Very early, during a recent Friday morning in Brooklyn, NY, people stood in a line that wrapped around the block. They were waiting for a food pantry to open.
At 10:30, when distribution began, the first recipients could receive onions and watermelon, canned tuna, rice, beans, milk, egg whites, and cilantro. Later in the day, they applauded when a truckload of yogurt arrived.
Years ago, food banks had a tougher time getting what they needed. A group in Alaska complained that they were getting pickles when they wanted oranges. Others in Idaho were offered potatoes they could not use. Eventually, the people at Feeding America asked a group of economists to solve their distribution difficulties.
Feeding America is a not-for-profit organization that annually distributes a whopping four billion pounds of food to more than 60,000 food pantries, meal programs, and food banks. Approximately 15 years ago, it was having allocation problems.
Assume for example, that a manufacturer said it had an extra truckload of mac and cheese, After Feeding America got the message, it contacted the food pantry that was #1 on its list. If that group said no, then it moved to last and #2 got the call.
The local people, though, felt the pressure to say yes. They knew the parent group was afraid to refuse a manufacturer because future offers could dry up. The result was a slew of mismatches, wasted food, and unhappy beneficiaries.
A group of economists came to the rescue.
The economists explained that like all command economies, their problem was lack of local knowledge. The solution was a market system with mock money called “shares.” Each day, pantries get their “shares” and look online to see what food is available. Seeing a truckload of cereal, they can base a bid on past transactions. Rather than depending on a call from the top, they knew what they needed. Receiving a load of pancakes, they went after some syrup.
Most crucially, prices distinguished food types. Longer lasting cereal and peanut butter had higher prices than the fruit that soon spoiled. Planning for the future, local pantries could save “shares” and borrow them. If they had extra inventory, they gave it to other pantries. At midnight spent “shares” were recirculated.
Our Bottom Line: Economic Systems
All countries need to decide how to produce and distribute what they want and need. They need to answer what (to produce), how (to produce it) and to whom (the income will go). The two main solutions are combinations of command and the market. (The third is tradition.) Command systems require mandates from the top down. Meanwhile the market functions through supply and demand from the bottom up.
Like most economies, when food pantries replaced command with a modified market, they flourished. On the day after Giving Tuesday, it’s nice to know that economists helped families get the food they wanted and needed.
My sources and more: Years ago, Planet Money had a podcast on food pantry distribution that was ideally complemented by a 2020 article from Chicago’s Booth School. But, if you want a riveting podcast about a food pantry, do listen to this NY Times Daily Podcast.