Assess the extent to which ‘information gaps’ and ‘irrational behaviour’ are the main causes of food waste in the UK.

Edexcel A-Level Economics Paper 1 June 2017 Extract

Assess the extent to which ‘information gaps’ (Extract B, lines 5 and 6) and ‘irrational behaviour’ (Extract B, line 11) are the main causes of food waste in the UK. (10 marks)

1. Information gaps exist as a result of both parties, or one party (asymmetric information) not having perfect information about an economic transaction or action.
2. In this case, there is some degree of asymmetric information in the food industry as producers would know less than consumers about how much food will be demanded each day.
3. This is likely to result in an over-production of food as producers would not want to miss out on any potential revenue.
4. This has contributed to 4.1 million tonnes of annual food waste.

1. However supermarkets and suppliers are working together to decrease food waste.
2. The extract mentions aims of 'improving forecasts for supply and demand' and 'increasing the reliability of transportation and storage'.

1. Additionally, irrational behaviour often means that economic agents don't end up maximising their utility.
2. This can happen because of the tendency for people to follow social norms or habits, or also if they lack the ability to compute outcomes logically.
3. In this case, the norm might be for families to store or cook slightly more food and have some leftovers at the end of the day.
4. Families are likely to end up guessing how much food to store rather than calculating it precisely.
5. The extract mentions that this contributes to 7 million tonnes of annual food waste.

1. However, this can be reduced through better provision of information by the government.
2. This can help customers to understand the negative consequences of wasting food, which will encourage them to buy the appropriate amount of food day-to-day.

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