Just about every morning when Daryle Bascom gets to the office, he logs onto his computer and immediately starts bidding online.
“It's kind of fun to go out and shop each day,” he said.
But he’s not wasting company time on eBay — he’s the chief operations officer of The Food Bank for Central & Northeast Missouri, based in Columbia. And he’s bidding on truckloads of food.
“We have a bid coming up at noon,” he said. “I found a snack load on there: some Slim Jims, it has some Angie's popcorn, some cookies.”
But what Bascom really wanted that day was a truck of baby formula. The government shutdown affected some programs that usually provide formula to families who need it.
“All the food banks have been scrambling, trying to figure out how can we get baby formula into the network,” he said.
But to get the formula he’ll have to outbid hundreds of food banks on the Choice System, Feeding America’s method of deciding who gets what.
Feeding America is the largest group tackling hunger in the U.S. The nonprofit saves billions of pounds of food each year, but with more than 200 food banks in its network, deciding where food goes is a huge undertaking.
Feeding America used to use an algorithm to answer that question. It generated a list of food banks based on need, and when a shipment came up, Feeding America called the food bank on the top of the list.
But if a food bank didn’t need or want that donation, that was a problem.
That’s what Choice System is trying to solve. If a food bank really wants a certain truckload, they can place a high bid of “shares.” Whoever bids the most wins that truckload. Every day, the fake cash is redistributed among the food banks.
It’s the brainchild of Canice Prendergast, an economist at the University of Chicago Booth School of Business. When he started working on this, he remembers talking to an Idaho food bank director named Roger about the old system who kept getting food he didn’t need.
“‘I have so many potatoes here already, I have a warehouse full of potatoes,’” Prendergast remembers Roger saying. “‘I’m sick of potatoes.’”
The problem was Feeding America had no way to know that one food bank might be overflowing with potatoes, and another might desperately want some.
So, Prendergast proposed this market economy, where food banks use fake cash to indicate they don't want potatoes but would love baby formula.
For some, including a few food bank directors on the task force, markets bring to mind unfairness. So, Prendergast had two goals: make a system that’s efficient and equitable.
This is where the daily share redistribution comes in. For example, food banks in areas with higher poverty get more points to spend. And smaller food banks can borrow shares to spend on credit.
And, so far, it's working. Prendergast’s research has found food banks value the donations through the Choice System much more than before.
“In a world where people want very different things, but you're not sure exactly what they want, sometimes markets, if they're designed well, can facilitate choice in that way,” he said.
But markets can’t completely solve the problem of scarcity.
Back in Missouri, the clock struck noon, the results are in, and Daryle Bascom can see how his morning bids fared with the Choice System. He won that truck of snacks for 3,000 shares. But the baby formula?
It went for 40,000 points.
He lost to a food bank in New York that spent more shares on formula that day than Bascom had in his whole account. He typically only gets a few more each day, he knows if he spends it all at once, he won’t be able to bid on other food for a while.
"You never want to want something so bad," he said. "Don't ever go to shop and want — go there with a need in mind."
