Two big resource economics topics are in the NYT over the past few days. First, Michelle Obama has apparently talked Walmart into subsidizing the consumption of fruits and vegetables, getting them to lower prices in hopes of increasing consumption. They hope that decreased prices will increase the quantity consumed, which seems likely, and that increased quantities consumed will lead to increased health, which seems less likely. This study by Dong and Lin disseminated two years ago shows that vegetable consumption is quite inelastic, responding little to changes in price. (Likewise the consumption of snacks is relatively unresponsive to changes in price, as discussed here.) I like the First Lady's economic thinking, but I'm guessing she'll need to be a bit more creative if she wants to make much of a difference here. The more interesting story is that Walmart is to some extent acknowledging its role as an influence on public health rather than as just a money-making corporation.
The second topic that has come up a few times lately is solar power. Although our food consumption patterns won't change much in the short term due to prices, there is more hope for changing energy consumption patterns, particularly when a longer term horizon is being considered. That's why concerns about barriers to the adoption of solar power here and China's increasing competitive advantage in the field are of some concern. On the one hand, China's production of cheap solar panels benefits those who want to see solar power increasingly adopted, but on the other, decreasing access in the US may dry up this country's investment in the area. Inexpensive loans and guaranteed demand boost businesses operating in China and hurt US investors, as solar power industry stocks lost an average of 26% last year. Here's to hoping the industry thrives somewhere, and that the newly available production capacity in the US is put to good use and soon.
