On household food stock and waste under risk

Abstract

ABSTRACTThis paper investigates household behavioral response to disruptions in the food supply chain, with a focus on the role for risk and its effects on household food stocks and food waste. We present an empirical analysis based on data from Chinese consumers over multiple periods in 2019 and during the COVID‐19 crisis of 2020. We investigate how household behavior changed during the COVID‐19 crisis, documenting both food stockpiling and increased food waste. The econometric analysis relies on a control function approach to handle endogeneity. We decompose the effects of increased risk on waste during the crisis into two components: the direct effect reflecting household decisions conditional on food stock; and the indirect effect associated with induced adjustments in food stock. Both effects on food waste are found to be positive, reflecting difficulties households have in managing large food stocks. We present evidence that one percentage point increase in household stocks during a period of supply disruption contributed to a 0.055–0.297 percentage point increase in food waste across food categories. We also present evidence that these effects may persist over time.