Feeding America accepts donations from food manufacturers and operated food banks across the United States to feed the poor. Alex Teytelboym wrote about how it benefited from a shot of Chicago economics:

• Feeding America used to treat all food as the same. A pound of chicken was the same as a pound of French Fries.
• It also prioritized the food banks it sent the food too.
• The organization would ask its food banks, in order of priority if they wanted the food that they had. If a food bank said no, then its priority was lowered and it wouldn’t be offered food as often in the future.
• This meant that food banks were afraid of saying no to a delivery of food. So they would always say yes – even if they didn’t need the food, meaning that a lot of food went to waste.
• An eBay style auction system was designed to make things more efficient.
• Food banks were given daily online credits based on the size and characteristics of the population they served.
• They could use these credits to bid on food deliveries, allowing the food banks to decide what kinds of food they would receive.
• Banks weren’t penalized for failing to use their credits which meant that there was far less wastage.
• For food banks that have an unexpected surge in demand a system of loans was also implemented so that they could effectively serve their populace.

Read more about the system, the economists that helped design it, and what this says about welfare economics more generally over here.

Source: The Week

Via: Marginal Revolution