Keywords

1.1 From Farming to Eating, Research and Teaching

Each reader of this book brings its pages to life, using your own history and insights to interpret and apply what we have written. Before writing this book, Amelia and William were students then researchers and teachers in a variety of places. We worked in agricultural schools, liberal arts colleges and health-science campuses in the U.S., Europe and Africa, and conducted workshops and fieldwork in Latin America and Asia. In each place, we have found students interested in agriculture, food and health coming from many different backgrounds, and going on to a wide range of career paths in the public and private sectors.

The topic of agriculture, food and nutrition offers common ground, and economics offers a shared vocabulary and toolkit of analytical methods. Putting the two together makes food economics a broad field of active dialogue among diverse people seeking a shared understanding of the world. Many people care about and participate in decisions about the food people eat, and everyone can use economic principles to improve decision-making. This book captures the intersection of food and economics, to discover new facts, explain what we see, and help people improve outcomes from agriculture to health.

1.1.1 Using Food Economics, for Professional Life and as Consumers and Citizens

The food economy involves people in every kind of profession as well as commercial businesses, community organizations and advocacy groups, government agencies and other institutions. One of the most common goals for our students is to fix global problems and improve global health, especially with the looming threats of climate change and income inequality which would stifle humanity’s impressive progress in health improvement over the last hundred years. Our students want to make meaningful contributions to improving global health through the food system. People everywhere also want to make well-informed food choices for themselves and their families.

This volume is intended to be a core textbook for advanced undergraduate and master’s or doctoral courses that help students gain insights and skills from economics to improve agriculture, nutrition and health around the world. Economic aspects of food and health are important for all kinds of careers in health care and policy, food production and agriculture, nutrition assistance and other domains. Economics provides a powerful toolkit for understanding how different individuals’ decisions interact and lead to many unintended but sometimes predictable outcomes that can be improved with strategic intervention. The book shows how people can use economics to guide practical decisions, such as what to eat for dinner today, in ways that add up to large-scale choices facing humanity, such as how best to address persistent poverty and inequity, climate change and other threats.

1.1.2 The Origins of This Book

Much of economics originated in the study of agriculture and food policy, such as the British trade restrictions that favored landowning aristocrats and motivated Adam Smith to write The Wealth of Nations (1776), and the link between population growth and famine that led Thomas Malthus to his Essay on Population (1798). The word economics itself derives from the ancient Greek word for household management, extended in the eighteenth, nineteenth and twentieth centuries to study interactions between people and societal outcomes.

One precursor to this textbook is Food Policy Analysis, published in 1983 by Peter Timmer, Walter Falcon and Scott Pearson. That book was among the first to use just analytical diagrams, instead of more complicated mathematical models, to show how the principles of economics can help explain, predict and guide change in all kinds of agriculture and food systems worldwide. When Food Policy Analysis first appeared, the world was in a deep recession after the commodity boom and then the food price crises of the 1970s. Massive famines in both Africa and South Asia dominated the headlines, and many countries still faced the high food prices and trade restrictions that motivated Adam Smith, as well as the rapid population growth and persistent poverty that motivated Thomas Malthus’ analysis of humanity’s future crises.

In the four decades since Food Policy Analysis was published, the world has changed dramatically. Large-scale investments in agricultural research and the rollout of new farm technologies known as the Green Revolution lifted over a billion farmers out of poverty and sharply lowered real food prices, while dietary transition led to the global obesity epidemic and unchecked use of fossil fuels drove climate change. Many people face terrible threats to their food lives, but our toolkit for action is bigger and more powerful than ever and we can use food economics to guide decisions.

This textbook aims to cover decision-making about the food people eat, from crops and livestock through food manufacturing to nutrition and health, with examples from many different settings. We summarize what’s been learned in recent years by thousands of food economists asking age-old questions about how best to feed ourselves and the world. What’s new is to present that material in a unified, accessible and compact manner, with a balanced perspective on all aspects of the food system from commodity agriculture to urban gardens, and the latest evidence on dietary transition and rising obesity rates alongside continued food insecurity and undernutrition.

The economics of food helps explain deeply rooted facts and trends, such as the persistence of self-employed family farmers even as input supply and food distribution is done by ever-larger companies with many employees. Some of these insights are surprising even to insiders. For example, we observe that total farmland remains roughly constant even as prime farmland is converted to nonfarm uses, because urban sprawl happens around towns and cities while farmers elsewhere bring land into agricultural use. The work of food economists, like other scientists or practitioners, is to use logical inference from all the available data to see what others might miss, and contribute the new insights needed to address our evolving challenges. We’re excited to explore these ideas with you through this book.

1.1.3 Supplementary Materials

This book is intended to be a standalone resource, primarily for use as the primary textbook for courses on economic aspects of agriculture, food and nutrition. For that purpose, we invite readers to visit the book’s accompanying website at http://sites.tufts.edu/foodecon.

1.2 Why Study Food Through Economics, and Economics Through Food?

1.2.1 Learning Objectives of the Book

This book is a study of economics about food, including the sustainability of agricultural production, equity in the food system and health outcomes from food consumption. Through this book, students will learn how to apply the economics toolkit to major policy questions around the world. Our methods are presented graphically using analytical diagrams and data visualization, building skills that are widely used in professional life and a foundation for more advanced study.

The beginning of each section will tell you what you should expect to learn on that topic, to guide your reading and explain the purpose of the material we present. The book also has overarching learning objectives. After reading this book and practicing your use of the economics toolkit described here, you will be able to:

  1. 1.

    Describe causal mechanisms behind observed production, consumption, market and trade outcomes using analytical diagrams that illustrate economic principles;

  2. 2.

    Apply economic principles to assess the consequences for wellbeing of market failures, government policies, regulations and external shocks to the global food system;

  3. 3.

    Obtain, use and explain available data on food, agriculture, nutrition and health;

  4. 4.

    Imagine, describe and analyze the effects of individual actions and systemic changes in agriculture, food and nutrition, taking account of resource constraints, available technologies and how people respond to incentives.

1.2.2 Why Study Food Through Economics, and Economics Through Food?

Food is life. Food systems span the entire range of human experience, and economics give us sharp insights into how food production and consumption works within the larger universe of individual experience, societal interactions and our physical environment. Humanity evolved to live almost everywhere on earth, catching or growing and eating an astonishing variety of foods. Our choices for what to eat, and how to obtain the foods we want, are among our most frequent and important decisions, both individually and for each household, community and country.

The ancient Greek definition of ‘economics’ was household management, and the modern economics of food still begins there: we focus on individuals and families, to explain and predict decisions about who does what within the home. We then turn to interactions between households, as people buy and sell things that would be more difficult or impossible for each family to do on their own.

The first modern economics textbook is Alfred Marshall’s Principles of Economics, published in 1890. That book provides some of the earliest sketches of what became the analytical diagrams and other research methods presented in this and other modern economics writing. The first sentence of Marshall’s Principles remains a valuable definition of what we do, explaining that ‘Economics is a study of mankind in the ordinary business of life; it examines that part of individual and social action which is most closely connected with the attainment and with the use of the material requisites of wellbeing’.

That opening sentence defines economics in a remarkably powerful way that remains accurate today, and is worth repeating to comment on each part of the definition. What Marshall wrote is that:

  • Economics is a study (not the only one),

  • of mankind (today we would say humankind, but Marshall was already emphasizing universality),

  • in the ordinary business of life (focusing on everyday decisions, such as farming and eating);

  • it examines that part of individual and social action (again, not all aspects of every action, but their commonalities that link individual choices and actions by whole societies),

  • which is most closely connected with the attainment and with the use (in other words, how and why things are made, distributed and consumed),

  • of the material requisites of wellbeing (not wellbeing itself, but the material things that are needed for people to meet their broader life goals).

Using economics to understand choices reveals how individual decisions and social interactions are constrained by what is physically possible to do, and what the rules of society allow. Nature and technology determine the universe of physical possibilities, and people’s choices are further constrained by societal norms, institutional rules and government policies of all kinds. Many people have few options, or only bad options. Environmental conditions may fluctuate wildly, and often degrade over time as we all use up the natural resources around us. But investments in new technology can open new possibilities, and people can change the rules of social interaction to improve outcomes.

The economics toolkit described in this book shows how individual and social choices about food have evolved over time and are changed by the actions of each successive generation in every country. Our work draws on and contributes to almost every other domain of research and practice in the health, environmental and social sciences, or the humanities. For many readers, a primary motivation is human health. We all want our food to sustain a healthy and active life for everyone, to overcome societal disparities and inequity. Agriculture and food also play a crucial role in the climate crisis and in addressing many concerns about sustainability and the environment. Food economics can help address each of these challenges through a wide range of careers. People everywhere also have an intrinsic interest in food as such: the challenge and opportunities of eating well every day and the unique joys of meals on special occasions.

Economists study people, explaining behavior in terms of how nature and technology shape each choice people make. To understand how food affects human health, we can all use many results from nutritional biochemistry and physiology, showing how we metabolize bioactive compounds and other attributes of food to build our bodies and fuel our lives. We also draw heavily on nutritional epidemiology, revealing how diets affect health outcomes over the life course. To understand where food comes from, and how our food choices affect the world around us, we draw heavily on agronomy and agroecology for plant production, and veterinary or animal science for animal-sourced foods, as well as food science for the study of how packaging and processing affects the food people eat. We are also attentive to more specialized work about specific aspects of the food system, such as fisheries and aquaculture and many subfields of the environmental sciences.

The economics of food borrows from the natural sciences to understand how food is produced, and from the health sciences to understand how it affects health, but the topic itself is about people: this textbook draws heavily on findings from demography that measures how the size and composition of each population changes over time, as well as sociology and anthropology to study how groups of people relate to each other, political science to study how governments and other institutions make decisions, and especially history and the humanities to tell the story of each community’s relationship to food.

The many disciplines that inform food economics, like economics itself, have deep internal debates that drive change in the frontier of knowledge. New facts are discovered, and then we develop new theories to explain them and predict future observations. For this textbook, we aim to describe exactly how recent scientific knowledge, whether in nutrition or agronomy or other fields, can inform economic decision-making and analysis, in ways that can be updated as new discoveries are made.

1.2.2.1 Why Use Economics to Study Food?

Economics is particularly well suited to understanding agriculture and nutrition, with a long history of using national statistics and household surveys to understand and address rural poverty and food scarcity. The quantities and prices of food produced, traded, delivered and consumed are among the first and most important kinds of data available since the beginning of recorded history, and have been used to explain, predict and assess links to a wide range of outcomes that people care about. Having available data about important choices has allowed generations of economists to test hypotheses, build the toolkit described in this book and use those methods and results to guide individual choices, program interventions and government policies.

1.2.2.2 Why Use Food to Understand Economics?

People everywhere care about food as such, but food-related choices are also profoundly revealing about human behavior and societal concerns more generally. For example, how nutrition assistance programs use cash, vouchers or physical deliveries and advice about what to eat reveals more general truths about the use of social insurance and safety nets to address inequities, how policymaking works and how program participants respond to each kind of intervention. Food is a fascinating lens through which to learn about people and society, offering endless variation on the common themes described in this book. Each situation is unique and unprecedented in some ways, but we can use that variation to reveal underlying principles that drive the outcomes we see.

1.2.2.3 Economics as a Science

Economics is a science in the sense of using systematic methods to record observations, make predictions and test hypotheses about what is observed. The resulting methods and data, shared among a community of researchers and practitioners, form a discipline that offers a specific toolkit and way of knowing about the causes and consequences of our actions and reactions. For use in diverse cultures the words in this book might need to be translated, but the analytical diagrams and data visualizations would remain intact and would be understood by academic economics trained in any country of the world. The explanations and predictions made by economists, like the work of other scientists, come from building simplified models that capture some, but not all, of the forces behind the outcomes we observe. Each model represents specific aspects of our infinitely complex world, omitting everything that is not needed for each particular set of explanations and predictions.

Like other disciplines, economics offers many different models, each tailored to specific circumstances and designed to guide particular decisions. Some researchers may aspire to producing a universally applicable holistic model that describes everything, but such a model would be as complex and unwieldy as the world itself. No single model can be all-encompassing, so we need a variety of models, each designed to explain and predict specific outcomes in particular settings. The development of this economics toolkit, like any other kind of research, is driven by curiosity about the causes of things, but also the need for structural models of causal relationships to solve practical problems, guiding our actions in each situation to improve future outcomes for ourselves and society as a whole.

1.2.2.4 Economics as a Social Science

Like other social sciences, economics differs in important ways from physical or biological sciences. One key difference is that the subject of economics is our own lives and human society. Every student, researcher and practitioner brings their own rich set of experiences and prior beliefs to their work, informing how we do economics. As scientists, we follow the evidence. As human beings, we all have other concerns including family and friends, religious faith and social or political commitments. All those social factors influence each economist and the field as a whole as we seek to improve outcomes in our individual lives and professional careers. The economics toolkit presented in this book is itself the product of past choices, and how we use and adapt that toolkit depends on decisions we make today, as you read and use this book.

A particularly interesting aspect of social science is that things we study may be directly influenced by our research. For example, if a food economist publishes results describing ‘shrinkflation’, whereby companies reduce package size instead of raising prices, news coverage of that study could lead consumers to read the fine print about quantity and focus on cost per unit instead of just the item price. That change in awareness would remove the incentive for companies to practice shrinkflation, thereby eliminating the phenomenon described in the research. Media coverage of economics research, like other scientific findings, can influence what people do, and of course there are many other sources of variation and change over time. For that reason, economists need an increasingly complex and diverse toolkit of different models, each one matched to decision-making needs in a particular setting.

1.2.2.5 How Economics Differs from Other Social Sciences

Economists explain variation in observed outcomes as the result of peoples’ choices under various circumstances. This kind of research draws on many other fields of social science and the humanities, such as psychology and cognitive sciences to understand individual decision-making, sociology, anthropology and history to understand the cultural and societal context of our actions, as well as management and government to understand institutional structures, power and control in businesses, social organizations and political life. Economics also involves explicit constraints representing what nature and technology allow, which draws heavily on knowledge from the physical sciences and engineering, natural and environmental sciences, as well as biological and health sciences. People in other fields also use economic methods and data, so the boundaries between disciplines are fundamentally blurry, but the economics toolkit retains a distinctive identity relative to other social sciences.

A first signature feature of economics is to focus on individuals’ choices, interpreting their actions as having been the best (or the least bad) of the options available to them. By focusing on peoples’ choices, economics focuses our attention on situations where improvements are possible, and by interpreting observed actions as each person’s best (or least bad) option, economics focuses our attention on peoples’ circumstances and what their choices reveal about their goals and aspirations. In situations where people have only one option or our actions are predetermined, economics is not applicable—economists would just move on to questions for which people do have choices. And where what appear to be choices are random, controlled by outside forces or otherwise not revealing anything about the person’s needs and wants, economists again would just move on to questions where analysis and prediction could be used to improve outcomes. Our concern in this book is situations in which we observe people consistently choosing one thing instead of another, in ways that allow us to infer something from people’s actions about their preferences and desires.

The mathematical jargon for economists’ way of interpreting choices is that each individual person’s actions reveal some degree of optimization, meaning that they chose the option that was best (or least bad) for them, given the limitations imposed by their circumstances. In everyday life, the term ‘optimization’ is used to mean improvements on what would otherwise happen, but in economics the word is used as a way of explaining why people did what we observe them to have done. Economics is concerned with peoples’ choices, using the idea of optimization to distinguish peoples’ constraints and options from their goals and preferences. Economics is about choice under scarcity, for use in situations where people have a limited set of options, and our actions reveal what matters most to us. Under extreme scarcity, people choose the least bad of their options. In better times, people may get almost all of what they desire. Observing many choices under various conditions can reveal similarities and differences in the priorities revealed by each person. Interpreting observed behavior as having been optimal allows us to infer something about peoples’ preferences and gain insight into how far a population was able to get towards their goals and aspirations.

A second signature feature of economics is to focus on interactions between people, where the rules of interaction determine the degree to which a whole population can achieve its goals. The options available to each person depend in part on choices made by others, so individuals’ decision-making cannot be understood in isolation. By interpreting each person as having done the best they can, economics avoids blaming an individual and focuses on ways to improve outcomes by changing peoples’ circumstances. Economics uses a systems approach to the social determinants of health, explaining each outcome as a simultaneous interaction between multiple forces. Each set of goals and constraints is represented by a system of simultaneous equations represented as lines on a diagram, explaining observed outcomes as points of tangency or intersection that result from interaction among all of the various factors taken into account by any particular economic analysis.

The mathematical jargon for economists’ view of societal interactions is that observed outcomes are seen as an equilibrium between people, meaning a balance between multiple forces whose outcome may be better or worse. In everyday life, the term equilibrium is used to mean something stable and calm, and things in equilibrium are generally good. But within economics, the word ‘equilibrium’ does not mean stable or good—something being an economic equilibrium just means it is the predicted outcome of interaction between different people under the circumstances described in a specific scenario. Most importantly, in economics an equilibrium need not be itself an optimum. For example, in an apartment with three housemates who prepare their own meals, each might do the best they can, but the group might not get along, experiencing conflict and missed opportunities for joint meals. This situation might persist for weeks or months until someone suggests a change in house rules, such as a fixed roster for chores or a new way of cooking that makes cooperation easier and leads to a better equilibrium. Both the initial outcome and the later improvement are equilibria, and revealed preference tells us that the second is better than the first. In this case, what economics reveals is how the improvement can be sustained only if all housemates agree to live by those rules or to chip in and share the cost of new kitchen equipment.

Like any scientific activity, economic analysis begins with observation and description, leading to explanations and predictions about what might be observed under different circumstances. In this textbook, we draw each model graphically and then use charts of data to see patterns and trends. Each prediction is a potentially testable hypothesis. Decades of research have led to the rejection of many plausible hypotheses, leading to the retention and refinement of the models in this textbook. Over time, each model in our toolkit has been validated and calibrated to fit observed data in various settings. This chapter focuses on that aspect of economics as a positive social science, so called because researchers ‘posit’ theories to be tested and refined with additional data. Later chapters will focus on the normative implications of each model, in the sense of identifying desirable ‘norms’ to improve societal outcomes.

Economics about agriculture, food and health is always an interdisciplinary activity. Production and supply depend on the physical environment, natural resource management and available technologies, while consumption and demand depend on biological needs as well as cultural and other forces shaping food choice, and the interaction between them is shaped by many social, institutional and political as well as geographic and technological factors. The analytical diagrams derived in this and later chapters are stylized models designed for generality so that each student, researcher and practitioner of food economics can draw them around specific scenarios reflecting their own knowledge and interests. For example, the diagrams in this book could be used to focus on climate change, water use, antibiotic resistance or other aspects of farm production, as well as food manufacturing and marketing or other food businesses. Others might use these diagrams to focus on weight, diabetes, nutrition and health. In each case, the causes and effects shown in each diagram depend on individual choices and business activity, but also policy choices and government interventions.

In summary, economics explains observed outcomes as resulting from individuals’ choices that were optimal for them, under circumstances where the societal equilibrium could potentially be improved through changes in policy or technological innovations. This approach to social science can be applied to many questions, at any scale of analysis. For example, when commodity prices start rising as they did during the world food price crises of the 1970s, and then again in the mid-2000s and the 2020s, exporting countries often respond by restricting outbound shipments. Their reactions make the price spike even worse, responding to a period of scarcity by holding back sales. Similar problems affect buyers who respond by stocking up in fear of further price rises. Agreements among buyers and sellers can help stabilize the market but may be difficult to introduce and enforce. Economics starts with individual households but quickly scales up to the world as a whole, helping guide decisions in many different settings.

1.2.2.6 What Economics Is Not

The economics toolkit described in this book may surprise you, because economics itself is often described in misleading or confusing ways.

One confusion is between economics and ‘the economy’. When economists describe and measure ‘the economy’, we mean the circular flow of all goods and services exchanged among households or individuals, companies and the government. That flow of goods and services adds up to national income, as described in Chapter 9. But as you will see in this book, only some of what we study counts as income. Alfred Marshall’s original definition explained that economics is concerned with the material requisites of wellbeing in general, so this book is also concerned with nonmarket factors such as pollution and climate change, and the many decisions about food and health that do not involve market transactions such as meal preparation within the home.

Another confusion is between economics and business or finance. Many people who want to work in private enterprises study economics, and some businesses have employees with ‘economist’ in their job title, but most of the economics discussed in this book is conducted in academic institutions or the public sector. This kind of economics research takes business practices as given, and our primary research question is what governments should do. Our findings are published in the public domain and investigate how changes in public policy might alter outcomes. The use of economics as training for a business career is particularly widespread in U.S. liberal arts colleges that do not have undergraduate business schools, but when people actually study how to manage a business their courses often focus on other topics such as accounting and finance, marketing and advertising, personnel management and entrepreneurship. Those aspects of business administration all have some links to academic economics, but business schools focus primarily on other aspects of enterprise management.

A third area of confusion concerns the role of specific schools of thought within economics. As defined in this book, economics as a whole is a scientific discipline that explains observed outcomes as resulting from individuals’ choices that were their best options at the time, under circumstances where the societal outcome of interactions between people could be improved with better government policies. Some economists focus on ways in which governments intervene too much, ultimately leading to a libertarian or small-government approach to politics. Other economists focus on ways that interventions could be extended, leading to a more activist or progressive approach to politics. Individual economists often engage in advocacy for or against specific policies, and schools of economic thought often form around a political ideology: for example, from the 1960s through the 1980s a ‘Chicago School’ of economists successfully sought to reduce the size of government, while competing groups of ‘saltwater’ economists at coastal universities favored a larger role for the public sector. The size and influence of each group varies over time as the discipline evolves, but the slow and uneven pace of change can be frustrating especially regarding gender dynamics and racial disparities, underscoring the need for each generation of new economists to bring their goals and ambitions to the profession.

1.2.2.7 Questions About Food and Nutrition that Economics Can Answer

Below are some broad questions that can be answered using economics, using the example of vegetable consumption as an important determinant of individual and population-level health. To feasibly work on questions like these for a research project, the questions would need to be focused on particular contexts (e.g., places, people, time periods) and be specific (e.g., which vegetables, which rules, which policies).

  • Why do so many people eat less vegetables than nutritionists advise?

  • Which households, and which people within those households, consume more than others?

  • What technologies or policies might make it easier and more appealing to eat vegetables?

  • How do food safety, food waste or time use and meal preparation relate to vegetable use?

Nutritionists and health scientists generally avoid characterizing individual foods as healthy or unhealthy, since the impact of a given food on health depends on what else is being consumed. Instead we focus on a healthy diet, meaning an overall dietary pattern balanced among food groups with a mix of attributes that meet the needs of a given individual or population. The degree to which any given set of foods provides a balanced diet is measured using metrics described in the text including the Healthy Eating Index (HEI) and the Cost and Affordability of Healthy Diets (CoAHD) indicators. Individual foods that tend to be insufficiently consumed can be described as healthful, because they bring attributes for which additional quantities are needed for health.

Amelia is a practicing dietitian, and knows from working with patients that predominant narratives about food can perpetuate harm through eating disorders, undesired weight loss or weight gain, dietary restriction and nutrient deficiencies. One of Amelia’s favorite principles from nutrition and dietetics is that there are no ‘good’ or ‘bad’ foods, and that finding the right foods for each person at each time and place can be a lifelong challenge. Food economics as presented in this book can be a helpful approach to meeting health needs in more sustainable and equitable ways at home and worldwide.

1.2.2.8 Economic Thinking as a Useful Skill for Any Profession

Studying food economics will help you build all kinds of skills for professional life, regardless of your career path. We use familiar examples to learn about the impacts of our own actions and societal choices and learn how to improve outcomes in practical ways. The theories and data analysis methods presented in this book can be helpful for any situation where people need to make decisions. Our goal is to build models that are useful in the real world to explain, predict and evaluate human choices.

This book focuses on data about agricultural production, food distribution and dietary intake. We describe how the world’s farming, marketing and eating activities are measured, and provide data analysis methods and data visualizations to help make sense of the results. Modern computing and communications have given us unprecedented access to information, almost all of which is filtered and distorted by other people for their own purposes. Learning how to find and interpret the data you need is especially important in a world of algorithms and artificial intelligence. As new tools become available, each of us needs even more advanced analytical skills to use them for our own purposes. Building up your own logic and intuition about data analysis is also important for self-protection, to avoid being misled by other people who might not share your goals. All these important skills can be used directly in a wide range of jobs and underlie research that would test the validity of economic models, estimate relationships and quantify impacts and cost-effectiveness of actual choices.

1.2.3 Intended Audiences for This Book

The economics toolkit used in this book is presented graphically in two dimensions, using analytical diagrams and data visualizations. The book spells out the principles of economics using terminology, diagrams and visualizations that have evolved over decades of practice, summarizing the findings of economic research and practice using only natural language and basic geometry. The book is written primarily for students with no previous knowledge of economics, as a first introduction to economic principles. The book can also be used by readers familiar with economics from other fields, using those principles to explain and predict changes in agriculture and natural resource use as well as food-related businesses, nutrition and health outcomes.

The book is intended for advanced undergraduates, graduate students and professionals working in agriculture, food and health. We provide many concrete examples from diverse settings, but our focus is on the general principles discovered by decades of economic research as summarized in graphical models of human behavior and societal outcomes. More advanced economic models use multivariate calculus to explore many dimensions at once, and specialist graduate courses use even more general analysis of all possible real numbers. The simplifications used for this book flatten the world to just lines and curves on a page, leaving you to imagine how these economic principles play out in your own experience and for other people in different circumstances.

Researchers and practitioners using economics draw on the theories and data in this book, simplifying the infinitely complex world to explain, predict and evaluate change. The analytical diagrams used in economics are in some ways like how physical processes are drawn in chemistry or physics, where letters and arrows illustrate theories about underlying structures that explain and predict what we see. Likewise, the charts and tables through which we visualize observed data are also like how data are communicated in other fields. Just as travelers use a variety of standard kinds of maps for different kinds of navigation, economists and other scientists use different kinds of two-dimensional pictures to describe the infinitely complex world.

1.2.3.1 The Models Used in This Book

Economic models all use similar principles but take different forms when representing any particular research or policy question, for any particular population and their circumstances. Economists have developed a variety of models suited to different places and people. In each model, peoples’ objectives and constraints have a mathematical structure with specific parameters that are predetermined in each scenario, as a set of options from which the observed or predicted outcomes are just one of several potential outcomes.

At the introductory ‘principles’ level of economic analysis, all models are shown in just two dimensions as a choice between two kinds of things. The same logic extends in all other dimensions, with increasingly abstract mathematics needed to show more than just two variables at once. The relatively simple two-dimensional analytical diagrams used in this book have evolved greatly since Alfred Marshall’s textbook in 1890, through generations of researchers studying agriculture and food choice as well as other topics. The resulting models provide stylized but rich descriptions of human behavior, in a form whose predictions and implications are remarkably useful.

The first part of our journey consists of thought experiments, systematically building up our explanations and predictions in a series of analytical diagrams that illustrate causal mechanisms behind observed outcomes. Each diagram is a qualitative model, representing a thought experiment that yields predictions about the nature and direction of change in response to what-if scenarios that you can imagine and apply to your own life. To study the economics of food, we show a subset of the diagrams shown in more general textbooks and adapt them to focus on agriculture and health. A key feature of our diagrams is consistent notation throughout the book, with the main thing of interest shown along the horizontal (X) axis and other things on the vertical (Y) axis.

The second part of our journey explores the real world, summarizing data from thousands of surveys and other observations in two-dimensional data visualizations that summarize patterns and trends in agriculture, food and nutrition around the world. These visualizations present quantitative results of empirical studies, summarizing what was observed in a way that might be useful for predictions and assessment. By definition, these charts show only actual observations and not the other possibilities that might have been. To imagine alternatives, we need to think about why those observed outcomes were chosen, using insights from the analytical diagrams.

In economics, the outcomes we see are explained as the result of several variables whose simultaneous interaction forms a system of equations representing a relationship between multiple objectives and multiple constraints. These relationships could be written mathematically, but for this textbook we will show each equation as a line or curve on an analytical diagram. Economics uses diagrams in much the same way as biology or chemistry, with lines and symbols showing interactions that could potentially be measured to estimate magnitudes of response and test the statistical significance of each model’s predictions.

To understand observed choices, economists analyze people’s decisions on the margin. What this means is that economic models aim to understand decisions about consuming the next unit of a given good, by analyzing whether the benefit of consuming the next unit of the good outweighs the cost of doing so. Marginal thinking is different from either-or thinking, because analyzing decisions on the margin is inherently asking how much of the good you are going to consume, not just whether you will consume it at all. Economists analyze decisions on the margin for all types of decisions, and in this section, we will focus on consumption decisions. This is another example where terminology in economics differs from ordinary language. In everyday usage, ‘marginal’ means unimportant, for example when people are ‘marginalized’ and excluded from the center of social and economic or political life. In economics, the ‘marginal’ unit is the most important one, because it sets the total quantity consumed and the price at which other items are bought and sold. These and other concepts are clearly illustrated by the analytical diagrams.

All parts of the book fit together, as the economic theory in our analytical diagrams guides what is measured and how to interpret each observation. Economists see observed outcomes as the result of individual choices, with each person having learned from their own and others’ experiences, leading to outcomes that depend on our natural environment, available technologies and government policies. That kind of explanation leads to systematic predictions that are tested empirically using econometrics, the toolkit of advanced statistical methods developed for causal inference, experimental tests and estimation of the relationships shown in our analytical diagrams and data visualizations.

1.2.3.2 Two-Dimensional Diagrams Show a System of Simultaneous Equations

On each diagram we draw multiple lines and curves, each a different equation between the two variables. The resulting system of simultaneous equations illustrates how people might interact with each other and the world around them, leading to a specific outcome shown as a point on the diagram. Changes in circumstances are shown as shifts in the position of each line or curve, causing people to move along a given line or curve to a different outcome. This kind of systems thinking permits economists to trace each observation back to its possible causes, generate predictions and hypotheses to test using new observations, and imagine alternatives that might improve the outcomes we see.

1.2.3.3 How to Learn These Models

This book explains each diagram in words, and we could try to teach and learn all the economics using only words. But sketching the diagrams is hugely valuable because the lines and curves lead to specific points on the axes. Tracing each line or curve according to its definition leads to a specific conclusion, using the logic of geometry to augment human intuition. Each point represents an observable fact in the world, such as the quantity of ice cream that a person eats in a day. Each line or curve represents a relationship between two numbers that is based partly on observable facts, such as the market price of ice cream that day, and partly on the scenario or situation that the model is designed to represent, such as the temperature and how ice cream is made, packaged and sold. Each diagram is built to explain a set of observed facts, predict how those facts would change under different conditions and assess whether those changes would be good or bad for the people we care about.

1.2.3.4 On the Philosophies of Modeling

The everyday work of economists consists of making and testing predictions using models like the analytical diagrams shown in this textbook. Economists build and calibrate models to fit specific observations, and then validate those models against other evidence. Our own personal experience plays a large role in how we use each model. Your own past experiences give you intuition and skills, and working with the models builds further intuition and skills. ‘Thinking like an economist’ means seeing how economic models might be relevant to any given situation. The shape and position of each curve captures underlying biophysical, natural and social conditions, and the interaction between curves leads to outcomes that we could observe.

The models developed in economics, as in many other fields, result from use of Occam’s Razor to explain what we see using the least complicated plausible mechanism. In the famous phrase attributed to Albert Einstein, ‘models should be as simple as possible, but no simpler’. When we reduce each model to just two-dimensional diagrams or data visualizations, all other dimensions are left out, and we can focus on a specific set of interactions that are themselves infinitely rich and complex. Much is omitted, but the remaining content provides powerful explanations and predictions about the world around us.

Another central aphorism to guide our work is due to statistician George Box, who famously said ‘all models are wrong, but some are useful’. Models are helpful when used under specific conditions, for particular scenarios. Outside those circumstances, the model would be misleading or simply irrelevant. To be clear about the situations described by a particular model, economists aim to be as explicit as possible about the logical premises or mathematical assumptions used to derive each prediction. Like other scientific theories, economic models may be precisely accurate only under very narrow circumstances, and yet also approximately true and broadly useful over a wider set of conditions, up to the point where a different model might be more useful. An important aspect of training in any discipline is to learn when each tool is most useful, and when to adopt a different tool. This textbook presents the models we have found most useful for economics about food, in ways we will explain. Each model provides only a part of the story, but taken together they provide a powerful toolkit to understand, predict and improve food systems for health.

1.2.3.5 Ways of Knowing in This Book

This book tells a story, using three ways of describing what we see:

First, we use analytical diagrams introduced in Chapters 2 through 6 to summarize economic theory, showing how economists explain and predict outcomes in terms of points, lines and areas on a graph. Each point on an analytical diagram is a potential outcome, joined together in a causal framework illustrated with geometry. The goal of the analytical diagrams is to explain why people choose the observed points rather than other options, and how changes would lead to different outcomes. More complex versions of these diagrams use more advanced math such as calculus and statistics, but retain the same economics principles and draw similar conclusions.

Second, we use data visualizations in Chapters 7 through 12 to represent observed outcomes, showing patterns and trends over many observations. These are usually either scatterplots made up of individual points, line graphs that trace change over time or bar charts that compare magnitudes. A few data visualizations involve specialized ways of arranging each observation, such as a Lorenz curve that shows the degree of inequality in a population so as to calculate the resulting Gini coefficient. In each chapter, analytical diagrams and data visualizations will complement your learning about a particular concept.

Third, we use written explanations throughout the book to connect the dots, asking what-if questions and describing a variety of examples. We will specify when particular words are used by economists in unusual ways, such as the terms ‘optimization’ and ‘equilibrium’. To follow the story, you can read the text in sequence from chapter to chapter, but you can also use the book more interactively, drawing the mechanisms behind current events in your own versions of our analytical diagrams, and making your own data visualizations from downloadable data of interest to you. As you proceed in economics, you will pick up a new way of thinking, and a new vocabulary. Familiar terms will gain new meanings, and you can be increasingly intentional about learning to think like an economist, conduct research and write like an economist, and potentially even become an economist if that turns out to be an attractive career path for you.

One topic omitted from this book is causal inference, meaning the use of observed data to infer causality about why things happened as they did, in contrast to other potential outcomes that might have occurred instead. The branch of statistics used to test economic theories is known as econometrics. We expect that some readers of this book might go on to do research of their own, using statistics and econometrics to advance the scientific literature in food economics, but the main audience for this book is students who need insights, knowledge and skills other than advanced statistics. Instead of statistical hypothesis tests, we will use charts and tables to show as much data as possible, and briefly describe what we see in the text below each set of data. Interpreting what we see using insight from economics helps us explain why people experienced what they did, and what changes might help lead to better outcomes in the future.

1.3 Understanding Charts of Economic Data

Visualizing data is an increasingly important skill, requiring practice beyond the traditional tools of writing and computation. A picture can reveal and communicate relationships that would be much harder to explain in words or statistics.

Understanding data visualization starts with what’s on the axes. Each chart or figure flattens our multidimensional world onto a page or screen. For most charts of data, your first step is to know what variables are arrayed along the horizontal and vertical axes. These should be clearly labeled in the chart’s title and labels for each axis, communicating what was observed and how those observations were transformed into a number and a position along an ordered list or number line. Explanations of what is meant by each symbol, line or area on the chart should be provided in the chart’s legend and notes below the figure, describing each variable in terms of what was observed and their units of measure.

After you know what variables are being shown, you can compare the data, looking for patterns or changes over time that make the chart worth reading as a compact way of communicating what was observed. Colors and shapes used to differentiate regions of the world, demographic groups or time periods will provide visual clues. A skillfully made chart will attract your attention with a main message that is immediately visible and reward you with more subtle variation that may take some time to see.

One aspect of data visualization that is especially important for economics is the use of a logarithmic scale for some variables, instead of a linear scale. Linear scales are like the numbers on a ruler or yardstick, in which each unit of physical distance corresponds to the same change in the level of a particular variable. For example, equally spaced tick marks might be labeled 0, 1, 2, 3 and so forth. Our analytical diagrams almost always use linear scales, but data visualizations sometimes use logarithmic scales instead, using each unit of physical distance to show an exponential change in the level of that variable. On a logarithmic scale, equally spaced tick marks might be labeled 1, 10, 100, 1000 and so forth, raised to the tenth power showing orders of magnitude with each step.

Data visualizations in economics often use logarithmic scales because the underlying relationship is exponential. This is no accident: exponential relationships arise whenever each thing makes more of itself, for example when people use buildings and tools to make more buildings and tools, allowing production and income to grow over time. Historically, growth rates of 2–4% per year can sometimes be sustained for many decades, so that production and income doubles every 18 to 36 years. Any given exponential process must have started somewhere and cannot continue forever, so a key task for economists is to detect points of inflection when each particular rate of change accelerates or slows down. When comparing data across countries, their levels of income per person is often put along the horizontal axis using a log scale because the outcome of interest, along the vertical axis, has some kind of exponential relationship to income. Converting these scales to logarithmic terms makes it possible to see the data much more clearly.

A central idea for all sciences is the difference between correlation and causation, and the difference between purely descriptive or ‘positive’ analyses of what we observe versus prescriptive or ‘normative’ analyses of what we think should occur. In this textbook, we will use data visualization to show correlations in our descriptive work, and use analytical diagrams to show the conditions under which we can infer changes in wellbeing for normative assessments of what should be. When describing things, all human beings make judgments: we look at data and want to say why things are and how they should be different. As you read this book, we hope you will be surprised and interested by what you see, and find that knowledge useful to guide action.