GMO bans and labeling laws

Lynne Kiesling

Tyler Cowen and I have several things in common — wry senses of humor, economist sensibilities, and a strong love of interesting and well-prepared food. Those last two traits at least show up in Tyler’s post yesterday about proposals in California to label foods to indicate whether or not they contain GMOs. Tyler summarizes what for me is the material point: despite hundreds of studies over decades, no scientific evidence exists to support the argument that GMOs present a health hazard. None.

Arguments to ban or label GMOs are usually based on, as Tyler says, the “standards of evidence being applied here are extremely weak”. Having read Gary Taubes recently, and having read some sports nutrition research over the past few years, I think that’s right. Nutrition science research does not have a sufficiently high standard of proof for their hypotheses; nor does it use a combination of random trials and statistical techniques that would enable researchers to draw more than basic correlations.

Tyler’s post is worth your time in its entirety; I think he’s right that rather than expending effort on GMO legislation, California’s food activists should instead focus on antibiotics and treatment of animals, the improvement of which would have substantial and scientifically demonstrated benefits for human and animal health and for the environment.

The food-focused GMO argument, though, does not address explicitly the claimed environmental risks, such as this list from the Union of Concerned Scientists:

As discussed in the 1996 UCS-authored report, The Ecological Risks of Engineered Crops, genetically modified crops pose six kinds of potential risks.19 First, the engineered crops themselves could become weeds, a broad term that covers plants with undesirable effects.20Second, the crops might serve as conduits through which new genes move to wild plants, which could then become weeds. Third, crops engineered to produce viruses could facilitate the creation of new, more virulent or more widely spread viruses. Fourth, plants engineered to express potentially toxic substances could present risks to other organisms like birds or deer. Fifth, crops may initiate a perturbation that may have effects that ripple through an ecosystem in ways that are difficult to predict. Finally, the crops might threaten centers of crop diversity.

Although few problems of the sorts listed above would be expected to surface within the three-to-four-year time frame that the new crops have been in widespread use, the good news is that there have been no serious environmental impacts—certainly no catastrophes—associated with the use of engineered crops in the United States.

Of course, that does not mean that one can conclude that there have been no environmental effects. There may have been modest or subtle changes in animal or plant populations that are simply not dramatic enough or obviously enough connected to engineered crops to attract attention. Other than for insect resistance, there is no systematic monitoring underway in the United States to detect adverse effects of genetically modified crops.21 So much may be going on that we are simply not aware of.

To their credit, this excerpt shows the UCS doing what Tyler is encouraging food writers to do — acknowledge the science as it currently stands. In general, so far we have no evidence for harms 1, 2 or 3, although the UCS expresses continuing concern about harms 4, 5 and 6 to animals and ecosystems. Continued research on these effects makes a lot of sense.

Often lost in this debate are the benefits of GMOs, both to health and the environment: vitamin and mineral supplementation, drought resistance, reduced use of pesticides. Look, for example, at the recent Hunan trial of the revised Golden Rice formulation that now has enough Vitamin A to reduce the incidence of blindness in young children arising from Vitamin A deficiency.

The Hunan trial, conducted in 2008, was meant to determine whether a small bowl a day of genetically modified rice (called Golden because of its yellow colour) could effectively deliver enough Vitamin A to make a difference. Vitamin A deficiency is a scourge of the world’s poor (Vitamin A is contained in fruits and vegetables such as carrots, sweet potatoes and spinach). According to the World Health Organization, Vitamin A deficiency affects about a third of the world’s children under 5. It claims the lives of more than a million people a year, including hundreds of thousands of children. As many as half a million children go blind every year because they don’t get enough Vitamin A.

And yet, environmental groups like Greenpeace protest Golden Rice:

Greenpeace is campaigning vigorously to block Golden Rice trials throughout Southeast Asia. And it has lots of allies, including luminaries such as Naomi Klein and groups such as the Canadian Biotechnology Action Network, whose mission is “collaborative campaigning for food sovereignty and environmental justice.” These groups insist that what the poor really need is utopian political solutions. “Food insecurity is brought about by lack of enough land, by decreasing rice production and decreasing incomes,” says one Golden Rice opponent. “Only through a genuine land reform which ensures farmers’ access to sufficient rice and other food sources will farmers start to become healthy again.”

Utopian indeed. And in the quest for that collectivist utopia, Greenpeace and their collaborators condemn millions of children to blindness, disease, famine, and early death. How’s that for not weighing the benefits when you emphasize the risks?

Next Restaurant: pricing and ticketing innovation redux

Lynne Kiesling

Last May I wrote about Next, a new restaurant in Chicago from chef Grant Achatz and his business partner Nick Kokonas. In that post I focused on the two innovations in the proposal: selling tickets concert style rather than having a reservation system, and using dynamic pricing for reservations/tickets at different times on different evenings.

Last week Next opened with great fanfare (although I don’t know first hand, because although I signed up on their email notification list I have yet to receive my login authorization for the ticketing system), and they’ve been getting attention both from foodies and economists (and economist foodies). The design feature that is receiving the most economist attention is the one that Nick Kokonas himself pointed out in a comment on my original blog post — the tickets are non-refundable but transferable.

Naturally, then, a secondary market has cropped up, with $170 tickets selling for $1000 and the like. Larry Ribstein ties his observations on such scalping into his previous work on ticket scalping. Why are such savvy entrepreneurs as Achatz and Kokonas letting secondary sellers capture so much of the surplus that they have created?

In particular, while I like the dynamic pricing, why don’t they set up a secondary market auction themselves? My Kellogg colleague Sandeep Baliga wondered the same thing yesterday at Cheap Talk, and then Jeff Ely picked it up and ran with it later in the day at Cheap Talk (note also that Nick Kokonas commented on both posts, love it). Here’s Jeff’s observations regarding my thoughts on a secondary market:

The most interesting design issue is to manage re-allocation of tickets. This is potentially a big deal for a restaurant like Next because many people will be coming from out of town to eat there. Last-minute changes of plans could mean that rapid re-allocation of tickets will have a big impact on efficiency. More generally, a resale market raises the value of a ticket because it turns the ticket into an option.  This increases the amount people are willing to bid for it.  So Next should design an online resale market that maximizes the efficiency of the allocation mechanism because those efficiency gains not only benefit the patrons but they also pay off in terms of initial ticket sales.

As Sandeep points out in the comments, setting up a resale auction that’s essentially a second-price sealed bid auction is not meaningfully different from or more difficult than any typical eBay auction in which lots of people have participated. Jeff’s auction design points are all really good, and if you’re interested you should go read them; in particular he has some suggestions for keeping scalpers from flooding the queue.

Now I just need to keep checking my email and hope that my ticket login shows up before all of the seats are sold …

Economic analysis of localvore choices

Lynne Kiesling

Last night the KP Spouse and I spontaneously decided to go out to dinner. We went to Chalkboard, our favorite restaurant near our house, and I ordered a salad as a starter (and amazingly delicious Hawaiian Ono as a main course, yum yum). We were chatting with the chef later (it being a slow Wednesday in August), and I complimented him on the flavor and texture of the lettuce. He said “I picked it about 5 minutes before you ate it”, which led to an impromptu tour of his garden behind the building. We’ll have to go back in a couple of weeks when the beans are ripe …

We love the freshness of the flavor and the choice and spontaneity we get from locally-grown produce at restaurants like Chalkboard, out of our own garden, and from the northern Illinois farm from which we buy a share of veggies annually. Freshness, flavor, and variety are the benefits to us of growing and buying local produce.

At some level I guess that makes us localvores, and as foodies and oenophiles I guess that’s unavoidable given the current trends in cooking and eating. Some recent articles and responses to them have me thinking more analytically about the true environmental and economic impact of local food choices.

Stephen Budiansky stirred up quite a storm last week in his New York Times opinion piece about the economic impact of localvore food production and consumption decisions. Like me, he grows some of his own food and buys local produce, but also like me, he takes an analytical perspective on the combined economic and environmental impact. On the benefit side are the clear freshness and flavor benefits — being able to pick produce at its peak ripeness rather than weeks early to facilitate transportation will maximize flavor.

The arguments have gotten more fraught in comparing the costs of local versus distant produce, both in environmental costs and economic costs. In particular, one of the arguments used to support local produce is its reduction in carbon footprint relative to distant produce. No evidence really exists to support this contention, which ignores two types of efficiency that reduce both the economic cost and the environmental impact of food grown at a distance: economies of scale in production and economies of scale in distribution networks and transportation. Economies of scale in agriculture mean that specializing in a crop and farming it intensely leads to higher yields per acre, and if that farming occurs away from dense population centers, then transportation and distribution networks deliver that produce to those markets. They do so at a scale that makes the incremental carbon footprint of a pound of produce positive but very small, because of the economies of scale in distribution and transportation networks (particularly with the kind of real-time logistics that Walmart has innovated and has propagated throughout industry). And that efficiency may even be so high that relative to local van/truck transportation of local produce, the relative carbon footprint of distant produce is smaller. Thus analyses of environmental and economic impact of distant produce relative to local produce suggest that economies of scale lead to lower production and distribution costs and small incremental environmental impact.

Here’s a more explicit example. When I pick up my CSA share 4 blocks from my house, a van has delivered probably 120 or so boxes to 2-3 dropoff locations from the farm 90 miles away. Assume the dropoff location is equidistant from house as Whole Foods is (a valid assumption). What’s the transportation carbon footprint of my CSA produce compared to the equivalent amount I would buy at Whole Foods?

But Budiansky points out an environmental impact of food that is really important, and is independent of local vs. distant:

The real energy hog, it turns out, is not industrial agriculture at all, but you and me. Home preparation and storage account for 32 percent of all energy use in our food system, the largest component by far.

A single 10-mile round trip by car to the grocery store or the farmers’ market will easily eat up about 14,000 calories of fossil fuel energy. Just running your refrigerator for a week consumes 9,000 calories of energy. That assumes it’s one of the latest high-efficiency models; otherwise, you can double that figure. Cooking and running dishwashers, freezers and second or third refrigerators (more than 25 percent of American households have more than one) all add major hits. Indeed, households make up for 22 percent of all the energy expenditures in the United States.

Yes. Storing and cooking that food is where, at the margin, we expend most of the energy in the food supply chain, and that fact gets lost in a lot of discussions of local vs. distant produce. And that storage and cooking make more of us healthier, our produce more long-lived (you should see the local beets that I’ve roasted and frozen for winter, gorgeous!), and our meals and lives more delicious and fulfilling. As Jonathan Adler points out in his comment on the column, “Indeed, were it not for increases in agricultural productivity over the past several decades, hundreds of millions (if not billions) of additional acres would be under plow.”

Steven Landsburg also commented critically on Budiansky’s column, and he rightly points out that Budiansky focused on the energy life cycle of food to the exclusion of all of the other aspects of food choices:

Budiansky ignores all that to focus strictly on energy consumpion. But the quality of our lives depends on a lot more than energy consumption, so Budiansky’s narrow-minded computations are strictly loco.

How, then, could one ever hope to do the right computation? How can we possibly gather enough information to compare the opportunity costs of land, fertlizers, equipment, workers, transportation and energy costs (among many others) and reach a conclusion about which tomato imposes the fewest costs on our neighbors?

Well, it turns out there’s actually a way to do that. You do it by looking at a single number that does an excellent job of reflecting all those costs. That number is known as the price of the tomato.

Of course Landsburg is correct in that argument. But with the condescending tone he uses and by not addressing in more detail the externality-uncompensated cost argument with respect to whether or not there are unpriced costs (and benefits) that are Pareto-relevant in food markets, he’s not going to persuade anyone that doesn’t already agree with him! Budiansky’s energy analysis could help Landsburg make the argument that, say, per pound of tomatoes, the magnitude of that unpriced cost is low enough that at the margin it would not change the amount of production. Landsburg asserts that in the next sentence, but he doesn’t acknowledge that Budiansky’s energy analysis helps him support that assertion.

Russ Roberts also commented on Budiansky’s column, although I do object to the “localvores are loco” meme and tone that he and Landsburg choose to use; such language is patronizing and counterproductive. In fact, I had a long exchange with a good friend of mine who is a chef, wine distributor, and committed localvore, and he objected strenuously to the tone in Budiansky’s column as being too dismissive. I don’t have any problem with Budiansky’s tone, so I couldn’t agree with him on that. He and I could agree that excess fertilizer runoff and wetlands destruction associated with large-scale farming are both environmentally and economically bad — and I can’t wait until we pull together the bootleggers-and-Baptists coalition of localvores and economists to get rid of the disastrous farming subsidies that create such outcomes!

However, I think in all of these commentaries there is a nugget of insight about localvore choices. A lot of supporters of local production are supporters because for them it is a moral cause (whether it’s small local farms, carbon, sustainability in general, industrial animal treatment, etc.). It’s not only, or for some not even, an analytical consideration, so successfully refuting the energy argument through analysis is not going to change those minds. I may not share those moral sensibilities, and I don’t accept any associated judgments of choices that individuals make that deviate from those moral sensibilities. I would also not support any public policy that enshrines these moral sensibilities. But as we continue to buy local produce, own shares in veggie and meat CSAs, and enjoy local restaurants using local produce, these decisions will propagate through markets, and production patterns will shift through market processes in ways that reflect either the moral or aesthetic preferences that inform those choices. How is that loco?

Dynamic pricing for foodies … and for electricity?

Lynne Kiesling

If you like to cook and to eat well in Chicago, you can’t avoid chef Grant Achatz (nor should you want to!). His signature restaurant, Alinea, was recently named the best restaurant in the U.S. and one of the best restaurants in the world, and he is a creative, if controversial, innovator of “molecular gastronomy”.

Achatz, with business partner Nick Kokonas, got the foodie chatterati talking again last week when they announced their new venture, a Chicago restaurant called Next. Next has two novel features: the menu will change every few months and will channel the food and atmosphere of a particular time and place, and the pricing is prix fixe along the lines of a concert ticket. The first time-place that they will feature is Paris 1912, the tail end of the Belle Epoque (one of my favorite artistic and culinary periods!).

The pricing of the experience as a prepaid prix fixe is interesting in and of itself, and other economists have commented on that since the announcement. But the feature that is likely to be of the most interest to KP readers is outlined on the restaurant’s FAQ:

How much?
A meal at Next will represent a great value. Depending on the menu AND what day and time you are dining, food will be $40 to $75 for the entire prix fixe menu. Wine and beverage pairings will begin at a $25 supplement. Next’s goal is to serve 4-star food at 3-star prices.

Yes. Instead of reservations our bookings will be made more like a theater or a sporting event. Your tickets will be fully inclusive of all charges, including service. Ticket price will depend on which seating you buy – Saturday at 8 PM will be more expensive than Wednesday at 9:30 PM. This will allow us to offer an amazing experience at a very reasonable price. We will also offer an annual subscription to all four menus at a discount with preferred seating.
Two walk-in tables will be available every evening.
The tickets will be available via our website, and we are building the reservation system from scratch to ensure the best customer experience. It will be simple to use, efficient, and familiar to anyone who has booked a show or travel online.

This is a pricing system for the foodie economist! Selling tickets in advance signals popularity to the seller, gives the seller more certainty about the number of customers and the amount they will sell, and enables them to optimize their purchases of inputs. They need only procure extra for the two walk-in tables, plus a cushion for mistakes and accidents. That’s one reason why they can expect to deliver “4-star food at 3-star prices”.

But the pricing feature about which I will rhapsodize is, of course, the dynamic pricing: “Saturday at 8 PM will be more expensive than Wednesday at 9:30 PM”. This price discrimination is brilliant but not novel, although its use in restaurant pricing is. It is a decentralized mechanism that enables consumers to sort themselves according to their their willingness to pay, their preferences and their price elasticity of demand while simultaneously enabling the seller to maximize revenue. Combined with the “concert ticket” design, this pricing structure generally looks like a good setup for profit maximization. And given what has driven Achatz’s popularity and the fact that the time-place “Paris 1912” idea is more like entertainment than any dining experience I know of other than Medieval Times, I think the price discrimination is also a valuable way to allocate dining spaces over which there will probably be excess demand.

Given this innovation in an improbable industry, here’s my challenge to those of you who work in the electricity industry, in electricity policy, or electricity regulation: if a creative innovator can create so much new value for consumers in such an improbable industry by adopting such a contractual form and such a pricing system, why do you reject it so strenuously in electricity? The parallels are striking — potential restaurant customers have a range of preferences, incomes, willingness to pay. We all need to eat. Restaurants have high fixed costs (although of course not in the proportion that we see in infrastructure industries). Customers like me relish the thought of such a choice, and look forward to its availability. Why do you make so many customers worse off relative to the potential value they could achieve from innovation if you removed the barriers to innovation, product differentiation, and competitive choice in retail electricity markets?

Jamie Oliver, children and food, and field experiments

Lynne Kiesling

Several years ago Jamie Oliver set out to improve school food for a group of British children. In part he was motivated by wanting to impart a love of good, healthy food in children by sharing his own joy in food, and in part he believed that healthier school meals would lead to less obesity and better academic performance. As Tim Harford noted in his Undercover Economist column in November:

Oliver’s mission to persuade schools to serve healthier lunches – and get children to eat them, and stubborn mothers not to stuff chips through the school railings – became a national phenomenon in 2005. Tony Blair and David Cameron fell over themselves to jump on the Naked Chef’s bandwagon, and soon everyone in the country had an opinion on the campaign.

Harford then discusses a working paper by Michèle Belot and Jonathan James that uses Jamie Oliver’s school lunch work as a field experiment; from Belot’s web site:

“Healthy School meals and Educational Achievements”, with Jonathan James

Children’s diet is a major source of preoccupation in many developed countries. The concerns have mainly been focused on the implications for obesity and health outcomes. However, the effects of children’s poor diet may extend beyond health; food is an obvious input in the “learning production function” and deficiencies in diet may result in important deficiencies in nutrients playing an essential role in cognitive development. This study exploits a unique experiment in the UK, the “Feed Me Better Campaign” where the meals served in the 81 schools of one area (Greenwich) were changed drastically by the British Chef Jamie Oliver. Because the campaign was literally designed as a large-scale experiment, it offers a unique opportunity to assess the causal effects of healthier food on educational outcomes. We find that educational outcomes did improve in Englsih [sic] and Science, although we cannot rule out small effects. We also find that the campaign reduced absenteeism by 15% .

A well-designed field experiment in economic policy is hard to achieve, particularly because to get a representative distribution among treatments you have to randomize who participates in what treatment, which is politically difficult (I can tell you stories about this in electricity, but it will require a cocktail). This experiment does not randomize, but it does provide a large-scale test with comparative demographics that minimize the selection bias problem. As Harford notes,

The chef had convinced Greenwich’s council and schools to change menus to fit his scheme; he mobilised resources, provided equipment and trained dinner ladies. Other London boroughs with similar demographics received none of these advantages – and indeed, because the programme wasn’t broadcast until after the project was well under way, probably knew little about it. The result was a credible pilot project. It wasn’t quite up to the gold standard of a randomised trial, but it wasn’t far off. …

… Surely what counts is that a new idea was tried out on a respectable scale, and now we have a chance to figure out whether it worked. What astonishes me is that it took a television company and a celebrity chef to carry out a proper policy experiment.

Oliver’s work has led to his receiving a TED Prize for 2010, drawing attention to his work to improve diet, food knowledge and understanding, and cooking for children, focusing on the UK and US. His TED address from a couple of weeks ago is well worth a listen; he does go a bit histrionic for my taste in some parts of it, but his passion for incorporating knowledge about food into education is obvious. And, he knows how to design a policy experiment.

Weekend cooking

Lynne Kiesling

We did a lot of cooking this weekend, including taking advantage of my Christmas holiday baking — I made double batches of pie dough and pizza dough and froze half of what I made for later. I had also frozen some Michigan tart cherries from the farmer’s market last June, so the mid-February treat was pizza and cherry pie, YUM! Here’s what a cooking weekend chez KP looks like:

The KP Spouse is a master pizza chef, and this was a delicious one — onions, garlic, olives, red peppers, coppa ham, fresh mozzarella. Life is good.

How to cook perfect roast potatoes

Lynne Kiesling

I cooked up a storm over the holidays — homemade pizza dough, cookies, pear clafoutis, New Year’s Day pork roast and spaetzle (but no sauerkraut), waffles, pancakes, beef barley soup (with homemade beef stock, YUM), it just went on and on and on. And it all turned out better than usual, because for once I slowed down, gave myself time to do it right, and focused on the simple pleasure of doing one enjoyable thing at a time and allowing myself to be entirely absorbed in it.

In part I interpret all of the focused, purposeful, yet slow-paced culinary immersion as a consumption good — I really do enjoy cooking very much. In part, though, I also think of it as part of my deliberate effort over the holidays to, as Jonah Lehrer described in his Wall Street Journal article on why most of our New Year’s resolutions fail, allow my prefrontal cortex some rest and relaxation time.

The biggest payoff of this activity came with Christmas dinner. The menu: beef-a standing rib roast, individual Yorkshire puddings, roast potatoes, and roast green beans with garlic. Our friend Sam and her mom joined us, contributing their conviviality and two delicious desserts. It was one of those rare meals in which every dish turned out well — the roast was done enough but not too done, the Yorkshire puddings puffed delightfully and looked like little chef’s hats (and tasted good too).

But for my part the best culinary discovery of the savory dishes in this meal was the roast potatoes. I am a great fan of the potato, so I am no stranger to roasting potatoes (although in the domestic specialization and exchange, the KP Spouse usually does the roasting, and typically on the grill). But the Christmas potatoes were a revelation — crunchy and flavorful on the outside, creamy and mellow on the inside. How did this happen?

I credit the British cook and domestic diva Nigella Lawson. In flipping through her book How To Eat to see how she cooks her rib roasts, I ran across her recipe for roast potatoes. She recommended doing three things that I had never tried before:

  1. Parboil the cut potatoes in salted water for 5 minutes
  2. Drain the potatoes, put a lid on the pot, and shake the pot vigorously to soften the parboiled potatoes and make their edges slightly mushy
  3. Toss the potatoes with 1 tablespoon of semolina flour before putting them in a roasting pan with (olive) oil that has been preheating (if you don’t have semolina you can use all-purpose flour instead)

The result was WOW. I’ll never be able to go back to doing them any other way. Give it a try and let me know what you find!

Coincidentally, today I got some validation from one of my favorite cooks-cookbook authors-food bloggers, Clotilde Dusoulier at Chocolate & Zucchini. Her post today describes the technique (and recipe) for her friend Pascale’s roast potatoes, and the “shake the pan” technique features prominently:

Pascale’s roasted potato magic unfolds thusly: the potatoes are parboiled for five minutes first, drained, and returned to the saucepan. At this point — and this is the crucial step, so pay attention — you grab the lidded pan and shake it vigorously, which not only is fun, but also serves to make the surface of the potato pieces fuzzy from rubbing their hips one against the other.

And wouldn’t you know it, it is this very fuzz that fosters the formation of a splendid crust when you then bake the potatoes, while the parboiling step reduces the baking time and ensures that the flesh inside stays moist.

Apparently her friend learned this technique from her British mother-in-law, so we have two data points here that suggest to me that the British know a thing or two about how to make great roast potatoes. I’d bet cooking them in goose fat wouldn’t taste too awful either …