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Using Game Theory to Optimize the Pace of New Technology Adoption
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Food Engineering

Description of the Consumer Food Game

Types of Solutions to the Obesity Problem that Won’t Work

Types of Solutions to the Obesity Problem that Are More Likely to Work

 

Everyone knows that America has a weight problem. According to one source, “More than two-thirds of U.S. adults are overweight or obese.” Everyone also knows that all you have to do to lose weight is to consume fewer calories than you burn off. So why can’t so many people just do it?

Well, it turns out that when it comes to deciding what to eat, your brain has two different parts that don’t necessarily play nice together: a rational, deliberative system that makes decisions thoughtfully, and an emotional affective system that responds to short term impulses without thought for longer period consequences.

So while you may go to the grocery store with the deliberative intent to buy only fruits and vegetables and lean meats, it is your affective system that leads you to grab a Snickers bar at to the check out line.

 

Food Engineering

What’s worse is that the food companies (both the makers and sellers of food) know about your affective system. Over time, the food companies have perfected many different sources of “food engineering” to strategically manipulate the way they make and present foods to consumers so as to encourage them to buy as much as possible. A fantastic overview of food engineering, together with possible ways to encourage more healthful eating, is provided by Pierre Chandon and Brian Wansink, “Does food marketing need to make us fat? A review and solutions”. In particular, Chandon and Wansink explain the 4 Ps of food marketers’ engineering of food: product, price, promotion, and placment:

… [T]he direct effects of marketing activity under the direct control of food marketers, often referred to as the 4 Ps of “product,” “price,” “promotion,” and “place” … influence the volume of food consumption:

1.  The short- and long-term price of food, as well as the type of pricing (e.g., a straight price cut or quantity discount), can influence how much people purchase and eventually consume. Pricing efforts are generally conspicuous and lead to deliberate decisions.

2.  Marketing communications, including advertising, promotion, branding, nutrition, and health claims, can influence a consumer’s expectations of the sensory and non-sensory benefits of the food... The influence of marketing communication can sometimes be as conspicuous as price changes, but consumers are not always aware of some of the newest forms of marketing communication (e.g., “advergaming,” package design, or social media activities) and, even when they are aware of the persuasive intent behind these tools, they may not realize that their consumption decisions are being influenced.

3.  The product itself, including its quality (composition, sensory properties, calorie density, and variety) and quantity (packaging and serving sizes) also influence in a variety of ways how much of the product consumers eat. This area has been frequently researched as marketing communication.

4.  The eating environment, including the availability, salience, and convenience of food, can be altered by marketers.



To summarize how food marketing has made us fat, it is most likely through increased access to continuously cheaper, bigger, and tastier calorie-dense food.

Chandon and Brian Wansink also note that researchers have tended to overestimate the impacts of consumers’ deliberative systems and underestimate the impacts of their affective systems, with the results that much of the policy geared toward decreasing the obesity problem has been ineffective.

Two contentions are also offered here:

1.  Researchers have over-estimated the impact that deliberate decision-making has on food intake. For this reason, the effects of nutrition information, health claims, and informational advertising, have had a smaller impact than is believed.

2.  Researchers have underestimated the impact that peripheral factors and mindless habitual behavior have on food intake.

 

Description of the Consumer Food Game

So what policies would be effective at encouraging people to eat better? To answer this question, we must have a better understanding of the underlying dynamics of the “Consumer Food Game.” The battle between Consumers and the Food Industry constitutes a game: the players in the game are Consumers, the Food Industry, and Regulators. Each player’s payoff (profits or well-being) is affected by the actions taken by the other players. The Consumer Food Game is illustrated in Figure 1.

Figure 1

Let’s consider the incentives faced by each player.

 

Food Industry

The Food Industry includes food manufacturers (Pepsico, Nestle, Kraft, Mars, etc.), together with wholesale and retail food outlets (grocery stores, convenience stores, restaurants, vending machines, etc.).

The entities that comprise the food industry are profit maximizers; that is, they want to make as much money as possible from sales to consumers. The Food Industry will thus utilize any food engineering techniques (the 4 Ps) at their disposal to induce Consumers to spend as much money as possible on the purchase of food.

The Food Industry is subject to laws and regulations imposed by Regulators, such as food labeling laws and tax laws. However, given their ultimate goal of maximizing profits, they are likely to follow only the letter of the law, but not the spirit of the law. In other words, while the Food Industry may very well follow the laws and regulations as they are written, they will do everything they can (use the 4 Ps) to legally circumvent any restrictions on sales to consumers.

 

Consumers

Consumers want good health, which includes maintaining their bodies at their ideal weights, but they are subject to their various food needs. More specifically, the European Food Information Council indicates that “The Determinants of Food Choice” include

•  Biological determinants such as hunger, appetite, and taste

•  Economic determinants such as cost, income, availability

•  Physical determinants such as access, education, skills (e.g. cooking) and time

•  Social determinants such as culture, family, peers and meal patterns

•  Psychological determinants such as mood, stress and guilt

•  Attitudes, beliefs and knowledge about food

Consumers’ food needs also encompass both their rational, deliberative, as well as theiremotional affective systems.

The factors that most affect Americans’ food choices are reported in Figure 2.

Figure 2

So while Consumers may wish to be svelte and healthy, they may very well end up being much heavier and unhealthier than they would like to be, as a result, perhaps, of succumbing to (i) cheap, easily accessible, widely advertised junk foods; (ii) eating to appease bad moods or satisfy peer or family pressure; and/or (iii) simple lack of information about food health and nutrition.

 

Regulators

Regulators are generally “supposed to” look out for the interests of Consumers. In particular, there are many actions that Regulators propose to take to help Consumers eat less unhealthy food, generally by placing restrictions on one or more of the 4Ps. For example, Regulators have proposed to impose taxes on sugary foods, limit the size of sodas that restaurants and convenience stores can sell, and limit food advertisements on TV (especially to children). However, Regulators are also influenced by the wants of Special Interest Groups, namely, various members of the Food Industry. Such Special Interest Groups have been able to defeat many of the Regulators’ proposals.

Another Special Interest Group that affects Regulators’ actions in the Consumer Food Game is the Group that generally opposes measures that restrict people’s freedoms. However, the Consumer Rights (Anti-“Nanny State”) lobby generally votes on the same side as the Food Industry, so their impact on the game doesn’t really need to be separately accounted for.

 

Types of Solutions to the Obesity Problem that Won’t Work

Given the interests and motivations of the three sets of players in the Food Game, many types of methods proposed to address the obesity problem are doomed to fail.

•  Proposals that appeal to Consumers’ deliberative systems in an attempt to curtail their food purchases when their affective systems are in control won’t work.

In particular, taxing candy or junk food will probably not reduce Consumers’ purchases (much) when they’re at the check-out counter and want to grab a candy bar or when they’re eating to appease a bad mood. (A large tax might do the trick, but it probably wouldn’t make it past the Special Interest Groups.)

•  Proposals that oppose the interests of strong Special Interest Groups will probably not pass.

In particular, the soda lobby (Pepsico, Coca Cola) is very strong, which makes any proposals to tax soda very difficult to pass.

(The beer lobby is also very strong. Many years ago when I was living in Chicago while attending graduate school, there was a proposal to raise money for some project by taxing beer. That beer tax proposal lasted, maybe, 30 seconds before it disappeared. Presumably, the proposal was instantly crushed by the beer lobby).

The Consumer Rights (Anti-“Nanny State”) lobby is also very strong. As such, proposals that either restrict consumer choice or are unduly meddlesome would probably not pass. In particular, the proposal to ban large soda size in New York City was voted down, presumably due to the joint efforts of the Food Industry and Consumer Rights lobbies. In a similar vein, proposals to remove junk food from certain locations in stores (in the check-out aisle or from promotional displays) probably wouldn’t pass either.

Proposals that directly restrict sales by the Food Industry to Consumers would probably not pass. The combined efforts of the Food Industry -- which would stand to lose a lot of money -- and the Consumer Rights lobby would join efforts and overpower most effort to pass such regulations.

  Many types of pricing and labeling requirements are generally doomed to fail, due to the ability of the Food Industry to circumvent such requirements.

With respect to pricing requirements, for example, Chandon and Wansink provide study results that suggest how Food Outlets might circumvent price requirements (the numbering scheme on the findings are mine):

1. … [T]emporary sales promotions can lead to a significant increase in consumption.

With respect to labeling requirements, for example, Chandon and Wansink note how Food Outlets can circumvent the intentions of certain types of requirements:

2. … [T]he framing of the information matters also for nutrition information. Food is perceived to be leaner and higher quality when labeled “75% fat-free” than “25% fat.”

Chandon and Wansink also note that the labeling requirements under the Nutritional Labeling and Education Act of 1990 [NLEA] might very well have led Consumers to choose foods with lower nutritional levels:

…the average nutritional quality of food products sold in grocery stores had actually worsened compared to pre-NLEA levels and compared to similar food products unregulated by the NLEA. This is largely driven by established brands, which account for a large portion of people’s diet (e.g., dinner food) and whose nutritional quality has slightly deteriorated. This may be because companies are afraid of reducing levels of negative nutrients (e.g., fat or sodium) in their flagship brands for fear that it may decrease flavor expectations and because companies prefer to compete on taste rather than on nutrition, which can now be more easily compared.

 

Types of Solutions to the Obesity Problem that Are More Likely Work

Solutions to the Obesity Problem that are more likely to work are those that don’t directly oppose the interests of any of the Food Game players. These include:

•  Standardizing packaging and serving sizes across brands and Food Industry outlets will make it easier for Consumers to make more informed choices.

In particular, the finding reported by Chandon and Wansink that

3.  Size labels used for food and beverages (such as “short” or “large” and also “biggie” or “petite”) have acquired meanings among consumers, who are generally able to rank order them accurately. In reality however, these labels mask huge discrepancies because a small size from one restaurant or brand can be larger than a medium size from another.

suggests that Regulators should impose standardized package and serving sizes across food types to help Consumers more easily compare nutritional information across brands and food outlets.

•  Mandating single serving size packages for both children and adults will make it easier for Consumers to choose more appropriate serving sizes.

Specifically, the findings reported by Chandon and Wansink that

4.  People take package size as a cue for appropriate serving size.

5.  The effects of package size on consumption are strongly influenced by the range of the other sizes available and by the serving size chosen by other consumers. One study found that people in hypothetical choice scenarios avoided the largest or smallest drink sizes.

6.  Larger package sizes are typically more profitable for food marketers, and they benefit from a higher perceived economic and environmental value.

additionally suggest that Regulators should require Food Manufacturers and Outlets to provide (i) single serving size packages and also, perhaps, (ii) child size packages, containing, say, one-half of a serving, while (iii) allowing them to continue to offer larger size packages.

Given finding 4 reported above, the single size packages will enable Consumers to choose the appropriate portion sizes, both for adults and for children.

Given finding 5 reported above, the child size packages will also help Consumers choose small size packages over medium size packages.

Given finding 6 reported above, Food Outlets should be appeased by (i) being able to (continue to) charge a premium for individual (convenience) package sizes, and (ii) being able to continue to generate higher margins on larger package sizes.

•  Better align the interests of the Food Industry (maintain or increase sales volumes) with those of Consumers (choose healthier foods) by promoting sales of healthier foods.

As I mentioned above, simply banning junk food displays near the check out counter work against the interests of the Food Industry by decreasing food sales, and would thus probably fail not work. However, requiring the Food Industry to provide (single serving sizes of pre-packaged) healthier foods to consumers along side the junk food displays would enable Consumers to make healthier food choices without (entirely) threatening the profits of the Food Industry.

•  Use public awareness campaigns to provide information to Consumers.

Chandon and Wansink report the following findings:

7.  Marketing communication informs people about product attributes, like the price or where it can be purchased. Marketing communication also increases awareness of the brand and food, which leads consumers, particularly children, to try fewer foods and to only search for brands they already know rather than the brand that would have the highest nutritional and hedonic qualities.

8. … [M]arketing communication can influence the importance of these benefits, for example, by making taste a more important goal than health. This may explain why nutrition ranks last in surveys of the drivers of food choices, after taste, cost, and convenience.

9.  The message communicated in these ads is that eating these foods is normal, fun, and socially rewarding.
 

Regulators can use these same methods that the Food Industry uses to promote junk food to form their own campaigns to promote healthier food choices. Manufactures of healthy food choices should be able to provide funding for these types of campaigns, with the expectation that they will earn back their investments through higher sales of their promoted foods.

 

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