures come from a partisan source, but no one is disputing the fact that grocery stores throw away a lot of expired food.

But is the waste bad? How could stores be set up to never waste perishable foods?

If stores and farmers could perfectly predict demand from week to week far ahead of time, there would be no waste. One week, customers at a given store would want 213 bunches of bananas, and that store would have stocked exactly 213. Obviously, this is not realistic. And even with omniscient grocery stores, consumers would still do a fair bit of throwing away themselves.

Another way would be to limit supply to the bare minimum. Suppose that demand for bananas at a given grocery store fluctuated between 120 and 300 bunches of bananas each week. To never throw away a rotten banana, the store would stock only 120 bunches each week.

If only one store in an area did this, the store would forgo many profitable sales, as its banana-spurned customers shopped elsewhere. If all stores in the area did this, the price of bananas would skyrocket. In either case, farmers and stores would have every incentive to increase production and therefore make more money. Depending on the underlying distribution of weekly banana demand, perhaps our hypothetical store should stock 250 bunches a week. Sometimes demand will fall short and bananas will go bad, but the strategy will be more profitable and consumers will be better off.

As it is now, the grocery store can change prices to help equate supply and demand. If the store has a batch of bananas about to expire, suddenly there's a sale on bananas. However, bananas are already extremely cheap, so customers are only sensitive to price changes up to a point. Eventually, it's cheaper to throw bananas away than to sell them for a penny (or even for negative prices; i.e., paying customers to take them). And there's nothing wrong with that, because the store tolerates a few rotten bananas in some weeks for higher profits in other weeks.

Domestic Beer Means Cheap Beer

Sam Adams is actually brewed in America, despite its decent taste.

I got a chuckle from a recent blog post written by Washington Post copy chief Bill Walsh. Walsh writes that Samuel Adams is often mistakenly listed on menus as "imported," because "domestic" has become such a synonym for "cheap" and "inferior" when it comes to beer.

Does this perception prove that American goods are inherently shoddy? Or that our status as a world leader is in jeopardy?

No. It's no surprise that the only foreign beers that get widely sold in the United States are the fancier ones.

Suppose that there is a German-brewed equivalent of Bud Light (I'll call it GBL, for German Bud Light). Just like GBL's American counterpart, in the trade-off between taste and price, the pendulum has swung almost all the way in favor of the latter. There's certainly a large market for bottom-of-the-line beer, but GBL cannot compete with BL in the United States because GBL faces higher transportation costs to get the product across the Atlantic.

Now, if labor were significantly cheaper in Germany and if the beer production process required a sufficiently high proportion of labor-to-capital costs, then GBL could save enough money on labor to make up for the transportation costs and thus have a shot at competing with BL. But we don't see such beers very often, suggesting that domestic brewers have an advantage when it comes to supplying the watery ale craved by broke American college students.

On the other hand, perhaps cultural acceptance is a larger hurdle than distribution costs. After Googling around for a while using phrases like "Budweiser in Japan," I found this article, which reports that Budweiser in 2000 had a minuscule share of the Japanese beer market despite hefty advertising.

Would I Have Opposed Nutrition Facts Labels?

CC image from ericskiff on Flickr.

Nutrition Facts labels have been required on most foods in U.S. grocery stores since 1990. I was 4 years old at the time, but I can just picture the little economist inside me opposing the policy.

I would have raised all sorts of arguments about how we shouldn't make it harder or more expensive for firms to do business and how the labeling law was creating a barrier to entry that many food producers could not overcome, resulting in a less diverse grocery store selection. I'd use a bootleggers and Baptists analogy, which involves two morally opposed groups agreeing on a policy for different reasons. Health advocates would support the ban for obvious reasons, but so would corporate food manufacturers, which would now face less competition and thus be able to charge higher prices.

I've been mildly opposed to New York City's law that calorie counts be displayed on restaurant menus for much the same reasons, but perhaps I shouldn't be. The sacrifices required to implement Nutrition Facts labels seem well worth it in retrospect, because they have enabled consumers to make better decisions. This information gain has put pressure on food producers to improve the health content of their products or at least offer healthy alternatives.

One more devil's advocate point: as I said in my prior post, we have to measure the value of something by how much better it is over the next-best alternative. Without Nutrition Facts labels, most people would still know that an apple is healthier than a candy bar, even if they can't quantify the calories, cholesterol, or other parameters involved. How much does knowing the hard numbers really improve health outcomes?

Asinine TV Dinner Instructions

Two things jumped out at me from the instructions on the back of my Healthy Choice Cafe Steamers: General Tso's Spicy Chicken TV dinner.

CAREFULLY remove film from top as PRODUCT WILL BE HOT.

This is pretty standard, but it's still amusingly over-the-top. Anyone with the least bit of life experience knows that items placed in the microwave tend to heat up. (Also, why does CAREFULLY deserve to be in bold, but not PRODUCT WILL BE HOT?)

CHECK that product is cooked thoroughly. Internal temperature needs to reach 165 degrees F as measured by a food thermometer in several spots.

Wow. Some people are too lazy to cook, so they make TV dinners. Other people routinely check the temperature of their meals using a food thermometer in several spots. It's doubtful that there's any overlap between these two groups.

These extremely cautious directions are no doubt a result of the 1994 McDonald's coffee lawsuit. Now, consumers have no one to blame but themselves. You can almost sense the committee of lawyers that oversaw the process. Why else would the directions always refer to your food as "product" instead of "food" or "meal"?

The most litigious among us are ruining it for the rest. There are tradeoffs between how useful and how legally thorough a set of directions can be. For the sake of an extremely small group of people, companies now have to err on the side of caution, sacrificing brevity and clarity for the majority of their customers.

Why Do Restaurants Give You Those Electronic Coaster Pagers?

Many restaurants give guests electronic coaster pagers that buzz and light up when their table is ready. The devices aren't cheap, but they do have an important role of somewhat "locking in" patrons to that particular restaurant.

If the hostess writes down your name and you get sick of waiting, you can discreetly walk out without saying a word and go in search of somewhere less crowded.

Instead, if the hostess gives you one of these electronic pagers, your only ways out are awkwardly handing the pager back to the hostess and telling her to take you off the list, walking off and basically stealing the pager, or just waiting longer than you wanted to for your table.

The hassle associated with the pager of course won't stop everyone from leaving, but it surely stops quite a few. And that can make a big difference at the end of the night for a busy restaurant.

D.C. Bag Fee: Just Make the Decision for Me

I've recently switched jobs, and I noticed a peculiar thing about how two Subway restaurants are dealing with D.C.'s bag fee. Since January 1, District merchants have been required to charge five cents per plastic or paper bag they give to customers, in an effort to keep the bags from ending up in the Anacostia River.

My old Subway, by L'Enfant Plaza, gives customers their sandwiches without the plastic bag (though they are still wrapped in the paper). My new Subway, by McPherson Square, always bags the sandwiches and subtly adds the 5 cents to the bill.

While these approaches are opposites, I prefer either to a third option: being asked each time whether I want a bag and having a tinge of guilt no matter what I decide. While classical economics tells us it's better for consumers to have as many choices as possible, behavioral economics and psychology have increasingly suggested that perhaps we're better off not thinking about certain options (Barry Schwartz's "The Paradox of Choice" deals with this phenomenon in depth).

This has certainly been true for grocery stores; I know more than a few D.C. residents have gone out of their way to shop in the Maryland or Virginia suburbs to avoid the bag tax, even though they could get 20 bags for a dollar and hardly be out any extra money at all.

I've written previously on the D.C. bag fee here and here.

New York City Bans Homemade Goods at Bake Sales

From Gothamist (via Marginal Revolution):

Months after it barred schools from holding most food fundraisers, the city says bake sales can go on—as long as no homemade treats with undisclosed calorie counts grace the fold-out tables. The new regulation, designed to combat ever-increasing childhood obesity, limits bake sales to "fresh fruits and vegetables, or one of 27 specific packaged items" that include low-fat Doritos, Nutri-Grain Cereal Bars (blackberry only) and Linden’s Cookies (butter crunch, chocolate chip or fudge chip cookies in two cookie packs) among other things.

This is, of course, to comply with New York City's mandate that food servers post calorie counts on their menus. An unintended consequence of this policy has been to add transactions costs to the operating expenses of feed servers. Large firms like McDonald's can easily absorb the cost, as it is split over its hundreds of restaurants in the city, but even hot dog vendors on the street must comply with the rules. Even smaller players--like parents making snacks for a bake sale--are pushed out of the market because they can't comply with the logistics.

Of course, at many bake sales, the participants will have little incentive to report such an offender, so perhaps the law will be largely ignored.

D.C. Bag Fees Do Indeed Hurt Merchants

One D.C. council member is amazed at the notion that the 5-cent fee for plastic bags may be hurting retailers (Washington Post):

Council member Tommy Wells (D-Ward 6), the sponsor of the bill, said the regulations are closely aligned with the legislation the council passed in June.

However, Wells is concerned about a provision in the bill calling for a study on whether the city should make a hardship exemption for "certain types of retail establishments." Wells said he's baffled by the provision because the tax doesn't cost the businesses any money.

"I have not heard it being a hardship on retail establishments," he said. "There has been some customer concerns, but it seems since the fee is charged to the customer and not the business, that really doesn't make any sense," Wells said.

Let's be clear: Anything that makes it more inconvenient or expensive for your customers to shop at your store hurts your business.

To start with a more abstract example, imagine that a city institutes a "Safeway tax," so that all Safeway customers have to pay a 50-cent fee that they don't have to pay elsewhere. Or imagine that Safeway's parking lots must by law be located several blocks away from the stores. In both cases, the store's customers are the ones paying the price (in money in the former case and in inconvenience in the latter), but arguing that these proposals wouldn't hurt Safeway is asinine.

The D.C. bag tax functions the same way: it forces customers to either pay a fine or suffer a major inconvenience. Either way, it makes grocery shopping in the District less pleasant.

The magic of capitalism is the ability to find substitutes when the price of one good rises relative to others. Many customers will instead do their grocery shopping in Maryland or Virginia. Additionally, many people will now find grocery shopping more of a chore and will instead eat out more.

To combat some of these effects, some D.C. stores are now giving away reusable bags. Of course, this is an additional expense that they did not face previously.

By the way, I've written previously on this topic here.

Those Meat Slicers Just Slow You Down

Many buffets staff a professionally dressed meat cutter or two to dish out slices of meat with a personal touch.

Could the buffet save money by instead cutting the meat ahead of time and firing the meat slicer? Probably not, as the meat slicers play an important role: slowing down customers' consumption of the buffet's most expensive item. Although everything in the buffet is technically all-you-can-eat and technically diners can request as much meat as they'd like, many people will accept the meat cutter's (meager) slice and then fill the rest of their plate with less expensive food. And when a long line forms around the meat, even better from the buffet's perspective.

Domino's Stinks, but Do We Really Want It to Get Better?

Domino's has recently been running an ad campaign saying how bad its pizza is. You can see a long version of the commercial here. The ad begins with claims that the Domino's pizza "tastes like cardboard" and "microwave pizza is far superior." It ends with the new CEO vowing to listen to the complaints and improve. The advertising value of this technique is dubious: The first time I saw the ad didn't exactly inspire me to want to order a pizza, but it has spurred several conversations and led to this blog post. Maybe any publicity is good publicity.

In many industries, cheap, inferior products dominate the industry. Check out the best selling beers in the United States. Taste is a matter of personal preference, of course, but few would argue that Bud Light is the best-tasting beer around. Yet we continue to buy it, and we aren't hounding Anheuser-Busch for a better product.

Everything in life involves tradeoffs. If the pizza is going to be of better quality, it's going to be more expensive. If the pizza is going to be more flavorful (again, a subjective quality), it will have less appeal to the mainstream. In almost every U.S. city, there are fancier pizza options available, yet Domino's continues to make money. There is room in our economy for sellers of subpar pizza, as evidenced by the number of people who buy it. Many people prefer the lowest common denominator, because its cheap price allows them to have money left over to splurge on the things they're really passionate about. We don't need to have the best of everything; it's just too expensive.

D.C. Bag Fee, or What We'll Do to Save 5 Cents

Beginning Jan. 1, grocery stores and several restaurants must charge customers 5 cents for a plastic bag. By informal measures, this has cut bag usage by over half, with some bit of consternation. The Washington Post reports many people awkwardly lugging groceries to their cars, sometimes dropping their items a few feet from the store.

Normally no penny-pincher, she now maps her day's travels to avoid having to shop in the District; she has abandoned her beloved neighborhood grocery store, Harris Teeter on Capitol Hill, in favor of stores near her Virginia office -- even though she pays an extra 2.5 percent food tax there. And twice she has unwisely carried an armload of bagless food out of D.C. restaurants, with calamitous results.

As alluded to in a prior post, many times in life, it makes sense to pay a small fee to avoid a major inconvenience. Perhaps drying our clothes on outside clotheslines would save electricity, but all of us bear the trivial expense of running the dryer because it saves us so much time. You would think that paying a few cents for the convenience of a bag would be a similar no-brainer, but it's causing a lot of stress for locals.

The article quotes Dan Ariely, a behavioral economist and author of "Predictably Irrational":

Because plastic bags have always been free, Ariely said, shoppers have come to see them as a kind of entitlement. Adding even a tiny fee is an affront to what they cherish as the natural order of things. "When it goes from zero to even a very small charge, it can feel very bad," he said. "It creates a very small financial burden but a very big emotional reaction."

Economic theory tells us that a tax should have the same effect regardless of whether it's the customer or the business sending it in (see here for a more extensive discussion (PDF)). However, this situation would have been much different if firms were taxed. I'd imagine they would suck up the 20-cent hit to their profit margins for each customer instead of getting a reputation for inconvenience. That way, the D.C. government would collect a lot more tax money but hardly make a decent in bag consumption. I wonder what the government would prefer: more tax revenue, or the use of fewer bags?

I've often been fascinated by how "free" is a drastically different price than some nominal amount, even if people can easily afford it. I'll likely have more on this topic in the future.

UPDATE 02/08: I've written more on this topic here.