Shrinkflation, unit price disclosure, and consumer welfare: Evidence from canned tuna

Shrinkflation, the downsizing of packages without proportional price cuts, raises effective prices in ways that are often difficult for consumers to detect under bounded attention. We exploit a documented episode of product downsizing, combined with preexisting state-level variation in unit price disclosure rules, to identify how information design affects consumer behavior and welfare. Using a matched sample of scanner data and a control function approach, we show that consumers in regulated states are three times more responsive to unit price changes, consistent with disclosure increasing the salience of the relevant price metric. Counterfactual simulations indicate that nationwide disclosure would raise annual consumer surplus by $3.03 million in the short term and $8.33 million in the long term once retailers adjust prices strategically. At present, only 16 states regulate unit price labeling on food items. Our findings demonstrate that such labeling improves consumer decision-making under shrinkflation.