The political economy of food security: a behavioural perspective

This chapter makes three basic points. First, from a political economy perspective, food security is intimately connected to volatility of staple food prices. Second, policy makers respond to this connection by focusing policy attention and fiscal resources on preventing and coping with volatile food prices, but these resources have opportunity costs in terms of slower economic growth in the long run. And third, policy makers are right to do this, because their political constituents have deep, visceral responses to volatile food prices, especially to food price spikes, that are based in behavioral psychology. The basic argument of the chapter is that new understanding from behavioral economics provides a solid foundation for a political economy of food security that moves away from the narrow assumptions of neoclassical economics, especially trade theory, to a more realistic framework that identifies why the vast majority of consumers and producers want stable food prices. From this understanding flows a much clearer approach to how and when to stabilize food prices.