Questions and answers about
the economy.

#economicsfest: What does food tell us about the economy?

The cost of living crisis has made clear the centrality of food in household budgets and people’s broader wellbeing. The nutritional quality of what we eat, where it’s grown and how much we pay for it are all crucial – not just for human health but the health of the planet.

When economist Ha-Joon Chang arrived in the UK in the 1980s, one of trickiest things he had to contend with was eating.

‘Before coming here I didn’t realise food could be so bad’, the SOAS University of London professor confessed on the first full day of the 2023 Bristol Festival of Ideas. ‘British people avoided foreign food with a semi-religious zeal… if you ate garlic you were being passive-aggressive.’

In the intervening years, things have improved, with Brits having something of a ‘collective epiphany’ and embracing international cuisines, Chang said. But, he argued, economics has taken the opposite track.

Rather than becoming more varied, the menu of acceptable economic thinking has narrowed. ‘Until the 80s, there were many contending schools of economics… there were Keynesians and Marxists and structuralists, there were many different kinds of economics. It was like the food scene in Britain today’, Chang remarked. ‘Today, economics is basically what is known as neoclassical economics.’ 

In conversation with Mehreen Khan, economics editor at The Times, Chang tried to add a little more flavour to the economic mix. 

His newest book – Edible Economics: A Hungry Economist Explains the World – explores economics through the prism of food: from the relationship between pasta shapes and the design of mass-produced cars, to teaching economics by using food as a bribe – something he compared to ‘the ice cream some of your mothers might have offered you to eat your greens’.

In a spirited discussion, Chang compared the disastrous mini-budget of the short-lived Liz Truss government to the return of Tex-Mex cuisine popular in the 1980s: ‘a bad imitation of something that already wasn’t great’, but which might, in its first iteration, have ‘given the illusion that you were daring because there was a tiny bit of chilli in there.’

The economic habits of the last decade or so of government? Khan likened them to ‘intermittent fasting’ with periods of austerity followed by a spike in public spending in response to crises, necessitating further belt-tightening after the fact. 

Menu costs

As the day edged toward lunchtime, Chris Giles, economics commentator at the Financial Times, chaired a discussion of a somewhat less cheerful subject: the rapidly rising prices of food and growing concerns about its supply.

The panel was united in outrage about the problem of food poverty in Britain. London School of Economics (LSE) professor and Monetary Policy Committee member Swati Dhingra called it ‘scandalous’ that measures of food poverty used in India when she was growing up – such as asking respondents if they had skipped a meal – were being applied to contemporary Britain.

More complicated, however, was working out who was to blame for the price increases. Dhingra explained that the current eye-watering rate of food inflation was driven more by international supply chain disruptions, including as a result of Russia’s invasion of Ukraine, rather than by profit-hungry companies upping prices.

She stressed that controlling food inflation was difficult because so much of our food supply chain is out of the control of national governments. ‘About 40-50% of food is imported; if you add to that energy and stuff manufacturers are bringing in from abroad, it becomes 80%,’ she said. ‘We’ve got to have a really big societal conversation that a lot of our prices are not set in the UK: they are set abroad.’

Melanie Vaxevanakis, founder of the Mazi Project – a Bristol charity that provides young people with locally grown vegetables and encourages them to cook – has seen the consequences of this first-hand and believes that small-scale agricultural systems are needed to address the issue. ‘I think from experience within the UK system and growing up in Greece, it’s really hard to depend on our governments to ensure that people can eat and that needs to be encouraged in communities’, she commented. 

Jean-Michel Grand, executive director of Action Against Hunger, added that the ripple effects were felt around the world. A globalised food trade, he pointed out, means that countries such as Egypt are investing in exports rather than home-grown foods, making it more difficult to produce and access staples. The response, he concluded, should be a ‘longer-term reconnection with a good diet rather than the law of the market’.

Taming inflation

Discussion of the real-world impact of inflation was followed by a conversation with one of the people tasked with taming it. In a panel that is now traditional for the festival, Huw Pill, the Bank of England’s chief economist, and Jagjit Chadha, director of the National Institute of Economic and Social Research, joined Anna Valero, LSE fellow, to discuss what comes next for central banks.

Pill said that it had not been easy being a monetary policy-maker in the last year. He reiterated his belief that there was a greater risk that inflation was more persistent, rather than less. But now the Bank had raised rates to a level deemed restrictive, he added, it was delivering on the job and did not – necessarily – need to raise interest rates further. 

Pill did not get an easy ride. Questions from the audience asked whether central banking should do more to combat climate change. And Chadha argued that the Bank has made mistakes, including a lack of explanation of the need for interest rate rises, which could mean that young people were being especially hit with high medium-term costs that they were not expecting. ‘It’s those surprises that worry me’. 

But it was fiscal challenges that caused the most concern for Chadha – specifically the persistent gap between public spending and income from tax and other revenues (the fiscal deficit) troubling the UK, in spite of low unemployment.

That, he warned, was in large part down to the fact that large numbers of people with jobs still need state support to get by – something that needs addressing with higher tax revenues and more, better targeted public investment to boost productivity. ‘My biggest concern is getting fiscal policy in a better place’, Chadha concluded.

That left Pill and the Bank to keep focused on the task at hand: using the tools of monetary policy to ensure a central price anchor that could create a firm foundation for building a credible case for public investment. 

‘What we’re trying to do is stabilise inflation to 2% – what that does is create the environment of macroeconomic stability that allows, be it governments, firms, households, to make decisions hopefully that are productive from an economic and environmental point of view’, said Pill.

Asking monetary policy bodies to try and fix climate change, for example, might lead to them being less effective at price stabilisation, which would ultimately make that harder. ‘It’s a very dangerous game to disturb monetary policy-makers from their focus on the 2% target.’

Food for thought

In the final panel of the day, speakers on the frontline of creating a more sustainable food system looked ahead, in a panel chaired by broadcaster Anu Anand asking ‘What is the future of food in the UK?’

Julia Kirby Smith, project lead at Better Food Traders, a nationwide network of local food retailers, shared stories of successful food projects like Growing Communities, a social enterprise distributing locally-grown vegetable boxes in cities.

Phil Haughton, co-founder of Bristol-based ethical food retailer Better Food, described some of the work that has gone into the organic, ethical retailer, including establishing a community farm and encouraging people to connect with the soil. 

Both advocated a smaller-scale, locally-sourced system of agriculture and food. Haughton suggested that we should begin to see ourselves as the collective owners of supermarkets and consider how we really want them to operate; while Kirby-Smith highlighted that inefficient distribution networks should be replaced in part by supply chains that allow food to be grown and eaten locally. 

But the panel also found that it was not easy to agree on what is meant by cheap food – and even harder to decide what it means for a world with wildly differing systems of nutrition and agriculture. 

While some of the panel argued against food sold at prices that did not reflect its impact, economist Lotanna Emediegwu (Manchester Metropolitan University) made the case for affordability. ‘We cannot be talking about the end of cheap food at this time’, he said, adding that it would mean ‘the survival of the fittest’. If you don’t have money to buy cheap food, what do you do?

Matthew Agarwala, leader of Cambridge’s Bennett Institute Wealth Economy project, stepped in to defend the role of international trade, which he called ‘the way we alleviate food scarcity, the way we alleviate water scarcity, the way we keep the world’s food system flowing.’

Agarwala also offered a conclusion on which all the panel could agree: that there is no such thing as cheap food – because ultimately someone pays. That might be cash-strapped farmers, consumers, people suffering the ill-effects of unhealthy food, or the environment. Governments, he added, could also step in to take the slack. 

Summarising a day that demonstrated much more diversity of thought and flavour than the British culinary scene of the 1980s, Anand reflected that the discussion encapsulated ‘the complexity of how much food fits into our health, what we can afford, how we live, how we celebrate, how we feed our children’. 

‘It takes bits of all these disciplines, all these answer to stitch together a proper solution.’

Author: Bethan Staton, Financial Times
Photo by VLG for iStock
Note: You can listen to audio recordings of the sessions here.
Recent Questions
View all articles
Do you have a question surrounding any of these topics? Or are you an economist and have an answer?
Ask a Question
Submit Evidence