With the recent spike in food prices, a three year old post demands new life. Here it is:
Clearly, were there to be a famine, a one year food supply in the basement would look really good. What may be slightly less obvious is that the presence of food storage, even if nobody ever uses any of it for an emergency, can stop a famine from ever actually happening.
To see this, letâ€™s take a very brief detour into the research on famines and hunger. It turns out that some locations can suddenly have widespread starvation even when the actual amount of food in the country has not changed much at all. There are a few reasons why this can happen, but the most interesting story is basically the same as what causes stock market bubbles, expectations. Suppose you hear a rumor that the crop is going to be very poor this year, and so there may well be a food shortage. Well, the smart thing to do would be to go stock up some food. You, and all of your smart neighbors (in economics, everybody is smart!), all go down and grab the food off the shelves. As Julie noted, we saw this behavior with the recent hurricanes. This surge in food demand raises the price of food, possibly so much, in a poor country, that poor people start starving. Remember that this happens even if the food supply turns out to be fine; because the food that poor people would be eating is now being hoarded by the middle class who, incidentally, now feel justified in having hoarded food because there clearly is a famine!
So now letâ€™s back up a few years and imagine that those middle class denizens had listened to the prophets and slowly, carefully, built up a sizable food storage. When the (false) rumors of a poor crop come out, they are gleeful that they will finally get to use all that food they stored! This means that they do not rush out to buy food, thus there is no mass hoarding and consequently the supply of food turns out to be perfectly adequate to feed the poor. â€œI guess I didnâ€™t need my food storage after all,â€ sighs the food storer, blissfully unaware that the unused food helped save the life of some poor person in their country. The story, by the way, neednâ€™t be about a crop failure; all you need is the expectation that food will be in short supply due to transportation malfunctions, weather, disaster, or whatever.
This story could play out several times over a lifetime, until at the end of their life, the faithful food storers wonder why they even even bothered to store food when no disaster ever struck. Perhaps they chalk it up to a test of faith, never realizing that their obedience averted the disaster in the first place.
The original post, along with many excellent comments, can be found here.