Fast food calorie content, whether to allow shareholder proposals and the psychology of gifting
Counting calories
“Big Mac. Large fries. Large Coke.” Who hasn’t made that order, if only once in your life? But would you choose the same if the menu were more explicit? “Big Mac, 540 calories. Large fries, 500 calories. Large Coke, 310 calories.”
That’s what researchers at New York University set out to discover. The idea wasn’t purely theoretical. The Big Apple (note: McDonald’s Apple Dipper dessert, 35 calories) passed a pioneering anti-obesity law in July 2008 obliging large restaurant chains to publicise the calorie content of their dishes.
The researchers took their clipboard to four restaurant chains: McDonald’s, Burger King, Wendy’s and Kentucky Fried Chicken. All the restaurants were located in low-income neighbourhoods of New York City. The headline responses conformed to what the lawmakers had hoped. More than half noticed the information about calorie content. Just over a quarter of those then acted on this information. And, of that number, nine in 10 said the calorie quantities had influenced their order.
Yet when the researchers checked the customers’ receipts, they found that their calorie intake had actually gone up, not down. NYC consumers had a mean consumption of 825 calories before the new law came into force. In the month afterwards, that figure jumped to 846 calories.
How to explain the discrepancy? First, it’s not as easy to change people’s consumption patterns as public health or public affairs professionals may think. Smoking is a case in point. Smokers still light up regardless of increasingly graphic health warnings. Moreover, it takes time; the study took place in the month after the calorie-counting rule kicked in. Income level is also a factor. The poorest are probably the least amenable to calorie labelling, putting the impact on their pockets above the impacts on their health.
“Calorie labeling and food choices”, Brian Elbel et al, Health Affairs, October 2009.
Shareholder proposals: nuisance or necessity?
When US food company Iroquois Brands was asked to look into the origins of a pâté de foie gras product that it distributed, it dismissed the request out of hand. For starters, the request came from a minor shareholder: Peter Lovenheim only owned 200 Iroquois shares. Second, the issue seemed, well, slightly off the wall. Lovenheim wanted to know if the French producer from which Iroquois sourced the pâté brutally force-fed the geese that went into the product.
Iroquois turned out to be wrong on both counts, as would be later proved when the US Securities and Exchange Commission ruled against it. Lovenheim might not have held many shares. But as government relations counsel for the US Humane Society, he did hold sway. Nor was his query immaterial. Under SEC rules, a shareholder proposal must be distributed in proxy materials before an annual or special shareholder meeting if that proposal requires the board to “take action”. Iroquois deemed no action was required. The SEC thought otherwise.
Although the case occurred 25 years ago, the lessons are salient. Companies have come to accept the value of permitting social proposals, even though most stand no chance of being voted through. Why? Because they can provide “a relatively inexpensive safety valve for dissent”, Telman argues. This in turn permits the kind of beneficial exchange between management and shareholders that promotes the legitimacy of the corporate decision-making processes.
“Is the quest for corporate responsibility a wild goose chase?”, Jeremy Telman, Law Review, September 2009.
Was Scrooge really that unhappy?
“It’s better to give than receive.” So the maxim runs. But academics, in only the way academics can, have taken a pop at the age-old saying. Giving, it turns out, doesn’t make you happy after all. Or, at least, not noticeably happier than others. So reads the new thinking from the fields of psychology, economics, and neuroscience. This timely working paper seeks to interrogate the revisionists. Using research from a variety of samples, ranging from adults to monkeys, the authors find that happier people give. Evidence from correlational and experiential studies back this up. The notion that giving gives greater happiness is also defended. The subtlety of the argument lies in the hypothesis that giving and happiness operate in “circular fashion” rather than one of linear causation.
The paper has a sting in the tail too. It considers whether modern charity advertisers are responsible for the breakdown in the giving = happiness equation. Could persuading people to give in order to be happy actually pervert the giving process? The intrinsic, selfless motivation inherent to giving suddenly becomes replaced by an economic, self-centred rationale, the authors argue. That shift reduces consequent happiness for the giver, and reduces giving as a whole.
“Feeling good about giving: the benefits (and costs) of self-interested charitable behavior”, Lalin Anik, Harvard Business School, working paper August 2009.
Campus news
The Network for Business Sustainability, an online resource for academics, has revamped its website. Among the highlights of the new site – nbs.net – are one-page summaries of seminal papers in the corporate responsibility field.
Professor Thomas Donaldson of Wharton Business School has been awarded the Lifetime Achievement Award in this year’s Aspen Institute Faculty Pioneer Awards.