The Allocation of Food to Food Banks by Canice Prendergast in the JPE

 The Allocation of Food to Food Banks by Canice Prendergast, Journal of Political Economy 130, 8, 1993-2017.

Abstract: "Feeding America allocates donated food to over 200 food banks. In 2005, it transitioned from a queueing mechanism to one where food banks use a specialized currency to bid for food. Food banks chose very different food than they received before. Small food banks acquired 72% more pounds per client than large food banks at little nutritional cost. This reallocation of food is estimated to have increased its value by 21%, or $115 million per annum. Food banks also sourced food much closer, saving an additional $16 million per annum. Finally, donations of food rose by over 100 million pounds."

"The old assignment algorithm gave each food bank an equal number of (random) pounds of food per needy client. This was problematic for a variety of reasons, despite its perceived fairness. First, food banks differ in their needs. The [old assignment algorithm] allocated an average of 10% of food distributed to food banks, but Feeding America knew little about the other food. This was further complicated by food richness, where some food banks had better access to outside food donations and had different residual needs. Second, food was randomly assigned on the basis of geography, leading to high transportation costs. Third, the allocation system was slow and deterred some donations. 

"Instead of equal pounds per client, the Choice System gives food banks an equal number of shares per client. These are used to bid in first-price sealed bid auctions, run twice a day. Shares can be saved and borrowed, and any shares spent on a given day are recirculated back to food banks that night. Bids can be negative, a feature used to ease donor relations. Through this mechanism, shares allow a food bank to match its purchases to both its permanent and transitory needs and to the geographic location of the donor.

"Despite the benefits that choice allows, many of the practitioners involved in the redesign were initially skeptical of a market-based system. Their concerns were primarily focused on the fear that smaller or less sophisticated food banks would suffer. To ensure equity across food banks, a series of safeguards outlined below were used, among them access to credit and the ability to bid jointly with other food banks. 

"The Choice System went live on July 1, 2005. We consider a variety of outcomes from 2002 to 2011. A feature of the design is that any food bank can purchase its old allocation, assuming that food banks face common prices. As a result, all food banks are at least as well off as before. This assumes that transactions costs are low enough that all food banks engaged with Choice, and a concern raised was that smaller food banks may not do so. We show that food banks quickly engaged, bidding over 200 times a year and winning more than 70 times. Furthermore, small food banks bid more per client than do large ones. We also show that the safeguards implemented to encourage the participation of small food banks were used as intended. We then quantify how different outcomes were under Choice. "

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Earlier:

Tuesday, December 4, 2018

Feeding America: Podcast on HBS case study of Canice Prendergast and Feeding America

Friday, November 13, 2015

Canice Prendergast on The Allocation of Food to Food Banks

Feeding America: Podcast on HBS case study of Canice Prendergast and Feeding America

Here's an audio interview of Canice Prendergast and Scott Kominers (who wrote the HBS case study) about the work that Prendergast and colleagues did with a team from Feeding America, which manages a network of more than 200 food banks nationwide.

The podcast is here: Building a Nonprofit Marketplace to Feed America

Prendergast says at one point: "The dynamic of the group was wonderful. I think one of the amazing things about this committee was essentially the length of time we got to listen to each other. I think if it has turned out to be a success, the reason was largely because of the willingness not of the academics to listen to the practitioners, but actually the practitioners to listen to the academics. This was a long way removed from anything that they imagined they would do when we started."


You can read the whole transcript by clicking on "Read More" at the bottom of the page linked above.

Canice Prendergast on The Allocation of Food to Food Banks

Market design has arrived at Chicago, here's a nice paper presented at the recent NBER market design conference.:

The Allocation of Food to Food Banks 
Canice Prendergast∗ Preliminary Draft August 13, 2015

Abstract Food banks throughout the U.S. provide nutrition to the needy. Yet the food that is distributed through food banks often originates with donors - large manufacturers or distributors - far from those needy clients. How that food is distributed to food banks across the country is the subject of this essay. An informal description is given of an innovation introduced in 2005 by Feeding America (at the time the organization was called America’s Second Harvest) that would better allow food bank preferences to be reflected in their allocations. Specifically, Feeding America transitioned from the centralized allocation process, where they would make decisions based on their perception of food bank need, to one where local affiliates would bid for food items. To do so, Feeding America constructed a specialized constructed currency called “shares” that are used to bid on loads of donated food. The process by which this change came about, its necessary idiosyncrasies, and its outcomes are described.
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Scott Kominers pointed me to an earlier news article on the paper
What happens when America's Soviet-style food banks embrace free-market economics?

"Initially, there was plenty of resistance. As one food bank director told Canice Prendergast, an economist advising Feeding America, "I am a socialist. That's why I run a food bank. I don't believe in markets. I'm not saying I won't listen, but I am against this." But the Chicago economists managed to design a market that worked even for participants who did not believe in it."

Black market in poverty--fraudulent ration cards

The Hindu reports: Hi-tech foodgrains rationing system introduced for below poverty line families

"Bangalore: The State Government has introduced a hi-tech rationing system which will ensure the timely supply of foodgrains to people living below the poverty line and simultaneously prevent black-marketing and circulation of bogus ration cards. ...
"Governments in the State over the past three decades have found it difficult to check the rampant black-marketing in foodgrains and circulation of bogus ration cards, although it is evident that politicians have been behind the large-scale issue of below poverty line cards in exchange for votes. "

Purchase for Progress

Gates Foundation to Fund Experimental Food Aid Program

"UNITED NATIONS, Sept. 24 -- The world's largest philanthropy on Wednesday announced an initiative to transform the way the U.N. World Food Program purchases food by helping poor, small-scale farmers in undernourished countries of Africa and Latin America sell their surplus crops at competitive prices.
The Purchase for Progress program is designed to help combat hunger and poverty in the developing world by giving farmers, many of them women with little or no access to commercial markets, opportunities to reach reliable buyers, including the World Food Program. In a five-year pilot period, the $76 million program hopes to increase the incomes of 350,000 such farmers in 21 countries, including 15 in sub-Saharan Africa."