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The Impact of Mandatory Disclosure Laws on Product Choices: An Analysis of the Salad Dressing Market

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Author Info
Mathios, Alan D
Abstract

The Nutrition Labeling and Education Act (NLEA) requires most food products to include a nutrition label. Prior to the NLEA, labeling was voluntary. This study uses nutrition label information and supermarket scanner data pre- and post-NLEA to examine the impact of moving from a voluntary to a mandatory labeling regime on consumer product choice. The voluntary unraveling of information is shown to be an important market mechanism. Prior to the NLEA, all low-fat salad dressings had a nutrition label, while the majority of the higher fat dressings did not. However, there remained large variation in fat content among dressings that did not voluntarily label. Those with the highest fat levels experienced a significant decline in sales after they were required to disclose. The results indicate that even in markets with credible, low-cost mechanisms to disclose, mandatory labeling can have an impact on consumer behavior and health. Copyright 2000 by the University of Chicago.

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Publisher Info
Article provided by University of Chicago Press in its journal Journal of Law & Economics.

Volume (Year): 43 (2000)
Issue (Month): 2 (October)
Pages: 651-77
Download reference. The following formats are available: HTML (with abstract), plain text (with abstract), BibTeX, RIS (EndNote, RefMan, ProCite), ReDIF
Handle: RePEc:ucp:jlawec:v:43:y:2000:i:2:p:651-77

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  1. Jin, Yanhong & Zilberman, David & Heiman, Amir, 2005. "Choosing Brands: Fresh Produce versus other Products," 2005 Annual meeting, July 24-27, Providence, RI 19192, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association). [Downloadable!]
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  2. David Hirshleifer & SONYA SEONGYEON LIM & Siew Hong Teoh, 2004. "Disclosure to an Audience with Limited Attention," Game Theory and Information 0412002, EconWPA. [Downloadable!]
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  3. Jayachandran N. Variyam, 2008. "Do nutrition labels improve dietary outcomes?," Health Economics, John Wiley & Sons, Ltd., vol. 17(6), pages 695-708. [Downloadable!]
  4. Kristin Kiesel & Sofia Villas-Boas, 2008. "Another Nutritional Label--Experimenting with Grocery Store Shelf Labels and Consumer Choice--," Department of Agricultural & Resource Economics, UC Berkeley, Working Paper Series 1060, Department of Agricultural & Resource Economics, UC Berkeley. [Downloadable!]
  5. Kristin Kiesel & Sofia B. Villas-Boas, 2007. "Got Organic Milk? Consumer Valuations of Milk Labels after the Implementation of the USDA Organic Seal," Journal of Agricultural & Food Industrial Organization, Berkeley Electronic Press, vol. 5(1). [Downloadable!]
  6. Junmin Wan, 2004. "Responses of Consumers to the Mandatory Disclosure of Information: Evidence from Natural Experiments in Japanese Inter-brand Cigarette Demands," Discussion Papers in Economics and Business 04-13-Rev, Osaka University, Graduate School of Economics and Osaka School of International Public Policy (OSIPP), revised Feb 2006. [Downloadable!]
  7. A. Mitchell Polinsky & Steven Shavell, 2006. "Mandatory Versus Voluntary Disclosure of Product Risks," NBER Working Papers 12776, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  8. Rosemary Avery & Donald Kenkel & Dean Lillard & Alan Mathios, 2007. "Regulating advertisements: the case of smoking cessation products," Journal of Regulatory Economics, Springer, vol. 31(2), pages 185-208, April. [Downloadable!] (restricted)
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  9. Seth M. Freedman & Melissa Schettini Kearney & Mara Lederman, 2009. "Product Recalls, Imperfect Information, and Spillover Effects: Lessons from the Consumer Response to the 2007 Toy Recalls," NBER Working Papers 15183, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  10. V. Joseph Hotz & Mo Xiao, 2006. "Strategic Information Disclosure: The Case of Multi-Attribute Products with Heterogeneous Consumers," NBER Working Papers 11937, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  11. Hirshleifer, David & Lim, Sonya S. & Teoh, Siew Hong, 2004. "Disclosure to a Credulous Audience: The Role of Limited Attention," MPRA Paper 5198, University Library of Munich, Germany. [Downloadable!]
  12. Jay Shimshack, 2004. "Are Mercury Advisories Effective? Inofrmation, Education, and Fish Consumption," Discussion Papers Series, Department of Economics, Tufts University 0423, Department of Economics, Tufts University. [Downloadable!]
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