"Rational Consumer Choice? The Case of Household Food Waste"

Recent advances in behaviorial economics raise serious doubts about the rationality of consumers’ behaviour in consumption decisions. Food consumption looks like a prime example: food purchased by consumers that ultimately goes to waste increases rapidly in developed countries and amounts to sizeable monetary losses. Yet, we argue that observed food waste patterns may be an efficient by-product of food consumption. To this end, we first develop a simple household model of food and non-food consumption, in which food waste occurs due to the interplay of three characteristics: (i) households experience satiation in food consumption and can discard any excess food at no cost. (ii) At the time of food purchase, they are uncertain about their near future food needs. (iii) They can invest effort into an information technology to reduce this uncertainty. In particular, our model predicts that expected food waste increases in the opportunity costs of effort. Second, we test our theoretical model empirically using 2016 food consumption data of approximately 57,800 U.S. households obtained from the Nielsen Homescan database. In particular, we analyze the relationship between shopping frequency and purchased food quantities. Employing an instrumental variable approach to circumvent possible issues of endogeneity, we find that an increase in the frequency of grocery shopping reduces the quantity of food purchased, which is in line with our theory of rational food waste and contradicts behavioral explanations of food waste like impulsive shopping. Our findings have important consequences for the design of anti food waste policies.