econlife - Six Facts About How Supermarkets Influence What We Buy by Elaine Schwartz

Like me, have you ever raced into your local market to get some milk and passed through produce and other aisles, grabbing some items you never realized you needed? One supermarket executive called it “building the basket” when they lure us to the rear of the store. (It is also true that if they didn’t move the milk from the truck to a back cooler, they would diminish refrigeration time and increase labor expense.)

But still, the store did nudge me to spend more money.

Six Facts About How Supermarkets Influence Us

1. Supermarket bars and restaurants affect our spending.

Yes, supermarkets are adding bars. Called a “superbarket” in Vox, grocery stores are inviting us to drink while we shop. For them, it’s a win-win. Groceries are low margin purchases but not booze. And after a drink or two, maybe, as we careen through the grocery aisle, we buy more. Whole Foods started it all in 2009. Then others copied. Similarly, Eater said we now have the “grocerant” where we can eat dinner too.

2. Music can impact how much we spend.

In one classic 1982 study, researchers observed the response to no music, slow tempo music, and fast tempo music. Keeping track of pace also, they hypothesized that the slower movements that responded to calmer music were accompanied by more shopping.

Taking the next step at a wine store, psychologists looked at whether the type of music made a difference. Discovering it did, they found that French music was correlated with French wine sales, And yes, German music increased the German wine purchases.

3. The size of our supermarket cart affects our purchases

Carts have gotten bigger. The supermarket cart was first invented (1937) by a retailer who wanted us to buy more than we could carry. More recently, stores have larger aisles, women working away from home who can visit the market less frequently, and stores like Costco that encourage bulk purchases. Whatever the reasons, journalists say that carts have tripled in size from 1975 to 2000. Others claim that Whole Foods doubled cart size between 2009 and 2011. However, the one statistic that seems most reliable indicates that when a researcher doubled cart size, customers bought 19% more.

4. Shelf layout influences our decisions.

Supermarkets have to decide who can occupy their prime “property.” Like beachfront homes, the supermarket checkout area is a coveted location. For the same reason, a separate display at the end of an aisle is a desirable spot. And, in a typical cooler, we would mostly see products from large multinationals. For example, Dreyer’s, Skinny Cow, Edy’s and Häagen-Daz are actually all Nestlé. Similarly Magnum, Ben & Jerry’s, Breyer’s, Klondike and Talenti are from Unilever. If the aisle had 24 doors, only two might lead to the generics and niche brands.

5. Product descriptions affect what we think we should buy.

At Trader Joe’s, a smaller U.S. grocery chain (owned by Germany-based Aldi), they care about their adjectives. Catering to a niche market of shoppers who want bargains and healthy food, they mostly name and sell their own brands. The label on some nuts could say Sea-salt-and-turbinado sugar-chocolate almonds while a chicken dish is spatchcocked lemon-rosemary chicken. That turbinado just refers to a certain type of sugar cane. But it sounds good.

6. Finally, it’s the choice dilemma.

Some stores like Trader Joe’s believe less is more. Typically they have only 3,000 or so SKUs–stock-keeping units–the number of items in a store. A normal supermarket has more than 35,000 SKUs.

According to Columbia professor Sheena Iyengar, less of a choice generates higher sales. However, the bigger chains give us much more.

Our Bottom Line: Nudges

Nobel Laureate Richard Thaler and his co-author Cass Sunstein tell us that we go through life influenced by nudges that shape our behavior. A behavioral economist calls the phenomenon choice architecture. Indeed, through sound, transport, language, choice, and placement, the “architecture” of the supermarket affects how much money we spend.

My sources and more: If you just listen to one podcast about supermarket behavior, I recommend this Freakonomics episode on Trader Joe’s. However, to read onward, you can look at Consumerist for cart size, this classic study for music, and Businessinsider for the wine study. Then Vox and Eater told me about grocery store bars and restaurants while NPR explained why the milk is in the back of the store.

Ideal for the classroom, econlife.com reflects Elaine Schwartz’s work as a teacher and a writer. As a teacher at the Kent Place School in Summit, NJ, she’s been an Endowed Chair in Economics and chaired the history department. She’s developed curricula, was a featured teacher in the Annenberg/CPB video project “The Economics Classroom,” and has written several books including Econ 101 ½ (Avon Books/Harper Collins). You can get econlife on a daily basis! Head to econlife.

Teaching with Videos by Mike Siekkinen

As a history teacher, I regularly use video when teaching. I would love to be able to take my students to the places we study, to actually see and experience where history took place, but that is not really an option in most cases. Video can be the next best thing.

Some of my favorite sites are Discovery Channel and I also use GPB (Georgia Public Broadcasting) frequently. YouTube can also be a great source for content, not just in history but all subjects.  And of course, I can’t forget izzit.org!

As with any video used in the classroom, I always ensure I watch everything first. I learned this early on in my educational career when teaching biology. I found a great (I thought) frog dissection video on YouTube. On the surface, it was excellent, going over each step of the dissection process with the students doing the narration. That was, until several of the students started using cuss words. In hindsight, I am so glad I watched this video in its entirety as this could have been very embarrassing otherwise.

Hollywood has done a great job in a number of circumstances with historical period pieces. As with any video, I always have things for students to do as they are watching. Additionally, for videos of any length, I will often pause and we will discuss points I want to bring up, and/or have students respond to prompts I give them during parts of the video.

Please do look at your school systems policy regarding video use in the classroom. Some districts have very strict policies about video use, while others leave everything up to the discretion of the teacher.

izzit.org has great videos that can be streamed directly by students. This year, I started assigning students videos to watch and then having them take the online quizzes. Students can do these at their own pace from individual Chromebooks. These would be supplemental to instruction. Give them a try. 

Dr. Mike Siekkinen, a retired U.S. Navy submariner, became a teacher as a second career. He teaches history at St Marys Middle School as well as Adult and Career Education at Valdosta State in Georgia.

econlife - What We Might Not Know About Philadelphia’s Soda Tax by Elaine Schwartz

The Philadelphia tax on sugary drinks and diet soda kicked in on January 1, 2017. As a 1.5 cents an ounce tax on distributors, it did not hit consumers directly. But a recent study indicates that it was passed along. Through the list price on the shelf, consumers paid close to 20% more for regular soda, diet soda, and juice drinks. That adds up to $1 extra for a 2-liter bottle and $2.16 for a 12-ounce, 12-pack.

But did it make a difference?

The Impact of the Tax

In a new “before and after” study, economists looked at the Philadelphia tax. The study covered 140 retail stores and more than 1200 sweetened beverages.

In their report, researchers concluded that while the tax was passed through to consumers, the amount varied. It was less in stores located in border communities and more, especially for soda, in high-poverty neighborhoods, independent stores, and for single servings. Also, taxed drinks were relatively less available. Instead, there were more bottled waters on the shelves. Consequently, it was more difficult to obtain a sugary beverage.

To all of this we can add that even without a sugary drink tax, we are drinking more water:

Our Bottom Line: Efficiency or Equality?

The Tax Foundation had an interesting approach that I wanted to share. Their take was the tension between efficiency and equality. On the efficiency side, they cited the health benefits created by the sugary beverage taxes. Shown by decreased sales of sugary beverages and increased availability of non-taxed drinks in Philadelphia, it is possible that obesity trends could be slowed.

However, on the equality side, we have a regressive tax. Defined as a levy that takes a higher percent of income from those who earn less, a sales tax is regressive since we all pay the same amount.

You can see below that Tax Foundation data indicate those earning below $100,000 have the highest percent spent on sugary beverages.

So, when you ponder the impact of a sugar sweetened beverage tax on price and availability, do add efficiency and equality to the mix.

My sources and more: For the latest results on the soda tax, this paper was a good source as was this summary. Meanwhile, the Tax Foundation had the tax rate analysis.

Ideal for the classroom, econlife.com reflects Elaine Schwartz’s work as a teacher and a writer. As a teacher at the Kent Place School in Summit, NJ, she’s been an Endowed Chair in Economics and chaired the history department. She’s developed curricula, was a featured teacher in the Annenberg/CPB video project “The Economics Classroom,” and has written several books including Econ 101 ½ (Avon Books/Harper Collins). You can get econlife on a daily basis! Head to econlife.

econlife - The Economics of Skiing Across Antarctica by Elaine Schwartz

Across a 921-mile stretch of Antarctica, two men are racing. Unassisted, each is alone. Unsupported, they are not allowed to receive a food or fuel drop or to use a kite for wind power. All each needs is on his pulk. The winner will be the first person to ski across the Antarctic alone with no assistance.

Like climbing Mount Everest, the quest is for extreme athletes. Colin O’Brady and Louis Rudd each had planned to do it alone. But their timing coincided and it became a race. They will be skiing a mile apart.

This is where they are going:

And where are we going? To the economic side of their trek.

But first…

A Typical Day

Together they left from southern Chile. The last leg was a 90-minute flight on a Twin Otter ski plane to the Ronne Ice Shelf. On November 3, the plane dropped off one of them, drove a mile, and then said good bye and good luck (I assume) to the other. At minus 25 degrees Fahrenheit, the weather was called balmy. Fully packed, their pulks weighed 375 pounds.

You can see a pulk and the ice ridges called sastrugi:

In a typical day, O’Brady got up at 6:00 or so and Rudd at 7:00. Each lit a stove. They had to collect snow for the day’s water supply and boil some. Their breakfast could have been freeze-dried oatmeal with extra oil and protein. Then each repacked his pulk, used the GPS attached to his chest, and was on the way. While their routines differed, basically they skied for 70 to 90 minutes and then stopped for a high calorie pick-me-up. O’Brady ate some Ramen for lunch while Rudd dug into his “grazing bag” for some salami and cheese or chocolate and nuts. For the night each had to set up a tent, a stove, lay out clothes to dry. Since they had 24 hours of daylight, solar panels were perfect for a charge.

O’Brady cubed his custom energy bars so they could defrost quickly:

Our Bottom Line: Antarctic Economics

To survive, O’Brady and Rudd had to be very aware of their land, labor, and capital. Defined as all that was natural, the “land” was their adversary. It was their 921-mile/75 day route. It was the crevasses, the ice ridges, and the uphill climb to the South Pole at 9301 feet.

The key then was their labor, their human capital. All they planned, every decision was about staying alive. Ranging from how many calories to consume to daily mileage, each minor decision could become crucial. Even sweating was life threatening because it created hypothermia. Infections healed more slowly because of the cold.

As for their physical capital, it was all they packed. Each had a pulk, food, the tent. They needed their stoves and high calorie snacks that for Rudd included 15 pounds of instant chocolate. O’Brady took toilet paper while Rudd did not. For emergencies, O’Brady had the more elaborate repair kit. Their cross country skis were covered with synthetic skins for traction.

Indeed, these men never had a free lunch. Every land, labor, capital decision involved a tradeoff…

And each one raised close to $200,000 to fund the trek.

My sources and more: Having seen how climbing Mount Everest was the perfect case study for my textbook, I knew the Antarctica trek could also have an economic theme. So, if you want more detail, do go to the NY Times articles, here, here, and here. Then, for up-to-date news, Colin O’Brady’s website and explorersweb.com could come in handy.

This is the day 33 update (Since he left on November 3, I assume Day 33 is today.) He appears to be halfway:

Ideal for the classroom, econlife.com reflects Elaine Schwartz’s work as a teacher and a writer. As a teacher at the Kent Place School in Summit, NJ, she’s been an Endowed Chair in Economics and chaired the history department. She’s developed curricula, was a featured teacher in the Annenberg/CPB video project “The Economics Classroom,” and has written several books including Econ 101 ½ (Avon Books/Harper Collins). You can get econlife on a daily basis! Head to econlife.

econlife - Why Less Land Needs To Make More Food by Elaine Schwartz

By 2050, there might be 10 billion of us, up from 7.2 billion now. With more affluence and more people, we are going to need 56% (or so) more calories than we consumed in 2010.

Let’s start by looking back. In this very clever very fast 200-year history, you can see a convergence of the health and wealth of 200 countries:

The question now is what to do as more health and wealth continue. A new report has some suggestions.

Planning for 2050

Called the three gaps, researchers at the World Resources Institute say we need to produce more food more sustainably by using as little extra land as possible.

• The Food Gap. At 7400 trillion calories, we need a 56% increase.
• The Land Gap. To produce those extra calories, we need extra land equal to double the size of India–even if we increase crop yields.
• The Emissions Gap: But also, sustainability should dictate how we bridge the food and land gap.

Shown below, the keys are less demand and more production:

But How?

The report presents what it calls 22 menu items for managing the three gaps. An example? One menu item tells us to “Shift to Healthier and More Sustainable Diets.” Then, the analysis is clearly a reality check. Projecting an 88% increase, they recognize that a wealthier world eats more meat.

Here is the environmental impact:

Yes, their analysis includes “strategies” that focus on food innovators developing meat substitutes. They realize any dietary shift will need marketing that reshapes social norms. And, it all will require new government policies.

With 22 items that range from decreasing fertility rates to increasing pasture productivity, the report is voluminous and for me, a bit discouraging. As economists, we all know the role of incentives. In their 96 page report, even in the eight times they used the word incentive, they did not convincingly display what would nudge us to do all that they (wisely) suggest.

Our Bottom Line: Remembering Malthus

Perhaps one of the first environmentalists, Reverend Thomas Malthus (1766-1834) told us in 1798 that population grows geometrically while resource production expands arithmetically. Consequently, resource prices will rise and supply will become increasingly inadequate.

We just have to look at the Hans Rosling video to know that Malthus miscalculated. As economists we can ask if the same leaps in technology and the appropriate incentives will resurface during the next 32 years.

My sources and more: Thanks to the NY Times for alerting me to the World Resources Institute study. From there, naturally I thought of Hans Rosling. Finally, you might want to take a brief look at this 2011 study from Nature. Doesn’t it sound a bit too similar to the current research?

Ideal for the classroom, econlife.com reflects Elaine Schwartz’s work as a teacher and a writer. As a teacher at the Kent Place School in Summit, NJ, she’s been an Endowed Chair in Economics and chaired the history department. She’s developed curricula, was a featured teacher in the Annenberg/CPB video project “The Economics Classroom,” and has written several books including Econ 101 ½ (Avon Books/Harper Collins). You can get econlife on a daily basis! Head to econlife.

econlife - What a Government Shutdown Does to Each of Us by Elaine Schwartz

A government shutdown is again in the news. The key date is December 21. If federal agencies without funding do not get their money by then, they have to follow their shutdown rules.

I suspect most of us will be affected. These are the facts:

Shutdown Agencies

Five agencies (blue) did get their Fiscal 2019 funding while seven (gray) did not. Those seven received a temporary reprieve from a CR (Continuing Resolution) that expires on December 21. If there is a shutdown, it’s the seven agencies that will be hit. And even then, not everything. It all depends on who is “essential.”

As for the numbers, we are talking about 750,000 government employees. Estimates indicate that 400,000 would work without pay and 350,000 would be furloughed. While the “essential” unpaid employees do get paid retroactively from new funding, those who are furloughed will not necessarily receive their back pay. But in the past, Congress voted to give them the money.

This potential partial shutdown sounds less catastrophic than the actual 16-day shutdown during October, 2013. At that time, suspended services included issuing new Medicare and Social Security cards. The EPA could not inspect 1200 different sites while the FDA postponed close to 900 inspections. The National Parks lost $500 million dollars in visitor fees and the Panda Cam went dark at the National Zoo. The IRS also had to turn away 1.2 million requests related to mortgage and loan approvals.

In the aggregate, economists believe shutdowns cost billions because of lost fees and pay to employees who were sent home. Then, to that government cost we can add the private sector where hotels near national monuments lose business, realtors have transactions cancelled, loggers cannot work in National Forests. Standard & Poor’s estimated a $24 billion hit to the 2013 GDP–a .6% slice of growth that was cut out.

Our Bottom Line: The Cost

The word “shutdown” obscures the massive impact. Summarized in one term, it sounds simple. But it is not.

I am reminded of what we have said before about the British seacoast. Quoting mathematician Benoit Mandelbrot, we pointed out that when you see the shoreline from afar, it looks like a smooth curving line. But look more closely at the coast–and at government shutdowns–and you recognize the details you need to know.

My sources and more: For the current shutdown basics, Bloomberg had a good article, the Committee for a Responsible Federal Budget had some history, and The Washington Post had some interesting detail. You might also want to read more about the three-day shutdown last January.

Ideal for the classroom, econlife.com reflects Elaine Schwartz’s work as a teacher and a writer. As a teacher at the Kent Place School in Summit, NJ, she’s been an Endowed Chair in Economics and chaired the history department. She’s developed curricula, was a featured teacher in the Annenberg/CPB video project “The Economics Classroom,” and has written several books including Econ 101 ½ (Avon Books/Harper Collins). You can get econlife on a daily basis! Head to econlife.