Will the Pandemic Change Consumer Behavior?

Barry Ritholtz rocks!


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Amazon has prioritized essential services as it is overwhelmed by consumer demand. All non-essential items are being delayed (although the subscribe & save seems to be still doing timely deliveries) The unprecedented demand is helping some retailers while potentially leading to the end of others.

We don’t know how much of this is temporary, but I would surmise that some of the changes in consumer behavior will become permanent.

Cripes! Now that I see this distribution of purchases, no wonder I couldn’t find my favorite King Arthur flour anywhere in recent weeks. People are starting to bake their own bread big-time.

How much of the world’s porn traffic is directed to the GOUSA?

So, all the protestations of piety from our politicians, blathering self-congratulation [or is it self-gratification?] from priests and pundits, seems to come to naught. Just maybe it’s because most Americans don’t consider porn a big deal in their lives.

They’re wrong, of course. Especially since it seems to be about 99% constructed to service male supremacy. Though, I also think that’s another expression of the lameness of individual feelings of power and voice in this society. Frankly, not the highest priority for economic analysis on my horizon.

Anyway – here’s the link to Pornhub’s Annual Report to the congregation. Some of it is worth a chuckle.

Thanks, Barry Ritholtz

Secrets of a New York City Banana

❝ On a hot day in June, the Hermann Hesse slipped into New York Harbor and headed for the Red Hook Container Terminal in Brooklyn. The 550-foot container ship, flying the Liberian flag, had come some 3,000 miles from Ecuador. It had gone through the Panama Canal, picked up cargo in the Caribbean and weathered a few squalls.

Its arrival in Brooklyn was only the beginning for the bananas on board.

❝ Every week, a ship like this one brings 40 container loads of bananas — or about four million — to the Red Hook terminal, a fifth of the 20 million bananas distributed around New York City each week.

❝ When bananas arrive in New York, they begin a second journey, traveling in a large loop around the city. They may be handled by customs officials in Brooklyn, blasted with a ripening gas in New Jersey, haggled over at an enormous produce market in the Bronx and finally taken in an unmarked truck, at night, to a fruit stand near you…

❝ In most of the country, the unseen, nocturnal business of ripening and distributing bananas is performed by grocery chains like Safeway. In New York, though things may be headed in that direction, much of the work still falls to local banana purveyors. They can trace their roots back to Antonio Cuneo, an Italian immigrant who cornered the market in the late 19th century and became known as the Banana King.

Fascinating article for all the reasons good journalism can be, should be. Not that there isn’t a place for imaginary tales. Even outside political lies, self-agrandizement. But, a straightforward piece of reporting like this – one that wanders off here and there to explain the nooks and crannies that adhere to all the economic and cultural processes of a topic essential to daily life – is a boon. A credit to the historical roots of journalism.

A worthwhile read.

Thanks, Justin

Um, eating potatoes won’t actually kill you

❝ There are plenty of reasons not to eat potatoes, and only one reason to eat them: they’re freaking delicious. That’s the only reason you need. No one is eating fries because they think they’re healthy. But the next time you eat some delicious, oil-crisped taters and someone blurts out “hey, you know fries double your risk of mortality, right?” because they read a clicky headline, you can rest easy knowing that they are wrong. And superiority is the ultimate reward, right?

❝ You could pretty much sum up the whole problem with the recent study on taters in one sentence: correlation doesn’t imply causation. Let’s all say it together. Correlation doesn’t imply causation…At the end of the day, people who eat fries three-plus times a week are almost certainly going to have other habits that make them more likely to die.

❝ For starters, it’s likely that people who choose to eat that many taters are exercising less than the people who care enough about healthy dining to avoid that starchy temptation. And they probably consume more sugar generally as well. Or maybe they take in less fiber. You can’t eliminate the confounding effect of these other habits — that’s the real problem with nutritional studies like this. It appeared in The American Journal of Clinical Nutrition recently and it’s showing up all over the web.

❝ Nearly every article based on the study claims that fries doubled the mortality risk of the subjects, and media outlets aren’t technically wrong about the results. But first things first: it wasn’t potato intake generally, it was only fried potato consumption that the authors linked to higher death rates. Non-fried potato consumption didn’t lead to any increased mortality risk. Here’s a nice quote from the actual study that summarizes their findings: “After adjustment for 14 potential baseline confounders, and taking those with the lowest consumption of potatoes as the reference group, participants with the highest consumption of potatoes did not show an increased risk of overall mortality.”…

❝ Listen: fried potatoes aren’t good for you…Fries are full of starch and fat, and you should probably limit your consumption of both of those things — especially the starch. Starch is a simple sugar, and those cause your blood sugar and insulin levels to rise and prompt your body to store fat…But in moderation — and in combination with a healthy diet and exercise — you’ll be just fine. Enjoy your fries.

Couldn’t agree more. I love good fries, Belgian preferred; though I’ve had great Brit food truck fare. Rare enough to find myself in one of the few local bistros where they reign that I probably have them like once every five years. But, then, even-handed moderation in what I consume covers all the do’s and don’t’s of my nutrition.

Salty Snacks Sinking Along A Predictable Rich-Poor Divide

❝ Consumers are buying less salty packaged food, although still too much by some standards, according to a longitudinal study of more than 170,000 households that used barcode scanners to record all packaged food purchases for a year as part of the Nielsen Homescan Consumer Panel.

❝ Total sodium from packaged food purchases decreased significantly between 2000 and 2014 (by 396 mg/d per capita). Sodium content of packaged foods also dropped overall by 12% over that 15-year period, which extended to all of the most salty foods, particularly condiments, sauces, and dips.

Still, the researchers noted in the paper in JAMA Internal Medicine that there is room for further reduction as more than 98% of households had packaged food purchases containing more than “optimal” levels of sodium…

❝ Two analyses in JAMA Cardiology of National Health and Nutrition Examination Survey data from the past 10 and 15 years, respectively, showed that income still matters for cardiovascular risk factors.

One showed that predicted cardiovascular event risk, smoking rates, and blood pressure improved in high-income groups but not among people at or below the federal poverty level. The other showed persistent gaps between the lowest and highest income groups for diabetes, dyslipidemia, and obesity as well as a widening gap in prevalence of hypertension and in smoking.

Anyone surprised when cultural and income differences reinforce poor choices?

China’s new economic model doesn’t sacrifice environment for profit


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Shenzen leads China’s pilot city program in new green development

Chinese lawmakers have approved the country’s 13th Five-Year Plan, the high-level document that will guide policymaking through 2020, including the country’s approach to climate and energy policy. As the world’s second-largest economy and the largest emitter of greenhouse gases, China necessarily plays a role in shaping global climate policy — and if it can deliver on the goals outlined in the plan, that role will undoubtedly expand.

The plan is the first to set a national cap on energy consumption — 5 billion tons of standard coal equivalent for 2020 — as well as offering new visions for energy efficiency and air pollution. A World Resources Institute analysis concluded that this FYP sets China on a path to a 48 percent reduction in carbon intensity levels by 2020, compared to 2005 levels…For reference, China’s pledge to the Paris Agreement has the country slashing carbon intensity by 60-65 percent of 2005 levels by 2030.

All told, it’s the “greenest Five-Year Plan that China has ever produced,” said Barbara Finamore, director of NRDC’s Asia program…

There’s a lot more to the FYP than energy policy, but many of the other pieces are complementary when it comes to the climate. New standards on air quality indicators like PM 2.5, for example, will no doubt rein in the country’s rampant coal burning.

But it’s not all about coal, either. While China saw a cut in coal use of around 3 percent in 2015, it increased its oil consumption by 5.6 percent in the same year. “If China is going to peak its CO2 emissions, it cannot just rely on cutting coal,” said Finamore. “Transportation emissions and oil consumption are going to be exceedingly important.” And they are: The FYP addresses vehicle emissions and public transportation in cities, in addition to allocating new money to high-speed rail initiatives.

I haven’t read through the plan myself – yet – but, I’ve blogged before about changes already initiated. Notably, providing natural gas for household cooking and heating. Hopefully, the target of reaching every household in every Tier 1 city will be achieved during this 5-year plan. Though Talking Heads on Western TV relish the topic of smog in China, they always seem to miss the point that half that smog comes from household coal fires – identical to the problem faced in the UK after World War 2.

I lived through a similar conversion process in the New England industrial city where I grew up and the change is dramatic, beneficial and qualitative in how life is affected.

It’s easy to raise questions about China’s ability to follow through on these kinds of ambitious plans in the face of slowing economic growth. The FYP outlines a target GDP growth rate of 6.5 percent through 2020 — speedy by global standards, but a far cry from the 10 percent growth rate of yesteryear.

But that’s not the right way to think about it, said Paul Joffe, senior foreign policy counsel at WRI. “China envisions a ‘new normal’ level of growth,” explained Joffe to press. “At that level, they view the economic and environmental targets as entirely compatible.” In other words, anyone wildly gesticulating at China’s flagging growth rate needs to take a chill pill. Ten percent is simply not sustainable.

It also doesn’t match China economic planners’ vision of a model wherein up to 70% of the GDP is based on consumption, goods and services.

Joffe’s description of coinciding economic and environmental goals bucks the conventional economic logic that says “you need to consume more to grow more,” said Kate Gordon, a vice chair at the Paulson Institute. That logic is faltering. Earlier this week, the International Energy Agency released data suggesting energy-related emissions and global GDP growth are decoupling. Indeed, Gordon argues that China’s energy-efficiency savings have in part allowed for that kind of decoupling…

The plan’s ambition gives post-Paris climate-action further momentum, and can only serve to strengthen the recent U.S.-China climate pact. As with all ambitious plans, though, implementation will be key — and the country is outlining some stark transitions. Upwards of 1.8 million workers in the coal and steel industries are expected to lose their jobs due to changes outlined in the FYP, and those workers will need to be retrained and reemployed. Truly delivering on those goals will require an unprecedented degree of foresight and coordination.

Though I haven’t read the details – as I mentioned above – I watched many of the discussions on TV. Fact is, the target for new urban jobs is much higher than just those needed to be retrained and reemployed. That is 10 million new jobs every year.

I can’t skip over the sour grapes still to be consumed by anyone mentioning how this ties in with the US-China climate pact. That will certainly enjoy respect and a part of this 5-year plan. In China. As long as the US Congress is controlled by the Party of Do Nothing – likely the case until sometime after the 2020 census, redistricting, an opportunity to sort Republican gerrymandering – ain’t nothing like new positive environmental legislation coming out of Washington DC.

Conspicuous consumption is contagious


There goes the neighborhood!

When someone wins the lottery, it can be bad news for his neighbor’s finances. A new study from the Federal Reserve Bank of Philadelphia examines the relationship between lottery winners in a particular Canadian province and bankruptcies in the same province — it found that neighbors of lottery winners are unusually likely to go bankrupt, and the larger the lottery prize, the more likely bankruptcy becomes.

Specifically, every $1,000 in lottery winnings translates to a 2.4 percent higher probability of a nearby neighbor declaring bankruptcy.

The researchers have an explanation for why this happens, too. When people declare bankruptcy in Canada, they have to disclose all their major assets — things like houses, cars, boats, and motorcycles — to the courts. The researchers found that the larger the lottery prize, the more money bankrupt neighbors spent on big-ticket vanity purchases — and the more likely they were to run out of money.

The clever study is one of the first to provide statistically rigorous evidence for a claim that seems plausible but is hard to prove: that rising inequality causes people to spend beyond their means in an effort to “keep up with the Joneses.” This is the idea that when someone’s wealth suddenly increases, her neighbors — and probably her friends and relatives — feel pressure to spend more to avoid being upstaged. Ultimately, this kind of competition can leave everyone worse off.

Never lived in a neighborhood where this was a problem. Most times, you struck it rich – you moved out of where I lived. 🙂

Earthquakes force Dutch government to cut gas field production


Let in a little winter air?

The Dutch government has ordered a further tightening of gas production at Groningen, Europe’s largest gas field, in response to a spate of earthquakes that have caused extensive property damage in the Netherlands’ northernmost province.

Output at the field, the world’s 10th largest, will be capped at 30 billion cubic metres (bcm) for the whole of 2015, Economy Minister Henk Kamp told reporters on Tuesday. At the beginning of the year, production of 39.4 bcm was planned.

“The earthquakes are still there, and we will have to reckon with earthquakes in the future,” Kamp later told Reuters. “We can do two things to preserve safety: reduce the production of natural gas and strengthen houses, and we’re doing both.”…

Which tells us something about the size of profits – and how priorities are sorted. Even though Kamp says, “We’ll do whatever is necessary for the safety of the people in Groningen.”

In February, output was cut to 16.5 bcm for the first half of the year after the Dutch Safety Board said gas companies and state regulators had failed to take the threat of earthquakes seriously enough.

In the second half of the year, output will be capped at 13.5 bcm, with stored gas tapped if necessary to make up for any shortfall…

Analyst Oliver Sanderson of Thomson Reuters Point Carbon said reaction to the planned reduction had been relatively muted because it was announced in June, during the summer…

“Last time there was a cold winter, two years ago, Groningen was producing at around 54 bcm,” he said…”Where is Europe going to get 25 bcm?”

He said that with Groningen producing at 30 bcm in a cold winter, the shortfall in Western Europe would have to be met mostly with Russian gas, supplemented with some Norwegian gas and liquefied natural gas imported by tanker.

Try selling that in Brussels,” he said, referring to the political sensitivity of European governments increasing, rather than lessening, their reliance on Russian energy.

Sometimes, circumstances make it a little easier to understand some nations keeping commercial and trade policies separate from the latest political conflicts.

A consensus on coffee’s benefits

Coffee has long had a reputation as being unhealthy. But in almost every single respect that reputation is backward. The potential health benefits are surprisingly large…

Just last year, a systematic review and meta-analysis of studies looking at long-term consumption of coffee and the risk of cardiovascular disease was published. The researchers found 36 studies involving more than 1,270,000 participants. The combined data showed that those who consumed a moderate amount of coffee, about three to five cups a day, were at the lowest risk for problems. Those who consumed five or more cups a day had no higher risk than those who consumed none.

Of course, everything I’m saying here concerns coffee — black coffee. I am not talking about the mostly milk and sugar coffee-based beverages that lots of people consume. These could include, but aren’t limited to, things like a McDonald’s large mocha (500 calories, 17 grams of fat, 72 grams of carbohydrates), a Starbucks Venti White Chocolate Mocha (580 calories, 22 grams of fat, 79 grams of carbs), and a Large Dunkin’ Donuts frozen caramel coffee Coolatta (670 calories, 8 grams of fat, 144 grams of carbs).

…Years earlier, a meta-analysis — a study of studies, in which data are pooled and analyzed together — was published looking at how coffee consumption might be associated with stroke. Eleven studies were found, including almost 480,000 participants. As with the prior studies, consumption of two to six cups of coffee a day was associated with a lower risk of disease, compared with those who drank none. Another meta-analysis published a year later confirmed these findings.

Rounding out concerns about the effect of coffee on your heart, another meta-analysis examined how drinking coffee might be associated with heart failure. Again, moderate consumption was associated with a lower risk, with the lowest risk among those who consumed four servings a day. Consumption had to get up to about 10 cups a day before any bad associations were seen.

No one is suggesting you drink more coffee for your health. But drinking moderate amounts of coffee is linked to lower rates of pretty much all cardiovascular disease, contrary to what many might have heard about the dangers of coffee or caffeine. Even consumers on the very high end of the spectrum appear to have minimal, if any, ill effects.

But let’s not cherry-pick. There are outcomes outside of heart health that matter. Many believe that coffee might be associated with an increased risk of cancer. Certainly, individual studies have found that to be the case, and these are sometimes highlighted by the news media. But in the aggregate, most of these negative outcomes disappear.

Aaron E. Carroll is a professor of pediatrics at Indiana University School of Medicine. He blogs on health research and policy at The Incidental Economist. He carries forward from this point in his article to broaden his search for understanding of the effects of coffee drinking – usually in moderation – on your health.

I suggest you RTFA. It’s even written in human being-English.