Category Archives: micro

Technology key to making food origin labels useful

Any move to force food producers to provide information on the origin of ingredients in products will require the use of technology to help consumers use and benefit from this information, according to research.

In a new paper Professor Iain Fraser, from the University’s School of Economics, examined the potential for mandatory country of origin labelling (COOL) information and how it could be best implemented.

Currently only a small number of products in the European Union legally require COOL information, such as for wine, eggs, beef and fruit and vegetables. For beef, this labelling must also differentiate between place of birth and where it is reared and slaughtered.

Many consumers say they like such information and prior research by Professor Fraser has found that UK shoppers are willing to pay more for meat with a UK COOL label, especially since the horse meat scandal of 2013.

However, there is often confusion about what the information refers to – such as meat products that don’t specify where the animal was raised as opposed to where it was slaughtered. Bacon, for example, can be cured in the UK but come from Danish pigs and be presented as from the UK, or vice versa and both would be legal.

The EU is in discussions to require COOL information as a mandatory requirement for almost all foodstuffs. This could have potentially huge ramifications for both producers and consumers, particularly in how best to present this information in a usable, trustworthy manner.

Professor Fraser notes that technologies such as blockchain and SmartLabels are among the ways in which consumers could receive information on packaging detailing the location from which an item has come.

The use of these technologies in this way already exists in a few examples, such as within Australia, or Switzerland, but have the potential to become more widespread if required, or consumers demand, more information on the origins of food products.

The paper adds that it may become the case that consumers can use a smartphone app to scan food in store, or set their preferences when shopping online, to seek out food with specific COOL data so that they can make the access to this data as useful as possible to their own needs.

The paper, entitled Wrapped in the Flag: Food Choice and Country of Origin Labelling, has been published in EuroChoices.

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Original article by Dan Worth, University of Kent Press Office

Professor Iain Fraser

Food and Consumers: Current Issues and Future Directions

A food and consumers research forum was held at the University of Kent on Friday 6th April, the same day in which the UK’s so called “sugar tax” came into effect. The event was organised by Professor Iain Fraser (Economics), Professor Ben Lowe (KBS) and Dr Diogo Souza-Monteiro (Newcastle University). Around 30 people registered for the event and speakers came from all over the UK and Europe. We were delighted that Professor Klaus Grunert (Aarhus University, Denmark) could join us to deliver his keynote speech on “Consumer food quality perception and food choice: The rise of credence qualities and the role of labelling information”. Professor Grunert is a world leader in the area of food marketing and consumer behaviour and the talk focused on marketers’ use of credence attributes such as healthfulness, sustainability and authenticity in positioning new food products. Other presenters spoke around emerging consumer related themes in the food domain including food security, the influence of food labels, take away food consumption, food policy choices, individual consumer processes and the role of technology in conveying more relevant food related information. Some fascinating insights emerged on the role of different research methodologies to reveal more about consumers and their behaviour with respect to food.

This was a truly interdisciplinary event with speakers and attendees from economics, marketing, psychology, sociology and public health backgrounds. The interdisciplinary approach attracted some lively discussion during and after the forum and allowed linkages to be drawn between food policy, consumption and the changing environment within which food is acquired, consumed and disposed of. It is great to see such enthusiasm and interest in a topic which affects us in so many different ways. So, lots to do and plenty of food for thought!

Research grant for study on marketing agricultural insurance through urban migrants

The School of Economics will participate in a major study, funded by the International Initiative for Impact Evaluation (3ie), on marketing formal insurance to smallholder farmers in Burkina Faso through their urban migrant family networks. The study will be led by Dr Harounan Kazianga (Oklahoma State University) and Dr Zaki Wahhaj (University of Kent) in partnership with Innovations for Poverty Action and the micro-insurance provider Planet Guarantee.

Last year a pilot study by the same team demonstrated that the potential client base for formal index-based insurance in developing countries is substantially larger than those directly engaged in rural farming, with significant demand from urban migrants with rural family links. The present study will look at the impact of this marketing strategy on the livelihoods of both rural farmers and urban migrants. Its wider objective is to investigate whether marketing formal index insurance to urban migrants with rural family ties is a viable strategy for increasing use of formal insurance among rural farmers in developing countries.

The study, with a total funding of USD 430,000 over the period 2018-2022 is one of six projects worldwide funded by 3ie under its evaluation programme on agricultural insurance.

Photo: Drs Kazianga and Wahhaj in Ouagadougou in 2017 with IPA country director Nicolo Tomaselli and research assistant Oumar Sory.

Keynes College

Workshop on production function estimation

Drs Olena Nizalova and Ilhan Guner held a workshop for staff and research students on production function estimation techniques on 29 March 2018.

The workshop was delivered by Olena’s co-author, Dr Oleksandr Shepotylo (University of Bradford), who demonstrated different production function estimation techniques and talked about various issues relating to production function estimation such as measurement errors in inputs, revenue and quantity based production function, estimation of production function for multiproduct firms, measurement of markups and other important firm level statistics.

Integration of humanitarian migrants into the host country labour market: evidence from Australia

The Journal of Ethnic and Migration Studies has featured a research paper by Dr Matloob Piracha. The paper entitled ‘Integration of humanitarian migrants into the host country labour market: Evidence from Australia’ (with Isaure Delaporte) was published on 6 February. You can read the full article here.

Abstract 

The objective of this paper is to identify the factors that influence the labour market integration of humanitarian migrants in the host country. A number of employment outcomes are examined including access to employment, access to stable employment, the wage/earnings level and the education-occupation mismatch. By using a recently collected panel survey data in Australia, the study shows that pre-migration education, work experience, previous migration episodes, as well as English proficiency, English training, study/job training undertaken in Australia and social capital form important determinants of the labour market integration of refugees in the host country. The paper highlights the differentiated impacts of these resources on the refugees’ outcomes at six months, one year and two years after arrival.

Dr Alex Klein

Labour scarcity and labour coercion: Serfdom in Bohemia

A new blog was published yesterday in Vox EU by Dr Alex Klein, Senior Lecturer and Sheilagh Ogilvie, Professor of Economic History at the University of Cambridge.

Summary

A famous hypothesis posits that serfdom was caused by factor endowments, specifically high land-labour ratios. Historical evidence seems to refute this idea, but with substantial identification problems. This column uses microdata for more than 11,000 Bohemian villages in the year 1757 to control for other potential influences on serfdom. The results support the factor endowments hypothesis, with higher land-labour ratios intensifying serfdom, suggesting that institutions are partially shaped by economic fundamentals.

Read the complete blog here.

Dr Adelina Gschwandtner

Improving drinking water quality in South Korea: A choice experiment

by Adelina Gschwandtner, University of Kent; Cheul Jang, Korea Water; and Richard McManus, Canterbury Christ Church University. Discussion paper KDPE 1720, December 2017.

Non-technical summary:

South Korea is a country with a historically polluted water supply. Water pollution has spread according to economic development worldwide. Increased discharges of untreated sewage combined with agricultural runoff and inadequately treated wastewater from industry, have resulted in the severe degradation of water quality all over the world; however, the situation appears to be especially worrying in South Korea. Several accidents of contamination in the water such as detection of trihalomethanes, heavy metal, harmful pesticides and disease germs in tap water, have made the average Korean concerned about the safety of the water supply, and very few citizens drink water directly from the tap.

It is reported that only 3.2% of the population in South Korea drink untreated tap water. Most Koreans use in-line filters and the annual sales of bottled water has increased exponentially in recent years. The present study aims to understand the main causes of pollution in a specific target area in South Korea and to investigate the feasibility of installing two different advanced water treatment systems in order to improve the water quality in the waterworks. The study shows that the main cause for pollution is agriculture, more specifically livestock sewage, and that in the long-run the reduction of pollution from livestock and the protection of the quality of the water in the river basin should constitute the main priority of policy measures.

In the short-run, installing either of two advanced water treatment systems is shown to be a feasible solution under conservative assumptions. The minimum monthly increase in water bill accepted by the Korean citizens is $2 which aggregates to a minimum net present value of $11 million over a project life of 20 years. Increasing the social discount factor from 4.5% to 10%, decreasing the useful life of the project below 12 years, and significantly cutting the estimated benefits can make the alternative investments unfeasible; however, these situations are unlikely to occur. The results remain robust to various other sensitivity analyses and therefore, the study shows that in general the instalment of the two advanced water treatment systems is beneficial to the South Korean citizens and constitutes a viable solution for the pollution of potable water in the short-run.

You can download the complete paper here.

Prof Nizar Allouch

Aggregation in networks

by Nizar Allouch, discussion paper KDPE 1718, December 2017.

Non-technical summary:

Understanding, and making sense of, large economic networks is an increasingly important problem from an economic perspective, due to the ever-widening gap between technological advances in constructing such networks, and our ability to predict and estimate their properties. Throughout history, various concepts have been developed to reduce the inherent complexity found in large economic systems, thereby rendering them more amenable to economic analysis. One prominent example is aggregation, which aims to devise representative concepts that can be analyzed in a more tractable manner. For instance, a key question, which appeared in the seminal contributions of von Neumann and Morgenstern (1944), Chapter IX, Gorman (1953, 1961), and Shapley (1964, 1967), is: when does a group of individuals behave as if it were a single individual?

Our investigation of aggregation in network games is quite similar in motivation. Often, the reason such an argument holds in the above literature appears to hinge on having identical preferences or compositions. Our approach suggests that aggregation holds for a similar reason in network games; however, the homogeneity is brought about by the network architecture rather than behavior or structure.

Our findings could potentially have empirical applications to many network models in economics, including public goods and targeting/finding the key players policies. Nonetheless, it remains to be seen whether other approaches from the vast and important literature on network position similarity, across myriad disciplines, ranging from biology and sociology to computer science – see, for example, Gagneur et al. (2004) and Newman (2006) – could be useful to further analyze complex strategic interactions.

You can download the complete paper here.

Dr Adelina Gschwandtner

Taste and health benefits key reasons for buying organic food

Shoppers usually claim they buy organic food because it is environmentally friendly and has higher standards of animal welfare. However, research has found that in reality better taste and health benefits are key motivators for buying organic produce.

Lecturer Dr Adelina Gschwandtner from the School of Economics, analysed the organic shopping habits of consumers in Canterbury to discover their price thresholds and rationale for buying organic foods such as chicken, milk, bananas, carrots and apples.

In total 104 individuals were surveyed about their organic food preferences and buying habits after they had left one of three major supermarket chains. They were asked about their willingness to pay more for organic food and their reasons for doing so, or not doing so, and their till receipts were analysed.

The data found that were spending an average of £3.84 of their total bill on organic produce, around 26% of the total. This is higher than many previous studies have found and suggests attitudes towards purchasing organic food are changing.

Indeed, when buyers were asked about how much of a willingness they have to pay for organic produce most responses were at an average of a 13% premium on non-organic products. However, in reality most consumers actually paid an average of 9% more for organic products.

While there is a gap between the premium people say they will pay for organic products and what they actually will spend, the fact people will pay more is notable.

However, meat items, where price premiums are often highest, remain a small part of organic sales, with just 3% of meat products sold from organic producers, suggesting people are still unwilling to pay more for meat items labelled organic.

Despite this when asked why they were willing to pay more for organic items most consumers stated they bought items for ‘non-personal’ benefits such as the belief organic food is environmentally friendly and meat is produced in more ethically acceptable ways.

But when the data from the surveys was analysed about what influences decisions to buy organic food it showed that ‘selfish’ reasons such as improved taste and health benefits are in fact the strongest drivers to buying organic food.

The findings could help supermarkets, organic food producers and even governments reconsider how they advertise organic produce to appeal to buyers by promoting taste and health benefits, rather than focusing on the environmental benefits of organic food, as is usually promoted.

The paper, entitled The Organic Food Premium: A Local Assessment in the UK, has been published in the International Journal of the Economics of Business (IJEB).

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Article by Dan Worth, University of Kent Press Office

Dr Maria Garcia-Alonso

Strategic trade control contract award

Dr Maria Garcia-Alonso from the School of Economics has been awarded a partnership in a framework contract for the provision of expertise on strategic trade control-related activities. The framework contract will provide the Joint Research Centre of the European Commission with technical expertise and support from external academia experts with proven experience in the field for thematic multi-disciplinary research work, preparation of training material and delivery of training, editorial and web support content.

The contract will be led by Professor Dr Quentin Michel from Université de Liège with other partners from King’s College London, Stockholm International Peace Research Institute, the Institute of Customs and International Trade Law and Dr Angelo Minotti.