FRANK NTI REBECCA MANES DUSTIN SHEARER Effects of Food Stigma & Labeling.
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Transcript of FRANK NTI REBECCA MANES DUSTIN SHEARER Effects of Food Stigma & Labeling.
FRANK NTIREBECCA MANESDUSTIN SHEARER
Effects of Food Stigma & Labeling
• Unsubstantiated or adulterated evidence
• Effects of stigma in consumption decisions
• Players involved: consumers, firms, &
government
• Cost-benefit calculations in decision-making
process
• Case studies
OUTLINE
FOOD STIGMA
A psychological phenomenon in which an object becomes viewed in a negative manner even when no actual problem or health risk has been identified.
Stigma is passed on via direct contact with a contaminated object in a phenomenon known as contagion
Effects of stigma in consumption decisions (Golan, et. al., 2001)
EXAMPLES OF STIGMA-INDUCING LABELS
Country of Origin labels Idea that domestically produced labels are superior
Local production, ethnocentricity, safety in recognized regulation
Nutrition Content e.g. differentiating as fat free
rBST Free Milk inherent connotation that rBST is harmful
GM Free Perception of ‘frankenfood’
Effects of stigma in consumption decisions
Unsubstantiated or adulterated evidence (Rosen, 2010)
ORGANIC FOOD
Soil Association’s Claims.:
“reviewed over 400 scientific papers”, found higher levels of “vitamin C, minerals, and trace elements”
confirm higher concentrations of antioxidants in organic peaches, tomatoes, and apples
Peer reviewed (UC, 2007) article results show higher vitamin C and total phenols than conventional kiwis
found higher levels of ‘beneficial’ vitamins, antioxidants, and omega-3 fatty acids in dairy cows raised on grass and clover
Results of QLIF study announced by Dr. Leifert to be published in next 12 months
Rosen’s Response:
Only 99 compared organic to conventional, 70 rejected under author criteria, 16 peer reviewed, and only 2 published in scientific journals
Reporter errors; differences in phenol content in peaches and tomatoes from one year to next; no statistical data in apple study
Miscalculated vitamin C and phenol content; then realized majority of phenols in thicker peels of organic kiwis, so never consumed
Higher ALA omega-3, but different carbon structure than EPA or DHA; still very small increase
Questioned two years later, and no new data
ORGANIC FOOD
Unsubstantiated or adulterated evidence (Rosen, 2010)
EMPIRICAL EVIDENCE: rBST MILK
Effects of stigma in consumption decisions
3 Part Experimental design
PART 1: introduce the Becker-DeGroot-Marschak (BDM) bidding mechanism which uses induced “cash values”
PART 2: submit bids using BDM to purchase a pencil
PART 3: elicite WTP values with the BDM mechanism for milk labeled with three production techniques (conventional, rBST-free, and organic) and three fat contents (0% skim, 1% low fat, and 3.25% whole)
(Kanter, et. al., 2009)
RESULTS
(Kanter, et. al., 2009)
RESULTS
(Kanter, et. al., 2009)
(Kanter, et. al., 2009)
WTP Conventional
WTP rBST-Free
Difference from Conventional
WTP Organic
Difference from Conventional
0% Skim $1.23 $1.03 -$0.20 $1.53 $1.201% Low Fat $1.37 $1.16 -$0.21 $1.39 $0.023.25% Whole $1.52 $1.24 -$0.28 $1.19 $0.05All Fat Types $1.28 $1.05 -$0.23 $1.37 $0.09
WTP Conventional
WTP rBST-Free
Difference from Conventional
WTP Organic
Difference from Conventional
0% Skim $0.55 $1.14 $0.59 $1.32 $0.771% Low Fat $0.64 $1.22 $0.58 $1.40 $0.773.25% Whole $0.63 $1.09 $0.46 $1.34 $0.71All Fat Types $0.61 $1.15 $0.54 $1.36 $0.75
Conventional rBST-FreeDifference from
Conventional OrganicDifference from
Conventional0% Skim 5.47 6.00 0.53 6.45 0.981% Low Fat 6.22 6.67 0.45 6.57 0.353.25% Whole 6.07 6.26 0.19 5.62 -0.45All Fat Types 5.92 6.31 0.39 6.21 0.29
Conventional rBST-FreeDifference from
Conventional OrganicDifference from
Conventional0% Skim 4.43 4.19 -0.24 6.25 1.821% Low Fat 5.07 5.22 0.15 6.93 1.863.25% Whole 5.43 5.16 0.27 6.45 1.02All Fat Types 4.98 4.86 -0.10 6.54 1.56
Table 3. Average WTP for Milk and Tasting Values by Fat Type, Production Method, and Order of Tasting
(b) Average Tasting Values for Milk
Tasted First
Tasted Last
Tasted First
Tasted Last
(a) Average WTP for Milk
BENEFIT OF LABELING TO CONSUMERS
Players involved: consumers, firms, & government
Differentiates the product from otherwise similar products
Enables economic efficiency
Ensures quality and safety, both in production and consumption
(Golan, et. al., 2001)
PRODUCT ATTRIBUTES
Search goods Characteristics which consumers can examine and compare
Experience goods Characteristics which consumers seek out after previous
purchase and evaluation
Credence goods Consumers must trust the label, since the attributes
are not observable
Players involved: consumers, firms, & government (Golan, et. al., 2001)
Misleading Ingredients
Players involved: consumers, firms, & government (Silverglade, et. al., 2011)
Misleading Claims on Functional Foods
Players involved: consumers, firms, & government (Silverglade, et. al., 2011)
More Unrelated Health Claims
Players involved: consumers, firms, & government (Silverglade, et. al., 2011)
Will adding an additional regulated but more encompassing label be more effective? Or add to confusion?
• Total Fat: <= 35% of calories from fat (or <= 3 grams per serving)
• Saturated Fat: <= 10% of calories from sat. fat. (or <= 1 gram per serving
• Trans Fat: <= 0.5 grams per serving (labeled as 0 grams per serving)
• Cholesterol: <= 60 mg per serving (not including meat & poultry)
• Added Sugars: <= 25% of total calories (except for breakfast cereals)
Players involved: consumers, firms, & government (Silverglade, et. al., 2011)
Improved Front-of-Package Labeling Schemes Being Tested by FDA
Players involved: consumers, firms, & government (Silverglade, et. al., 2011)
WHEN ARE LABELING POLICIES APPROPRIATE?
Consumer preferences differ
Information is clear & concise
Information enhances safety
Costs and benefits of consumption are borne by the consumer
Each of the steps along the labeling tree can be established
No political consensus on regulation
Players involved: consumers, firms, & government (Golan, et. al., 2001)
FIRMS: Voluntary Labeling
Problem Complexity in preferences
Considerations If revenue generated outweighs cost
Allows the firm to sell more without reducing the price or to raise the price without losing sales or market share (Schmalensee,1972)
Spillover effect: one firm includes information that applies to all similar products
Players involved: consumers, firms, & government (Golan, et. al., 2001)
ATTRIBUTE AWARENESS WITHOUT LABELING
Consumer Cynicism: belief that firms will be as “optimistic” as laws allow and anything not mentioned is negative or low quality
Warranties: allow for testimonial of product quality for credence goods
Competition: compels firms to reveal information
Players involved: consumers, firms, & government (Golan, et. al., 2001)
ECONOMICS OF MANDATORY LABELING
Mandatory labeling can result in higher additional per-unit costs for small firms leading to competitive disadvantage
Elasticity of demand and supply determines how much of the labeling cost will be passed onto consumers
Which consumers are impacted most? Robin Hood Effect
Players involved: consumers, firms, & government (Golan, et. al., 2001)
ROLE OF GOVERNMENT
Type of information involved
Distribution of the cost and benefits
Establish mandatory labeling laws
Correct asymmetric and imperfect information
Correct externalities (social welfare consequences)
Players involved: consumers, firms, & government (Golan, et. al., 2001)
ROLE OF GOVERNMENT CONT’D
Providing services to enhance voluntary labeling
Standard setting Testing Certification Enforcement
Not intervening at all
Players involved: consumers, firms, & government (Golan, et. al., 2001)
Players involved: consumers, firms, & government (Golan, et. al., 2001)
REASONS FOR THIRD PARTY INVOLVEMENT
Consumer choices & social objectives
Intelligibility and credibility of information
Fair competition among producers
Consumers’ access to information
Reduced risks to individual consumer safety and
health
Players involved: consumers, firms, & government (Golan, et. al., 2001)
COSTS
GOVERNMENT: Cost of program initiation Administration Enforcement (government)
FIRMS: Administrative: interpreting rule Costs of testing: determining nutrient content Printing costs: changing printing plates Inventory costs: labels made that can’t be used Reformulation, changing product recipes Changes to industry structure
CONSUMERS: Higher prices
(Golan, et. al., 2001)
Cost-Benefit Calculation
BENEFITS
Socially-desirable changes in consumption behavior
Economic efficiency in consumer choices
Product reformulation
Consumer confidence in product quality
Cost-Benefit Calculation (Golan, et. al., 2001)
CASE STUDY: DOLPHIN-SAFE TUNA FISHING
Marine Mammal Protection Act
Canned tuna consumer boycott
Tuna-canning firms buy & label ‘dolphin-safe’, as regulated by legal definition
Import ban on non-signatory tuna producing countries; contested
International Dolphin Protection Agreement
Definition of dolphin-safe changed to allow net-caught tuna
1972
1980’s
1990
1990
1997
1992
Case study (Golan, et. al., 2001)
BIBLIOGRAPHY
Works Cited
Golan, Elise, Fred Kuchler, and Lorraine Mitchell. "Economics of Food Labeling." Journal of Consumer Policy 24 (2001): 117-84. Print.
Kanter, Christopher. "Does Production Labeling Stigmatize Conventional Milk?" American Journal of Agricultural Economics 91.4 (2009): 1097-109. Print.
Rosen, Joseph D. "Nurtrition Claims Made by Proponents of Organic Food." Comprehensive Reviews in Food Science and Food Safety 9 (2010): 270-77. Print.
Silverglade, Bruce, and Irene R. Heller. Center for Science in the Public Interest. Rep. no. 54321. CSPI, Mar. 2010. Web. 7 Feb. 2012. <http://cspinet.org/new/pdf/food_labeling_chaos_report.pdf>.