Many great points already about how to respond to your friend. I’d like to expand a bit on a few.
Shaybenmosche mentions the connection between two markets that illustrates interesting subtleties. Yes, you leaving the market reduces demand for meat and likely lowers the price which may in turn increase demand for the remaining people in the market. But you entering the market for meat alternatives increases demand and price there, which will drive producers to innovate and/or enter the alternatives market.
Cole points out that a shift of the demand curve leads to a reduction of price and quantity, which follows from the fact that you as a new vegetarian have left the market for meat. An interesting extension of this idea is that demand for meat may be more inelastic after your exit (given that remaining consumers are more inelastic in their demand than you). This is not necessarily great news for the animal advocate who hopes that increases in price (due to policy or otherwise unrelated to the price changes in your scenario) will reduce meat consumption and therefore animal suffering. But it does somewhat undermine your friend’s argument—the reduction in price that occurs because you left the market will probably affect the inelastic meat eaters less than your friend imagines.
Saulius mentions the Andreyeva et al (2010) paper, which is a good meta-analysis of the food elasticity literature. The answer to your question about cumulative elasticity is mostly here (they find the mean of elasticities that are estimated using a variety of methods), although I think you’re looking for aggregate elasticity, which is roughly the shape of the aggregate demand curve with respect to price. The main difference between the two concepts is that aggregate generally refers to summing over people or products, while cumulative seems to sum over time (though I’m less familiar with this literature). There are many subtleties about the different methods used to estimate elasticities that I’d love to discuss, but won’t here because this comment is already long.
Following up on Saulius’ reply, we generally prefer less-aggregated elasticities when it’s possible to estimate them finely, because the aggregate elasticity is sweeping a lot of important dynamics under the rug. I suspect that’s probably what you’re interested in as well—given the different behavior patterns of demographic groups of people, what is the overall effect of a price change in chicken on quantity demand for chicken? If I’ve misinterpreted your question, please let me know! The good thing about estimating elasticities for demographic groups is that the researcher can combine them after the estimation procedure to understand the overall effect of some change.
As the Andreyeva et al paper shows, a lot of research has estimated price elasticities for food, and other work has estimated income elasticities of demand for meat. Less well-studied (because the models get complicated quickly) are cross-price elasticities for different types of meat and their alternatives. This is on my short-list of projects to work on next.
Thanks for opening up the discussion here!
Thanks, Samara. I found the paper you’re talking about here: https://www.ncbi.nlm.nih.gov/pmc/articles/PMC2804646/pdf/216.pdf
I’m out of my depth here, but it looks like the paper is answering the question: “if the price of chicken changes from $X/kg to $(X + Y)/kg, how will kg of chicken sold change?” While the question I’m asking is “if I don’t buy chicken, how will kg of chicken sold change?”.
Thanks for the clarification, I understand your question now. You’re asking about estimating the size of a demand shift that results from one economic agent leaving the market, as opposed to an elasticity. I believe we’re asking the same question; with elasticities, I want to investigate the underlying mechanism that takes us from your leaving the market to a shift in the demand curve. Whereas you would like to know the end result only.The answer to this question (the effect on aggregate demand of one person leaving the market) may be difficult to estimate correctly. The best approximation I can think of in the existing literature is the effect of food scares on demand. For example, this paper on news coverage of salmonella outbreaks and this paper on media coverage of the BSE (mad cow) outbreak on demand for British beef both show the impact on demand of media coverage of food scares. Of course, they have to use a media coverage as a proxy for people leaving the market, since there’s no way to collect data in that way.Circling back to your friend’s question, I do think that it’s unlikely that you or another individual leaving the market would affect price enough to trigger increased purchases in the people remaining. I suspect that you leaving the market would also have a very small effect on aggregate quantity demand, in the same way that your marginal non-purchase of chicken will be unlikely to change the way that the supermarket orders their products. Similarly, just you entering the market for meat alternatives won’t cause a large increase in demand. I do think your discussion with your friends will plant some seeds, though.
I like the idea of using food scares as a proxy! Very cool.
It sounds like you are saying that knowing “how will kg of chicken sold change given change in price” will let you answer “how will kg of chicken sold change given me not buying chicken.” I don’t see quite how to do this, could you give me a pointer? (for concreteness, what does the paper’s estimate of elasticity of poultry at 0.68 mean for “kg of chicken sold given I don’t buy the chicken”)
Perhaps more importantly, it sounds like you might disagree that one person abstaining from eating chicken has a meaningful impact on the number of chickens raised + killed. If so I’m quite interested, as this is something I have become convinced against by sources like https://reducing-suffering.org/does-vegetarianism-make-a-difference/.
My current model is that if I buy the meat of one chicken at a supermarket, that *in expectation* causes about one chicken to be raised + killed.
Sure, I didn’t discuss the connection between your demand decrease and the remaining people’s elasticities. Let’s use Brian’s example of the supermarket supply system to illustrate that connection.When you stop buying chicken, demand in the store has decreased. Perhaps it decreases to the point where the store decides to put the chicken on sale. Other shoppers who still buy meat will see the sale price and change their purchases according to their price elasicities, which are defined as the percent change in quantity demanded given a 1% change in price. Using the specific example of the paper’s elasticity, a 1% decrease in price would cause a shopper to buy 0.68% more chicken. In the next ordering cycle, the inventory manager orders less chicken because you decided not to buy chicken and because the other shoppers purchased some of the excess stock at the sale price. We could call this a new equilibrium, and we see that equilibrium quantity demand has shifted. I won’t make an assumption on whether the equilibrium price is lower in this little supermarket scenario (only because I’m not sure how supermarkets actually set their prices).These causal pathways are always a little tricky because you can always talk your way out of any scenario, but the underlying mechanism behind a demand shift in a larger, more abstract market could work like this.This hypothetical supermarket brings up your second point. You’re right for calling me out on my statement about not making a difference—your non-purchase of meat in a grocery store does have the probability of setting off a chain reaction in the supply chain that reduces the number of chickens killed in expectation. I should have been more clear in my previous comment, because I was certainly thinking of a larger-scale aggregate market like, for example, the entire US market for chicken. In this case, you are one of ~300m people in the market for chicken, and your one-time non-purchase would have a small effect that would be hard to estimate (this is a more precise statement of what I meant).I do believe that you save may chickens, in expectation, with a non-purchase. And further, I do believe that your continued non-purchase of chicken and your entry into the alternatives market will, in expectation, save more chickens. I also believe that your non-purchase of chicken will likely lead you to change other purchasing decisions according to your ethics, and I believe that your ethical decisions will, in expectation, influence the people around you. (This is also something I’d like to study formally in the future.) So I believe, in expectation, you can do a lot of good!