EA - [Linkpost] Inconsistent evidence for price substitution between butter and margarine: A shallow review by samaramendez

Link to original articleWelcome to The Nonlinear Library, where we use Text-to-Speech software to convert the best writing from the Rationalist and EA communities into audio. This is: [Linkpost] Inconsistent evidence for price substitution between butter and margarine: A shallow review, published by samaramendez on April 14, 2023 on The Effective Altruism Forum.Executive summaryOne prominent strategy for reducing animal product usage is to decrease the prices of plant-based analogs for meat, dairy and eggs. Cross-price elasticities measure how prices of analogs affect sales of animal products, and vice versa.Previously, we found cross-price elasticities that sometimes indicated decreased plant-based milk prices could cause increased consumption of dairy milk. To see whether this result replicated, we studied elasticities of butter and margarine.We synthesize 52 cross-price elasticities from 19 demand studies of butter and margarine.We expected butter and margarine to be substitutes. Instead, we observed wide variation in estimates, complementarity, and even opposite signs of two elasticities for the same pair of products in the same setting (study, time, country, etc.).Margarine was a substitute for butter in two thirds of estimates, while butter was a substitute for margarine in about half of estimates.The results are likely explained by some combination of methodological issues and complex consumer behavior.Estimating elasticities from observational data is very difficult, and there is some evidence of methodological issues in the literature. Consumer behavior may be highly context specific.Our best highly uncertain guess is that methodological issues contribute 45% of the observed variation in results, with complex consumer behavior accounting for the remaining 55%.Price substitution between plant-based analogs and animal products is not a certainty.It is possible that decreasing plant-based analog prices causes harmful increases in animal product usage in some contexts.Research aiming to test behavioral theories that might explain our results and to validate observational estimates of elasticities against experimental methods may help clarify consumer behavior.Thanks for listening. To help us out with The Nonlinear Library or to learn more, please visit nonlinear.org.