Comparing Experiences of Nutritional Labeling to reduce the Incidence of

Obesity and Overweight Problems in Europe and U.S.

Maria L. Loureiro,

IDEGA-USC, Spain & NILF, Norway

Understanding the causing factors of obesity

Obesity Growth Currently: BMI growth

%pop BMI>25 in OECD countries

0

10

20

30

40

50

60

Year

1977

1979

1981

1983

1985

1987

1989

1991

1993

1995

1997

1999

2001

%pop BMI>25

Percentage of Individuals Obese and Overweight in Selected

Countries

Figure 1: Incidence of Overweight Problems Internationally

6046.1

51.141.7

36.248.8

44.852.2

43.157.6

48.342.7

6264.5

0 10 20 30 40 50 60 70

country

Obesity by Age and Country: ECHP

Source: Sanz-de-Galdeano, A., 2005

The Fat Tale Problem….

Obesity by Age Group

Source: Sanz-de-Galdeano, A, 2005

Obesity as an economic externality

• Estimates of the cost of obesity per capita of the population differ from country to country, but a rising pattern is emerging.

• Direct costs of obesity are estimated to be as high as:– Sweeden US $45 per capita per year, – US$ 35 in Germany– US$ 32 in the Netherlands – US$ 69 in Belgium, close to 6% of health care costs. In addition, these

costs are rising dramatically. – US$ 25-31 in UK( 2002)– US$ 157 in USA– 1% of EU GDP!!!...and rising!

(World Health Organization Media Center, 2006)

Obesity as an economic externality

• The social and economic consequences of obesity are serious.

• Social problems (stigma effect): obesity affects in a negative and statistically significant way earnings and wages in the EU, U.S. and in the U.K, particularly for females (Harper, 2000; Cawley, 2004, Brunello and O´Homes, 2007), as well as personal relations.

• Economic problem with externalities: direct medical costs in OECD are rising

– U.S. studies indicate the health care for overweight and obese individuals costs an average of 37 percent more than for people of normal weight.

• Other related illnesses to obesity are also growing.

Source: Andreyeva, T., P.C. Michaud, A. Van Soest.

Why Economic Instruments?

• Economic intervention is justified when there are market failures:– In the obesity epidemic there are clear costs (externalities)

being paid by the whole society– Information may not be sufficient to make rational choices:

misleading information, or asymmetric information.– Not all agents may be able to make rational choices: the

case of children

• If one or more of the previous premises is violated, then government intervention is justified.

Types of Instruments

• Information instruments– Nutritional Labeling– Nutritional Guidelines– Educational Programs

• Pricing Instruments– Taxes – Subsidies

• Other economic regulations to limit certain input usages or sales of outputs, advertising to children, etc.

Information Instruments: Nutritional Labeling

Types of Nutritional Information on Food Labels

– Nutritional Panel– Nutrient content claims-”light” 30% fewer

calories, low in sodium, etc.– Voluntary food profiling labels

Nutritional labeling: The US Nutritional Panel

specify the number of servings per container and the key nutrients of a serving in a 2,000-calorie-per-day diet (expressed as percentage of the Daily Value). Serving sizes on the label are standardized so that consumers can comparenutritional information between products.

International Concerns about Nutrition Labeling Practices

• In the EU provision of nutritional information is done on voluntary basis.

• EU Nutritional Labeling Directive is under review. A proposal is expected during 2007.

– In a EU recent survey, it was found that 56% of all food products included tabular nutrition labeling and 44% had no tabular nutrition labeling. Inconsistent labeling information

• Only those products healthier use labels (signaling and disclosure) ant these become marketing tools.

• In the United States the Nutrition Labeling and Education Act (NLEA) was passed in 1990.

• The resulting nutrition labelling regulations, which became fully effective in 1994, provide consumers with an unprecedented amount of nutrition information by mandating nutrition labelling on virtually all processed foods.

• The Nutrition Facts Panel´s contents, regulated by the FDA, are specific to the food product or food product category

The European Food Labels: Food Profiling

•Non standarized

•Non-comparable information

•Still Voluntary, unless a nutritional claim is madeThe Keyholder symbol applied in

Sweeden and Norway by the ICA retail group

Nutritional Labeling coverage EU

• Large Geographical Differences:

– UK: 75 % of products are labeled– Spain: 54% of foods carry a label– Germany: 50% of foods are labeled– Poland: 41% of foods carry labels

Are labels effective: Who reads them?

• Not all consumers are used to read labels

• Spanish study (Loureiro, Gracia and Nayga, 2006): who read the labels?

• Only obese and overweight female with higher levels of education usually read food labels while shopping for food.– Previous U.S. studies arrive to the same conclusions.

Measurements of Direct Effects: Labeling on Health

• Problems with assessment:– We need to have a good measure of the

dietary intakes. Is that really possible?• Measurement error can be really large due to

problems with 24 hour recall, diaries, complication of food frequency questionnaires.

Assessing the Benefits of Nutritional Labeling

• Most previous studies were conducted in the US. They have shown that:– After the NLEA 1991, unhealthy foods were

transformed to healthier foods given that they were obligated to disclose their nutritional properties (Mathios,1995).

– Labels help consumers selecting healthier food choices (Kim, Nayga and Capps, 1995).

– Labels increase knowledge of nutritional properties of foods among consumers.

Benefits of Labeling

• However, in spite of these encouraging results, recent studies show limitations of the NLEA to reduce obesity.

• Variyam (2006) finds that the implementation of the NLEA was associated with a decrease in body weight and the probability of obesity among non-Hispanic white women.

• One thing is to pass a cost-benefit analysis and another is to change radically consumers´ behavior (Golan et al.,2000).

European Preferences Towards Food Labeling

• Spanish study (Loureiro, Gracia and Nayga, ERAE, 2006) shows that consumers are supportive of future food nutritional labeling. – On average, in a sample of 400 representative

shoppers the mean WTP for nutritional labels carried by energy dense food was about 11% of the initial price.

– Individuals watching their diets due to medical reasons and obese were willing to pay on average more.

European Preferences Towards Food Labeling

• However, choice experiments show that the presence of a known brand is more important than the level of nutritional information provided when facing shopping decisions.

• Can marketers savvies offset more stringent regulations with better promotion campaigns and more interesting product design?

Health Claims: Are those good for you??

• Recently regulated at EU level. Need scientific consensus

• Are there perverse effects linked to marketers strategy of highlighting information related to only one food attribute and ignoring all others (vitamin levels?)

• Low fat, fat-free, etc.

Nutritional Labeling in Restaurants

• Being currently debated in the U.S. The U.S. Surgeon General (2001) “increase availability of nutrition information for foods eaten and prepared away from home”.

• Great importance of food away from home in Western societies. Americans spend about 46% of their food dollars in FAFH (Variyam, 2006).

• Fast food: generally higher calories and saturated fat.

Product Calories Price$

Double

Quarter Pounder

760 2.99

Cheese Burger

330 0.99

Big Mac 590 2.39

Crispy Chicken

550 2.79

Burger King Hamburgers XXL

• Spain chastises Burger King for advertising giant burger

• 971 kilocalories on average, which is "almost 50 percent of the energy requirement of an active teenager".

• Advertising promotion: It's awful being a vegetarian, right?"

• The XXL as a Whopper "with two enormous portions of flame-broiled meat that will give you all the energy you need to take the world by storm."

Information Instruments: Summary

• New guidelines may help consumers to select healthier food choices

• US one of the countries is the world with more stringent legislation regarding food labeling. Number of labels when up considerably while obesity became a serious problem.

• Labeling is not a panacea. Additional efforts should be made to educate individuals about proper ways of eating.