Lecture 5 (nudging part 2)

Question 1

We know that in-store promotions lead to an increase in the quantity of purchased items, but does it lead to food waste?

Answer 1

A recent meta-study by Tsalis et al. 2021 showed that
while the effect of multi-buy offers is discussed in the
literature, there is no conclusive evidence whether
promotions affect food waste.

Question 2

Can interventions in
supermarkets reduce
household food waste? by Gravert et al.

a) Summarize the research question and the experimental design of the main study in this paper

b) Summarize the data and results

c) What is the mechanisms, nudge?

d) What is the conclusion on the study?

Answer 2

Research question:

In this project, we show that in-store promotions lead, not
only to an increase in the quantity of food purchased, but
subsequently also to an increase in food waste.

Experimental design:

We conduct a natural field experiment with over 40,000 products
purchased and exogenous variation in promotions.

They want to design an experiment which triggers the slow rational system 2 instead of the fast intuitive system 1.

Therefore they design 3 different prices for system 2 and 1 control price:

1. Quantity discount
   + message (nudge)
2. Quantity discount
   + more visible unit price.
3. Unit price
   discount (1 for discount price / 2)
4. Quantity discount
   (control)

Design overview:
- 8 stores chose to participate 2 stores with 2 products
- We randomly assign 2
treatments to each store for
2 weeks
- We evaluate the difference
in sales. Outcome 1 = Sales
- Customers can opt-in to fill
out a survey online, due to the qr code on the packaging. Outcome 2 = Reported Food Waste by the household.

Design – The supermarkets
 We collaborated with 8 supermarkets
across Sweden
 We contacted ca. 80 supermarkets (10%
success rate)
 The highest population density is in the
south -> good representativeness
 4 supermarkets were bigger markets
outside of the city
 4 smaller and inside cities
 We stratified by supermarket size

Design – Product Selection
 The major share of household food waste comes from bread, dairy and fresh fruit and vegetables

We had the following constraints:
 1) Products that expire fairly quickly (within a week of purchase),
 2) high sales volumes
 3) regularly sold at regular price, discount and multi-buy
 4) stable price over two weeks.
 5) no close substitutes
 6) sold in single packaging (not by kg) and wrapped, so it would be possible to attach sticker to a survey to them.

We chose: Cucumbers (all stores), Broccoli (2 stores).

Design – The Survey
 To collect data on food waste we set up an incentivized online survey
(SurveyXact)
 Reward was a 100kr (10 USD) coupon
for the store
 It was not announced that the survey
was on food waste to avoid self
selection
 We asked
- “How many cucumbers did you buy?”
- “Did you eat the cucumbers?”
- A few demographic questions
- “Do you often buy too much?”
 We know who was in which treatment

Question b)

Results – The data

Store Data
 43246 products bought during the
experiment
 We pool cucumbers and broccoli
for power
 Daily sales
 Weekly sales for up to 4 weeks
prior and after the experiment
 Daily sales of ecological
substitutes
 309 products on average (SD =
255)

Survey Data
 We used 21,000 stickers
 On average 150 per day, product
and supermarket
 178 answer from the survey (1%
response rate)
 Final sample 176

Results: Total Sales
- All interventions worked as intended. All three variations (1, 2, 3) encouraged shoppers to think
before purchasing and to buy less. All interventions reduced sales on average (10–18 percent less
compared to the basic quantity discount, 4).
- The unit price discount (3) had the biggest effect on sales. In comparison to the quantity discount
(4), it reduced sales by 18 percent on average. This intervention also significantly reduced
reported food waste. Consumers who bought more than one product when exposed to the unit price discount were 10 percent more likely to eat their purchases, compared to those who bought
more than one product, when exposed to the quantity discount.
- Those consumers who were randomly exposed to either the more visible unit price (2) or the
message to only buy as much as they will eat (3) bought fewer products than consumers exposed
to the normal quantity discount (4). Both interventions work to increase consumer reflection at
time of purchase, and result in consumers making more deliberate purchases, in order not to buy
too much.

Results - consuming and beliefs
Consumers who stated in the survey that they often buy too much food also reported having food
waste. They were also less confident that they would eat the food they bought during the
experimental period. These results indicate that most consumers are aware of their behaviour, but
that this awareness is not enough to change behaviour.

Question c)

Mechanisms – Default effect

 Taking two products when on offer (Promotion) is perceived as the
default, while taking one is the default in the Single condition
 McKenzi et al. (2006) propose three explanations for why the default
works:
1. It takes effort to switch away from the default
2. The default conveys a recommendation of what one should choose/ rational
inattention leads to people following the default
3. Switching away from the default feels like a loss

 Debiasing through Salience or the Nudge reduces the effect of loss
aversion.

Question d)

Conclusion:
 Consumers randomly exposed to a simple discount, a nudge or a more
salient comparison price buy significantly fewer products than those
exposed to a quantity discount.
 We find suggestive evidence that the quantity discount increases
household food waste.
 Our field experiment has high external validity and no self-selection into
the experiment. It provides a valuable complement to the mostly survey-
based literature on this topic.
 Our experiment has importance for policy makers: Banning quantity
discounts for highly-perishable products could be an effective policy to reduce unnecessary household food waste.
 Such a policy would be costless and straightforward to mandate, if there
is political will.

Question 3

Do discounts on general increase food waste?

Answer 3

No in some cases does it decrease food waste by offering lower prices for products, which is still good, but maybe is close to running out date or eg. single bananas.