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Using Economics to Model, Predict, and Change Behavior

William MastersIn 2010 William Masters, PhD, joined the Gerald J. and Dorothy R. Friedman School of Nutrition Science and Policy, where he is professor and chair of the Department of Food and Nutrition Policy. Masters received a BA in economics and political science from Yale University and a PhD in applied economics from Stanford University in the Food Research Institute. He came to Tufts from Purdue University where he was a professor and associate head of the Department of Agricultural Economics. His research interests include malnutrition and poverty, agricultural development, and the use of new incentives and institutional arrangements to promote the development of markets that better meet people’s needs.

Offering collaboration in

  • economic techniques for the study of agriculture, food, and nutrition
  • use of quality signals and assurance, e.g., third-party certification labels
  • use of incentives in contests, e.g., prizes and lotteries

Seeking collaboration in

  • research projects that could benefit from an economic perspective

Masters analyzes the behavior of people who produce and consume food, using various economic techniques to explain and predict choices. One goal is to use this information to improve outcomes by altering the incentives and institutions through which people interact. Masters is primarily interested in behavior toward agriculture, food, and nutrition because of their importance for global poverty and health and for environmental sustainability. “My work lends itself to multidisciplinary collaborations because behavior towards food depends so much on the underlying biological or environmental structure that people are interacting with,” he says.

For example, in an effort to change the behavior of food manufacturers and consumers toward infant nutrition, Masters conducted pilot studies in Mali and Ghana using quality certification to reveal the hidden nutrient content of various foods. “Typically, children who are exclusively breastfed don’t fall too far below their growth curves for the first six months or so,” says Masters, “but as soon as children outgrow the nutrients available from breast milk, many infants in low-income settings fall off a cliff in terms of their growth curves.” One reason is that infants need more nutrient-dense and digestible foods than their older siblings and adult family members.

Many parents in low-income African settings have limited choices for infant food—they can make it themselves or they can purchase premixed infant cereals from the local marketplace. “Traditional infant foods made at home from raw ingredients are extremely labor-intensive and spoil quickly,” says Masters. “Food markets frequently offer only brand-name infant cereals because individual buyers seldom purchase the generic brands, possibly because they rarely have reliable information about the actual content of these brands.” Masters found that although nutritious generic infant cereals could be sold at a fraction of the cost of brand-name cereals, markets wouldn’t carry generics if consumers didn’t buy them. He speculated that providing quality certification for infant foods might change consumer buying habits and lead to expansion of choices at local markets. His market experiment in Mali offered buyers (primarily illiterate mothers) a series of choices between brand-name infant cereals, noncertified generic cereals, certified generic cereals, and the raw materials for home processing of these foods. The study determined the value these buyers placed on quality information and estimated the net welfare gains of certification to be about one month’s worth of adequate nutrition per child. Because of the success of the market experiment in Mali, Masters is now working with colleagues at the University of Ghana and elsewhere to launch the development of infant food certification programs.

Masters also studies a related set of questions that concerns the design of incentives to promote healthy choices or other social goals. “An employer might like employees to go to the gym, or to eat healthily,” says Masters. “How do you construct a set of incentives that will meet people where they are and raise them one—give people an incentive to do more than they’re doing in the direction that is desirable?” Some organizations use prizes and contests as incentives to promote behavior change. Masters’ research in this field focuses on proportional incentives—where the payoff is proportional to effort or performance—in contrast to lump-sum or winner-take-all competitions. While big prizes for the best or first achievement of some goal attract the most attention, Masters finds that proportional rewards have useful advantages, such as increasing the number of entrants in the competition as well as increasing effort by individual entrants. “In the real world, lots of companies make money, not just the ones that make the headlines,” he says. “We can use that insight to design better contests.” Creating competitions with proportional prizes could be especially helpful where people are very diverse and therefore spread out over a wide range of abilities. “With proportional rewards, no matter where you start from, you get some benefit for moving up just a bit,” he says.

Contests can offer proportional rewards whenever success can be measured incrementally and improvement at every level would be desirable. Masters has argued for new proportional prize contests to promote agricultural innovation to alleviate malnutrition and advance food security in developing countries. “Overall success requires many small improvements that solve local problems and spread from there,” he says. Proportional prizes would create incentives for local people to work to solve local problems. Agricultural innovation is also an area that would benefit from Masters’ collaborative approach because it requires interdisciplinary work on a series of small problems that lead to the overarching problem of food insecurity.

Economic techniques that explore what people really want and what they are willing to pay for can inform many research projects. “If somebody in engineering is developing a water pump, or somebody in the vet school is doing an animal vaccine, we can use economics to find out what that’s worth to people,” says Masters. “You can’t just ask people, because they’ll often tell you what they think you want them to say. We know that what people say is dependent on what their incentives are, so we have to look behind that veil—that’s what this whole family of techniques for eliciting ability and willingness to pay is about.” Masters enjoys collaboration and is especially interested in working on projects at the intersection of the social and natural sciences.

For more information, please see http://nutrition.tufts.edu/faculty/Masters-William.




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