Why America is Hungry According to John Oliver
http://www.rollingstone.com/tv/news/watch-john-olivers-sobering-look-at-american-food-waste-20150720
America seems to have a food crisis with 49 million Americans living in food-insecure households as of 2013. The crisis however isn’t a shortage of food production but an unprecedented amount of food waste. 40% of food produced in America never makes it to the dinner table, that’s over 165 billion dollars of food production value wasted. But why is all this food rotting away in the trash with so many hungry people struggling to find their next meal? That answer can be found using a game theory analysis of the food production industry.
The companies producing and selling food are in it for the money thus their behavior can be predicted by modeling their options as a game with their payoffs corresponding to their profits. One example is a peach farm. Peaches are rated on a scale; number 1 peaches are the typical round peaches we are used to while number 2 peaches look slightly deformed but they are just as edible as number 1 peaches. Due to how a food’s aesthetic appeal factors into its value, a number 2 peach is worth about a third of a number 1 peach. Now the peach farm has to decide what to do with all of its perfectly edible number 2 peaches and when they consider the payoffs of either selling the number 2 peaches or leaving them to rot. It is often not worth it for the farm to sell the number 2 peaches so all of that food goes to waste.
Leaving peaches on the ground while 49 million Americans struggle for food is bad enough, but the biggest problem with food waste is all the food that is produced, processed, shipped to stores, and then thrown away because it is passed its expiration date. There are actually two problems here. The first problem is the expiration date. There is a lot of confusion surrounding expiration dates and in general most products do not even require an expiration date. As a result many of the ones we see are arbitrary. If we look at the expiration dates as a game from the production company’s perspective, it is better to create arbitrary expiration dates with a small time frame before the food is “expired”. As a result more people will throw out food and have to go back to the store to buy food more often. The second problem is what happens to all of that food that is thrown out. The sellers have two options, to either donate the food or to throw it away. Donating the food requires money input to manage the delivery of the food to the people that need it and from the company’s purely money based perspective, donating leads to a negative payoff. As a result they go for the food wasting option because they get a payoff of 0 from throwing the food out.
The solution would be to subsidize the food donating process so that companies would get a larger payoff for donating the food. These incentives do exist but they are not permanent government laws; they must be renewed annually so in many cases companies tend to not risk donating the food in case the bill does not pass that year. This solution is evident when using game theory to analyze food company behavior.