Obesity: Class Warfare, Imperfect Information... or both?

Saw this on CNN today: Poor and fat: The real class war, by L.Z. Granderson. Some figures from the article:

Ground beef that is 80/20 is fattier but cheaper than 90/10. Ground turkey breast is leaner than the other two but is usually the more expensive. And many of us can't even begin to think about free-range chicken and organic produce -- food without pesticides and antibiotics that'll cost you a second mortgage in no time at all.
...The American Journal of Clinical Nutrition recently published a study that found $1 could buy 1,200 calories of potato chips but just 250 calories of vegetables and 170 calories of fresh fruit. And it is also true that Mississippi, the poorest state in the country, is also the fattest.
In fact, the five poorest states are also among the 10 fattest, and eight of the 10 poorest states are also among the 10 with the lowest life expectancy.
I guess one could dismiss this as one big coincidence, but is it also a coincidence that half of the top 10 states with the highest median incomes are also in the top 10 in life expectancy?

I would interpret Granderson's argument as: low-income leads to unhealthy foods leads to fat (leads to more healthcare spending and even lower incomes). Looking at calorie counts compared to food prices does seem to support that. However, bringing some micro theory into the discussion complicates this causal story somewhat.

We can quantify the effect of income on food choices through this simplified model. Imagine two different families, both trying to fill a calorie requirement of 2000, but the low-income family has a food budget of $3 and the high-income family has a food budget of $10.

After plugging numbers into the formula above, the high-income family buys only 0.3 servings of potato chips and 9.7 servings of fruit, while the low-income family gets about 1.4 servings of potato chips and 1.6 servings of fruit.

The same intuition is expressed graphically below. Purchasing decisions are represented by points where the red and blue lines cross.

So far, so good: as one would expect, the high-income family buys more fruit and less potato chips than the low income family. One problem for this example, though, is that neither of these families will be gaining any weight!

If people only eat the necessary calories to keep an even weight, it won't matter whether their income is high or low. They'll just adjust their purchasing choices to get the right amount of calories. A dietitian might frown on you for eating chips as a snack instead of fruit, but as long as your consumption of chips is small, it won't necessarily cause you to gain weight.

It takes some extra assumptions to model over-eating. Maybe there's some property of potato chips that causes people to eat too much of them, i.e. what if someone buys potato chips thinking that a $1 serving will be 1200 calories, when it's actually equivalent to 1600 calories? Keeping with the numerical example above, the rich family would overeat by about 120 calories and the poor family by 560 calories.

It's only imperfect information or self-control problems which make food choices cause weight-gain. If we assume that low- and high-income types have exactly the same sort of bounded information, we'll find that the rich gain less weight, because their greater resources have them purchasing less unhealthy food to begin with.

This story gets even more pessimistic if there is some difference between low- and high-income people's capacity to overcome imperfect information. It might be that the poor have less time/energy to research and craft their diet than the rich do, so they are more prone to mistakes. Additionally, there could be some personal attribute - an impulsive nature or low conscientiousness - which both causes someone to have low income and also makes diet control more difficult.

While the costs of obesity are worth addressing given their heavy contribution to public healthcare spending, as Granderson rightly observes, the lens of class warfare isn't the best for understanding the problem.

Ultimately, to prevent obesity people need more incentive to monitor their own health. For me, it's knowing that on the current trajectory of public health care spending, there probably won't be any money left by the time I'm old and infirm. It doesn't entirely surprise that current beneficiaries of public health care are not too concerned about solving this spending problem for the rest of us (morbid fact: about a third of health care spending goes to patients in their last year of life). Which class is under attack, and which class is attacking anyway?

Maybe the obesity problem will resolve itself as young people make the calculations and figure they will likely be on their own, in terms of medical care, by the time it is most necessary. Or maybe the lure of potato chips is simply too great for us as a nation and will lead to our fiscal undoing.

Farm Subsidies: A Picture Worth 1,000 Words

Who ever said there's no skiing in Iowa? Source.

In other news, the Institute of Medicine is advising the government to adopt a series of policies to control the American "obesity epidemic." One such policy is a proposed "soda tax."

I have a better idea. Instead of taxing soda, why don't we repeal the subsidies which makes the primary ingredient, high-fructose corn syrup, so dirt cheap to produce?

Ultimate Cakeoff, Econometrics, and Causality Questions

For reality television and competitive cooking enthusiasts the show Ultimate Cakeoff, produced by TLC, is a real tour de force. The premise: top cake artists and decorators are brought together to compete in creating a cake for some high-profile event. The judges evaluate their efforts based on technical difficulty, adherence to the theme, and aesthetic value, then choose a winning team to receive the $10,000 prize.

Each team has nine hours to produce their ultimate cake. In order to keep the competition interesting and generate some much-needed drama, each episode is broken up by one or two smaller challenges designed to test the team leader's technical skill and speed at a particular cake-related task (such as piping, decorating, carving, etc.) The winner of each mini-challenge can choose one of the other two teams to sit out for thirty minutes.

Nine hours is already a short timeframe to create an award-winning cake - many wedding cakes can take up to a week to construct - so it would seem like losing 30 minutes to an hour would be a serious disadvantage. But, after watching two seasons of Ultimate Cakeoff (a dirty job, but someone had to do it) I noticed something strange: teams forced to sit out didn't seem to lose with any greater frequency. In fact, they often went on to win the competition!

This counter-intuitive trend sparked my curiosity, so I decided to put the question to a statistics program. After collecting data on every episode to find the characteristics of each team, who was forced to sit out, and who won each competition, I was able to find some results. The first regression found that being forced to sit out due to a challenge would increase the chance of winning by about 24%, a statistically significant result. After controlling for the individual attributes of of each participant the statistical significance vanished, and being forced to sit out had no measurable impact on the chance of winning at all (Click here to view the regressions performed, in STATA output format).

What might explain these findings? It would seem that less working time would result in a lower-quality cake, that was less likely to take the prize. Discovering the opposite result is somewhat surprising.

Of course, cake artists forced to sit out were not chosen randomly. The most common reason when choosing who to give a penalty was some variation of "(s)he looks way ahead! Take a break and slow down!" Apparently, cake artists are pretty good at judging each others' progress, and the team that is ahead partway through the competition is often the most talented. Trying to stall them with a penalty may even the field slightly, but not enough to overcome superior cake skills and design.

Admittedly, this is a pretty trivial application for a powerful statistics program. But, there may be some broader lessons for social scientists generally. When human choice is involved few events are truly random, which would be the ideal in an experimental setting. Economists can find some clever ways to mimic a true experiment, but perfect success in that regard still remains elusive. Examining how the data are collected and what selection effects are present is crucial to interpreting statistical results... Otherwise one might be inclined to believe that a shorter work-time makes a better wedding cake!

My 13-bean inflation hedge.

Never mind gold or TIPS. There are much more mundane ways to protect your purchasing power from inflation. Durable food commodities work just fine. I recently invested in 75 lbs. of 13-bean soup mix, purchased from The Great American Spice Company.

Beans: the grad student's investment vehicle.

Assuming that core commodity inflation continues at its current pace (almost guaranteed) and that these beans last the several years it will take me to consume them (less certain), I think it's a nearly foolproof investment. Other methods of hedging against inflation carry their own risks and are also much more expensive. Bulk food purchases are the chickenhearted investor's best friend, as Andrew Tobias has put it.

Now, any suggestions on bean soup recipes?

Followup (2/4/2012): I'm not quite as excited about the beans as I used to be. The problem with a bean mix is that some types of beans cook faster than others... and the gastrointestinal consequences of under-cooked beans are obvious to anyone who's suffered through them. If I were doing this over again, I would have gotten a bulk order of one type of beans and saved some money and hassle. Oh well - live and learn.

"Coupon Lady Money Saving Madness" is madness indeed.

So, I found a video on the internet which should have bargain-hunters, cheapskates, and economists (to be redundant) foaming at the mouth. By using coupons and mail-in rebates, a woman was able to cut her grocery shopping bill down from over $150.00 to just $9.43. Find the video here. So why isn't everyone saving 97% on their shopping, and putting the grocery stores out of business?

The reason most people don't do this (and never will) is because it's inefficient. Yes, it's very impressive to see someone save ~$145 off their groceries, but the real question is how much time did it take, in coupon saving, organization, and so on, in order to accomplish that? The woman in the video said she collects coupons, sends in rebates, and plans all her shopping in advance... If it took her 14 hours, she effectively earned $10/hour for her coupon-clipping work. However, I'm guessing it took longer than that, and her "wage" was actually much lower.

For people who have jobs, it'd be more effective to spend those extra hours working than clipping coupons. If you don't have a job or are paid a very low wage, coupon clipping could make sense. However, there are a variety of other ways to make money on the internet - filling out surveys, using ShortTask, or advertising on Twitter - to name just a few. For an hourly rate, you can almost certainly do better than coupons.

If you're a college student, spend that time studying instead -- you're going to school to make more money later, so focus on grades, not penny-ante coupons (unless you're studying english or sociology, in which case I suggest dropping out and coupon-clipping full time, because it'll be more profitable).

There's an efficient level of coupon saving, which depends on your income and how you value your time. For highly paid professionals, the efficient amount of coupons might be zero, while some others may gain a small benefit from spending their time that way. Taking coupons to an obsessive level, as this woman appears to have, is just wasting time for yourself and everyone in line behind you.

Kitchen Nightmares -- restaurant makeover or yelling contest? Let the numbers decide.

Gordon Ramsay's show, Kitchen Nightmares, has brought hope to the greasy spoons and dirty dive restaurants across America (but mostly New York) for two seasons now. Ramsay made his name first as a soccer player, then gourmet restaurant owner, and now as a TV host to a variety of competitive cooking shows, most notably Hell's Kitchen. He's been named the #1 most successful restauranteur in the world thanks to his kitchen acumen, high standards and vitriolic temper.

For Fox's show Kitchen Nightmares, Gordon Ramsay visits restaurants which are financially floundering and attempts to turn them around. This may mean producing an entire new menu, renovating the décor, or installing state-of-the-art kitchen appliances. In spite of these efforts, many still go belly-up after Ramsay leaves.

Before the show starts, most Kitchen Nightmare restaurants are under a mountain of debt. The stubborn owner of Sabatiello's was over a million in the hole before Gordon Ramsay showed up. Facing such a dismal business scenario, even expert advice can only go so far. Are heavily indebted restaurants doomed to bankruptcy, or is Gordon Ramsay not the miracle worker he's sold as?

With some simple econometrics, we can take a stab at answering that question. Data were collected on the amount of debt, proportion of male owners, and whether each restaurant was still open. After watching the twenty-one episodes from Season 1 (so I like reality TV, sue me) and running it through a regression program, here are the results: