Opportunity and Choice

Bonnie Ghosh-Dastidar and Tamara Dubowitz of the RAND Corporation posted an article yesterday examining how well the theorized link between obesity and so-called ‘food deserts’ holds up to empirical scrutiny. Though the link between obesity and distance to full-service grocers has taken on the status of stylized fact in much of the public policy literature, Ghosh-Dastidar and Dubowitz observe that “there is little rigorous evidence to support the notion that food deserts are driving the obesity epidemic.” Having grown up in low-income urban communities, I have often been at a loss for why ‘choice’ is the only explanation for eating habits not worthy of serious consideration. Sure, choice does not tell the whole story. But surely it tells us more than the literature allows. If we were examining patterns of dress for this same demographic, we might sensibly conclude that the choice of apparel—while by no means independent of income, education, age, etc.—is essentially a function of a set of aesthetic norms embedded within the cultural community which informs (but does not strictly constrain) the tastes and choices of individuals nested within the community. Let’s refer to such modes of dress as urban fashion.

Like all analogies, this one is limited. We, for example, would classify obesity as a public health problem; the same cannot be said for urban fashion. Yet urban fashion is not without consequence for an individual’s life chances. I recall as a young man learning that I would have to abandon many norms of dress to which I was accustomed and adopt sartorial norms which I found foreign. Such was required if I was to be taken seriously in the job market and in other social contexts. Adaptation is not without psychic costs, and many of my peers chose to forego these costs, considering the associated benefits remote and speculative. My point here is that while the choice of my peers adhere to their preferred patterns of dress might have hindered the achievement of other goals, we needn’t contrive a complex theoretical framework to understand the phenomena in question. It is not that hard to understand. In my case, my eating habits changed for the same reasons my style of dress changed: my values changed, and I chose.

A while back, in a critical review of the book Place Matters: Metropolitics for the Twenty-first Century, I took issue with what I viewed as a central bias of that collection of scholarly essays. I said that the authors seemed to require that the reader

be willing to discuss issues of urban decay without reference to any agency in urban dwellers themselves—urban residents come across as flat characters in a narrative that only contemplates victims and villains. The authors are dismissive of arguments or evidence that counterproductive norms and dysfunctional behavior within inner city communities contributes to the environment. They make clear that their focus is on opportunity structures and not behaviors (66). Examining structural causes is needful; declining to give way to condescending moralizing is admirable. But the authors err on the opposite extreme by romanticizing urban dwellers and leave no room for individual agency in the account of their lives. Hence, high rates of obesity are the results of parents being afraid to let their children play outside in dangerous areas and the lack of healthy food options in inner city food deserts…One wonders what the authors do with studies in the food insecurity literature which suggests that unhealthy eating habits persist even when more nutritious foods are available and even when such foods are subsidized.

Ghosh-Dastidar and Dubowitz’s research

published in the American Journal of Preventive Medicine, shows that factors other than location may have greater sway over how and where consumers shop. Store choice may reflect individual factors, such as personal food preference and income, as well as store characteristics, such as availability, quality, pricing, and point-of-sale advertising of food.

After accounting for prices of items offered at food retail outlets, distance to where residents shopped was not associated with obesity.

Imagine that: personal food preference might actually be a factor in eating habits and obesity. Opportunity matters but so do choices. It is not an either/or proposition.

A.K.

Ronald Coase: In Memoriam, Part 9

The ninth scholar we discuss in our series, In Memoriam, is yet another Nobel laureate and yet another of my personal heroes, Ronald Coase. Coase was born in 1910 in the UK where he attended the LSE. Coase was, by his own amused admission, a lifelong economist who never studied economics. Of course, he meant that his degree was in commerce and that his economics training was largely autodidactic.

          Ronald Coase YoungRonald Coase Old

1910-2013

Coase initially thought he would become a lawyer or historian. Such predilections might help explain the fact that, despite a career spent in the academe, Coase was doggedly empirical and eschewed the trend in modern economics toward increasing theoretical (i.e. mathematical) sophistication in isolation from the real world and the functioning of real institutions. Coase was truly a prolific thinker and writer—he published his last book, How China Became Capitalist, in 2012 at age 101—and his contributions to the social sciences are too many to be recounted here. I will limit my remarks to the contribution by Coase that began his 80-year career as an institutional economist.

Nature of the Firm

In the 1930’s, as a student and still quite a young man, Coase began struggling with somewhat of a paradox. While many economists were arguing that markets require no top-down coordination, or, to put it another way, that markets worked most efficiently when coordinated in a decentralized fashion by countless individual decision-makers each responding to changes in relative prices of the factors of production, Coase observed that “within a firm, the description does not fit at all.” In effect, real markets operated with a high degree of conscious control over some operations and virtually no conscious control over others:

Outside the firm, price movements direct production, which is coordinated through a series of exchange transactions on the market. Within a firm, these market transactions are eliminated and in place of the complicated market structure with exchange transactions is substituted the entrepreneur-coordinator, who directs production. It is clear that these are alternative means of coordinating production. Yet, having regard to the fact that if production is regulated by price movements, production could be carried on without any organization at all, well might we ask, why is there any organization? [Download “The Nature of the Firm” (1937) here]

After visiting American factories and businesses, Coase realized several things. First, “there is a cost of using the price mechanism.” These costs are largely the costs associated with finding what the relevant prices are and of organizing exchanges around the fluctuations of those prices. Second, firms form because they are seen as reducing many of these costs, especially when it comes to certain factors of production such as labor. Moreover, market actors must decide whether it is cheaper to make or buy, that is, whether to organize internally or exchange on the market for a factor of production. Thus, how production decisions are made within a market are determined by a comparison of costs which till Coase were not properly taken into account by theoretical economists. These costs, known now as transactions costs, are essential to understanding the nature and function of institutions in various aspects of social and economic life. Thanks to the insight of Coase, multiple disciplines now take account of these costs as well as what they reveal about the human propensity toward institution-building.

Hat’s off to you, Professor Coase!

 

A.K.