Thursday, July 16, 2015

Expiration Dates and Social Trust

I'm just back from a visit to Shanghai (more to blog about this later).

While I was there I spent some time at the super market buying groceries. Something that struck me: instead of printing an expiration date on foods - as is usually done in the U.S. - the packages have the date of production printed instead.

Seems like a pretty trivial difference, but it got my armchair economist going. What would explain this?

I think it has to do with differential levels of trust in strangers across societies. Americans are generally more trusting of their food suppliers and the freshness of their food. But suppose you thought that the grocery store might be run by scoundrels?

One advantage to printing the production date is that it's harder for the store to hide expired food. If you see a package with a "production" date that is later than today, you can easily tell that something is up. To know when the food expires, just add the appropriate number of months to the production date. Shoppers have to expend a little more mental energy but also get slightly more assurance that their food will be fresh.

This may sound a bit paranoid on the part of Chinese consumers, but given the recent scandal of frozen meat from the 1970s being seized, a cautious attitude seems well justified.