A quick note to readers: I'm going to run a mini-experiment in May while I take a month off from blogging. Each Tuesday, in place of my regular column, I'll run a classic post from Casual Kitchen's archives. I'll also run an *extra* bonus post from the archives each Thursday.
I'll post brand new Friday Links each week all month as always.
My hope is to help familiarize newer readers with some of the best work in CK's increasingly gigantic back catalog of posts. And of course, I'll be back with more new material in June (I'm planning something surprising... we'll see how it comes out!). As always, I welcome your thoughts and feedback!
Survivor Bias: Why "Big Food" Isn't Quite As Evil As You Think It Is
Lots of food writers and bloggers, myself included, love to criticize Big Food. It's such an easy target. After all, shouldn't everyone be against an industry that earns billions by force-feeding us unhealthy foods?
Of course, you can only make a statement like that (and keep a straight face) if you view the world with a conspiracy-theory mentality. If that's your primary mindset, stop reading this post right now. Because I am about to suggest an alternate explanation for the realities of the food industry--one that doesn't involve the a priori assumption that our destiny is under the control of an evil cabal of greedy food lords.
A warning though: this explanation involves a quick detour to statistics class, and a quicker detour through my former career on Wall Street. But in just a short few minutes, you'll see that someone else is behind the curtain selecting the foods on our grocery store shelves.
My quick detour starts with a financial question: what happens to a mutual fund that really sucks? (Don't worry, this will be brief. I promise.)
Well, a mutual fund can get away with suckola performance for a few years, but if it significantly underperforms its peer group for much longer, it will be closed down and killed off. It gets pulled from the newspapers, its performance record vanishes, and it gets washed down the memory hole as if it never existed.
Here's the point: this regular mercy-killing of bad mutual funds creates a deeply misleading picture of past performance. Since the worst-performing funds are regularly removed from the data set, the past performance of mutual funds in general looks better than it actually was. What you see isn't really a true picture of past performance--it's just the past performance of the survivors.
Statisticians call this phenomenon survivor bias, and it gives a whole new meaning to the expression "past performance does not guarantee future returns." (Even though I left Wall Street more than a year ago, I still throw up in my mouth a little bit whenever I hear that awful, awful phrase.)
Okay. The point of this article isn't to tell you to be suspicious of the mutual fund industry, that's just a freebie side benefit you get from reading a food blog written by a retired Wall Street analyst. The point is to apply this concept of survivor bias to the food industry, and specifically to the foods sitting on our grocery store shelves.
Many of us like to think that all the deliciously unhealthy foods in our grocery stores are there because evil food companies engineer them that way on purpose. What we don't see, and what few of us think about, are all the foods that weren't quite popular enough with consumers, and were therefore killed off. The food industry is littered with the corpses of thousands, perhaps tens of thousands, of foods that have come and gone. Just like underperforming mutual funds, these unpopular or ill-conceived food products die off because they didn't perform well.
If you were to look over the thousands of foods that came and went over the past 50-75 years, you'd find foods of all types. Some would be healthy, some extremely unhealthy. Some would be terrible and tasteless, some would be delicious but for whatever reason unpopular. Some of these foods never made it past regional test markets or focus group testing. Some had huge ad budgets behind them, while some quietly came and went with no ad spending at all.
In every case, however, what really mattered was this: consumer demand was insufficient to support the products that didn't survive. And so they died. The remaining foods on our grocery stores shelves, however unhealthy they may be, are the product of survivor bias. It's quite simple: the foods most heavily demanded by consumers always survive.
So, who's really behind the curtain choosing the foods on our grocery store shelves?
It's us. We are behind the curtain. That's right: fattening and unhealthy foods are on our store shelves because we put them there.
This is why consumers have such a critical role in deciding what is available to us in our stores and markets. Exercise your power by spending your money accordingly.
Readers, share your thoughts!
Note: I owe a debt of gratitude to two exceptional books by Nicholas Taleb: Fooled by Randomness and The Black Swan. Both were instrumental in helping me think through issues raised in this post. Things are not always as they seem.
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