ESSAYS ON FOOD WASTE AND CONSUMER DEMAND ANALYSIS
Open Access
- Author:
- Yu, Yang
- Graduate Program:
- Agricultural, Environmental and Regional Economics
- Degree:
- Doctor of Philosophy
- Document Type:
- Dissertation
- Date of Defense:
- June 02, 2020
- Committee Members:
- Edward C Jaenicke, Dissertation Advisor/Co-Advisor
Edward C Jaenicke, Committee Chair/Co-Chair
Yizao Liu, Committee Member
Douglas Harvey Wrenn, II, Committee Member
Peter William Newberry, Outside Member
Edward C Jaenicke, Program Head/Chair - Keywords:
- food waste
demand analysis
stochastic frontier
household production
sell-by dates - Abstract:
- Unnecessary food waste is a global economic and environmental problem. In the United States alone, consumer welfare loss from food waste amounts to a massive $160 billion annually, which is about 30% of the total food supply. Moreover, discarded food is a major source of greenhouse gas emission globally, generating about 3.3 gigatons of carbon dioxide and methane each year. If regarded as a country, food waste is the third-largest carbon-emitting country after the U.S. and China. Despite the importance of the food-waste problem, researchers have had only limited success in studying the underlying issues behind food waste, partly because no public or private organization is measuring actual food waste on a wide scale. At best, researchers have been able to investigate food-waste issues either at the national level by comparing separate datasets on food consumption and food acquisition or at the small scale by conducting experiments or surveys. The three essays in this dissertation study attempts to fill this gap by (i) employing an indirect but creative method to examine household-level food waste in a national survey of food acquisition, thus allowing us to investigate how household characteristics are linked to the estimated levels of food waste, (ii) incorporating food waste into a theoretical model of household behavior, thereby showing that waste is a rational outcome of utility maximization and an important factor to account for in other models of household-level food behavior, and (iii) finding empirical evidence in consumer and market data that policy changes (i.e., extending the sell-by date on milk cartons) can and do reduce food waste. To overcome the lack of observed data on food waste, the first essay begins by formulating household food consumption as a production process that transforms food inputs into chemical energy required for the human body’s metabolic process and physical activities. Household-level food waste is estimated as input inefficiency via a stochastic frontier production model. Applying the method to a nationally representative sample of households, the essay shows that on average, U.S. households waste about 31% of their food, and that this level of annual waste corresponds to $240 billion. In addition, by accommodating heterogeneous wasting behavior, the results indicate that healthier diets and higher income lead to more household food waste, whereas lower household food security, food-assistance program participation, and larger household sizes are associated with less food waste. The second essay shows that without modeling or at least partially accounting for wasting behavior, demand estimates in traditional models are potentially biased. The reason for the bias is that the omitted food waste is often a rational and heterogeneous choice made by households and linked to other consumer choices. This point is illustrated by both theoretical and empirical examples. Two structural approaches to identifying and estimating rational food waste are introduced. The first approach partially identifies the waste function through economic constraints. The second approach considers behavioral assumptions on household utility maximization. Taken together, these efforts represent one of the first attempts to incorporate food waste into utility-maximizing models of consumer behavior and provide useful estimates to study the rationales of wasting food. Policymakers could apply the models and utilize the results to calibrate the amounts of actual consumption and to find more effective mechanisms to incentivize food waste reduction. The third essay examines a real-world policy change that was intended to reduce food waste. Consumers often find sell-by labels confusing and misinterpret their meanings as “safe-until” dates. Consequently, a significant portion of perishable food is mismanaged and disposed of earlier than necessary. As an effort to reduce food waste, in September 2010, New York City’s Board of Health repealed its regulation on sell-by dates of pasteurized milk products. This policy change, in effect, increased the shelf-life of milk from 9 days to about 15 days. Based on a theoretical model of rational food waste and various empirical verifications using micro-level scanner data, the essay finds that the city’s new policy effectively reduced food waste by more than 10%. This result translates to a reduction in wasted milk of more than 5.2 million pounds annually in New York City, an approximately $3.4 million value. This study is the first to find empirical evidence that policy changes can reduce food waste.