CONSUMER FOOD LABELS

AND HEALTHBy Sandra Contreras, Caitlin Lowe,

and Kyle Waldie

PRODUCT CHARACTERISTIC ASSESSMENT

Another variable that can affect demand

Must differentiate product to maximize sales

Companies must assess what characteristics are valued by consumers for labeling

REASONS FOR LABELING

Need Based Marketing Based

Health needs: Low sugar, gluten free, low sodium

The idea behind these labels is that the consumer who will purchase them must know what is in the product before the purchase can occur

Nutritional preference: Fat free, low calorie

Social preference: locally grown, animal welfare, native language labeling

Taste: Real sugar, real butter

Science&Technology: GMO, hormones, antibiotics

DEMAND - NUTRITION STUDY Nutrition Preference

Berning et al. (2011) performed a study using health labels on microwave popcorn in the San Francisco area

Hypothesis: If the product contained a nutrition positive label sales of these healthy popcorns should increase

Result: Nutrition labels in fact decreased sales of the healthy popcorn while unhealthy popcorn products increased in sales.

DEMAND – GMO STUDIES Genetically Modified Organisms (GMO)

Issue in domestic and international agriculture

Lack of knowledge, fear and moral reasons influence perceptions of GM products

Colson et al. (2011) – two studies to assess WTP for nutritionally enhanced GM foods

WTP for GM products measured through labeling

DEMAND – GMO STUDY 1 WTP for GM food with nutrition

enhancing benefits Participants from Des Moines, IA and Harrisburg,

PA participated in nth price auction

Prior knowledge/perceptions of GMO’s was assessed

Labels: Plain, Transgenic GM, and Intragenic GM

Information: Pro-biotech, Anti-biotech, and both

Results: GM > Plain, Intragenic > Transgenic

DEMAND – GMO STUDY 2 Consumer acceptance of improved nutrient

content through GM Same experimental design

Labels: GM-Free, Intragenic GM, and Transgenic GM

Information treatments were the same

Results: Source and type of information influenced consumer demand and the premium they were WTP for the GM product. It was also shown that consumers preferred Intragenic over

transgenic; there was no clear preference for GM over GM-Free

Results were measured through labeling

Broccoli Tomatoes

Potatoes

DEMAND - CRITIQUE Critique of Berning et al. and Colson by

Jayson Lusk (2011) Every study can always be improved upon and Lusk

points out some of the more glaring issues that he see’s with the two studies along with what he agrees with from the two studies

Lusk criticizes Colson et al. for their experiment method Confusion as to whether plain label was GM just not labeled The way and order in which information was presented biased

consumers thoughts on the plain labeled product Colson et al. also simply omit relevant statistical information,

but include the very same in their second paper Lusk liked the Berning article as it used actual grocery

store scanner data in a real life setting which is less likely to bias consumers and reveal true WTP and demand

EXPERIMENT

1 2 3

Russet Potatoes (5lbs.)

GM-Free Product

Russet Potatoes (5lbs.)

Enhanced levels of Antioxidants & Vit. C

Intragenic GM Product

Russet Potatoes (5lbs.)

Enhanced levels of Antioxidants & Vit. C

Transgenic GM Product

POLICY IMPLICATIONS Obesity Issue – how do we control this?

Labeling – put “healthy” on the product Berning et al. (2011) found that labeling healthy

popcorn decreased their sale popcorn Policy: CA in 2011 banned the sale of soft drinks

in schools Combination approach

GMO Issue Domestic Market: should the U.S. require

labeling? Export Market: EU requires labeling of GM

products and acceptance process lags the U.S. 1-4 years

POLICY IMPLICATIONS Information Type on Labels

Berning et al. (2008) Consumer Preferences for Detailed vs. Summary Formats of Nutrition Labels

Summary label was preferred by consumers for those that read the label

What percentage of consumers even read labels? If a large percentage does not read them why

invest money in labeling? Do people even care about making healthy

choices? If not, why should we label?

BIBLIOGRAPHY.

Berning, J . P. 2010. Do positive nutrition shelf labels affect consumer behavior? findings from a field experiment with scanner data. American J ournal of Agricultural Economics 93 (2): 364.

Berning, J . P.. 2008. Consumer preferences for detailed versus summary formats of nutrition information on grocery store shelf labels. J ournal of Agricultural Food Industrial Organization 6 (1): 6.

Colson, G. J . 2011. Consumers’ Willingness to pay for Genetically Modified Foods with Product-Enhancing Nutritional Attributes. American J ournal of Agricultural Economics 93 (2): 358.

Colson, G. J . 2011. Improving the nutrient content of food through genetic modification: Evidence from experimental auctions on consumer acceptance. J ournal of Agricultural and Resource Economics 36 (2): 343.

Kiesel, K. 2011. Nutritional labeling and consumer choices. Annual Review of Resource Economics 3 (1): 141.

Lusk, J ason.20011. Information, Prices, and Healthy Lifestyle choices of adults: discussion. American J ournal of Agricultural Economics 93(2):385