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Should The United States Initiate A Mandatory Labeling Policy For Genetically Modified Foods?

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Author Info

  • Huffman, Wallace E.
  • Rousu, Matthew C.
  • Shogren, Jason F.
  • Tegene, Abebayehu

Abstract

In many countries, including those in the European Union, Japan, Australia, and China, labeling is required for foods that contain genetically modified material. Other countries, including the United States, do not require mandatory labeling of GM foods. The United States, however, does allow firms to voluntarily label their products as non-GM. This raises the question of whether a mandatory labeling or voluntary labeling policy is more efficient. Proponents of voluntary labeling policies say they are less expensive, because only the firms that wish to label their products must incur the labeling costs. In a mandatory labeling regime, all firms would need to incur additional costs, whether the costs are due to product testing, label design, segregation, mistakes in labeling, etc. Many proponents of mandatory labeling of GM foods say that consumers have a "right to know" what they are eating and proponents claim that governments should mandate labels for foods made through genetic modification. This paper presents empirical evidence on consumers' value for foods with positive (i.e. this food is made with genetic engineering) labels versus and for foods with negative (i.e. this food is made without genetic engineering) labels. The positive label is likely to occur under a mandatory labeling system, while the negative label is likely to occur in a voluntary system. Thus, we present evidence on the consumer value of different labeling policies. We estimate values using a laboratory auction experiment performed on 142 randomly chosen adult consumers in the Des Moines, IA, and Saint Paul, MN, areas, grouped in 8 experimental units. They participated in a random nth-price auction experiment, in which they bid on three familiar neutral food items (an oil, a processed food, and a fresh food) that may be genetically modified. Experimental units are randomly assigned to the labeling treatment (i.e., food items with accurate GM food labels versus no food labels). Using statistical design and econometric analysis, this paper will estimate the average value of food label regimes to consumers. This will be measured as the difference in the auction price of a particular food item with and without a GM food label. We present evidence that shows that a voluntary labeling system elicits the same consumer reaction as a mandatory labeling system. Because a voluntary labeling policy would be less expensive to implement, this paper provides evidence that the United States should not abandon the current voluntary labeling system for a mandatory one. This information could be useful to U.S. public policy makers who must decide on GM food labeling legislation.

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Bibliographic Info

Paper provided by American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association) in its series 2002 Annual meeting, July 28-31, Long Beach, CA with number 19857.

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Date of creation: 2002
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Handle: RePEc:ags:aaea02:19857

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Keywords: Food Consumption/Nutrition/Food Safety;

References

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  1. Fox, John A. & Shogren, Jason F. & Hayes, Dermot J. & Kliebenstein, James, 1998. "Cvm-X: Calibrating Contingent Values with Experimental Auction Markets," Staff General Research Papers 1311, Iowa State University, Department of Economics.
  2. Noussair, C.N. & Robin, S. & Ruffieux, B., 2002. "Do consumers not care about biotech foods or do they just not read the labels?," Open Access publications from Tilburg University urn:nbn:nl:ui:12-378702, Tilburg University.
  3. Golan, Elise H. & Kuchler, Fred & Mitchell, Lorraine, 2000. "Economics Of Food Labeling," Agricultural Economics Reports 34069, United States Department of Agriculture, Economic Research Service.
  4. John M. Crespi & St)phan Marette, 2001. "How Should Food Safety Certification be Financed?," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 83(4), pages 852-861.
  5. Shogren, Jason F. & Seung Y. Shin & Dermot J. Hayes & James B. Kliebenstein, 1994. "Resolving Differences in Willingness to Pay and Willingness to Accept," American Economic Review, American Economic Association, vol. 84(1), pages 255-70, March.
  6. Kirchhoff, Stefanie & Zago, Angelo M., 2001. "A Simple Model Of Voluntary Vs Mandatory Labelling Of Gmos," 2001 Annual meeting, August 5-8, Chicago, IL 20540, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
  7. Shogren, Jason F. & Margolis, Michael & Koo, Cannon & List, John A., 2001. "A random nth-price auction," Journal of Economic Behavior & Organization, Elsevier, vol. 46(4), pages 409-421, December.
  8. Elizabeth Hoffman & Dale J. Menkhaus & Dipankar Chakravarti & Ray A. Field & Glen D. Whipple, 1993. "Using Laboratory Experimental Auctions in Marketing Research: A Case Study of New Packaging for Fresh Beef," Marketing Science, INFORMS, vol. 12(3), pages 318-338.
  9. Lusk, Jayson L. & Roosen, Jutta & Fox, John A., 2001. "Demand For Beef From Cattle Administered Growth Hormones Or Fed Genetically Modified Corn: A Comparison Of Consumers In France, Germany, The United Kingdom, And The United States," 2001 Annual meeting, August 5-8, Chicago, IL 20684, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
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Cited by:
  1. Wachenheim, Cheryl J. & Vanwechel, Tamara, 2004. "The Influence Of Environmental-Impact Information On Consumer Willingness To Pay For Products Labeled As Free Of Genetically Modified Ingredients," Journal of Food Distribution Research, Food Distribution Research Society, vol. 35(02), July.
  2. Marks, Leonie A. & Kalaitzandonakes, Nicholas G. & Vickner, Steven S., 2003. "Evaluating Consumer Response to GM Foods: Some Methodological Considerations," CAFRI: Current Agriculture, Food and Resource Issues, Canadian Agricultural Economics Society, issue 04.

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