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I Am an Important Fact: Predictably Irrational Edition

This comes from Peter Davis's reflections on David Kessler's new book, The End of Overeating: Taking Control of the Insatiable American Appetite.

We economists like to believe that consumers are rational, but, when it comes to food and tobacco, we're clearly not.


I think a lot of people would agree with that comment but would be repelled by the idea of targeted government intervention into the realm of food. But it is hard to imagine a working market for a good that is designed to render consumers irrational, which is to say, a good that is designed to overcome the normal checks and balances of the market.

Put slightly differently, I'm looking forward to reading Kessler's new book.

By Ezra Klein  |  June 15, 2009; 10:06 AM ET
 
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Comments

It should be a good book, but based on this quote alone, I'm not sure that food choices and tobacco present sufficient evidence to conclusively show that people are on balance irrational. Many smokers enjoy smoking a lot. It is a stress reliever; it keeps weight down; and it provides a great opportunity to socialize, take a break from the day, and enjoy the outdoors. Likewise, many people enjoy the taste of fatty foods. The effects of both of these decisions are decades away when the choices are made. It is natural to discount the distant future in favor of enjoying today. This is analogous to the time value of money.

My general view is that a fact that is inconsistent with what some people perceive to be people's best interests does not show that people are irrational. More often, it shows that people have different preferences than what they admit in surveys.

Posted by: Dellis2 | June 15, 2009 10:36 AM | Report abuse

Isn't the role of advertising/marketing to extend the realm and reach of the irrational claim and the irrational response?

Posted by: bdballard | June 15, 2009 10:52 AM | Report abuse

I'm reading this now. It's actually lighter on the conspiracy theory than I expected. Kessler simply reveals the science the food industry uses to make its products addictive to people who are so inclined, which from what I can tell is roughly half the population. He makes an impressive case that highly-engineered processed foods are as addictive as cigarettes. Whether addiction is rational behavior is up to the reader to decide.

I'm near the end of the book now, where Kessler lays out some strategies the consumer can use to resist the addictive pull of processed foods. I haven't seen any calls for regulation yet, although he does talk about a toxic food environment. Maybe that part is coming up at the end.

Posted by: csdiego | June 15, 2009 11:23 AM | Report abuse

Of course, a big part of what Kessler means by "rational" is "exhibiting the preferences I believe I would exhibit". The markets for food and tobacco work very well (see, for instance, the exquisite price sensitivity for not-yet-addicted smokers), they just don't produce the results we want, or say we want.

The eating public at large is like the little investor with fixed ideas of what simple factors should affect a stock's price, and gets fleeced about as thoroughly. So it wouldn't be surprising that interventions in directions the differ from the ways that the government currently intervenes produce salutary results. (And it's crucial to remember that the government does intervene enormously already.)

Posted by: paul314 | June 15, 2009 11:26 AM | Report abuse

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