Information Cost and Consumer Choices of Healthy Foods

This article examines whether or not a reduction in consumer search cost for nutritional information increases the probability that heterogeneous consumers will choose healthier food products. Empirical results from the ready-to-eat breakfast cereal (RTEC) market confirm the conceptual analysis that lowering information cost via simplified nutritional labeling increases the healthfulness of consumer choices. The healthfulness attribute weighs 28.44% more heavily in consumers' decision-making with simpler labeling systems. On average, introducing front-of-package labeling increased the probability of a consumer choosing a healthy RTEC by 3.49% and reduced the probability of choosing an unhealthy RTEC by 3.81%. Calories, sugar, saturated fat, and sodium consumption decrease by 0.31%, 2.63%, 6.94%, and 1.97%, respectively. Fiber intake increases by 3.24%. Further results show that less-educated and smaller households with less frequent purchases benefit the most from a reduction in information cost. Overall, this article shows the potentially positive role that voluntary, more convenient labeling could play in improving market and public health outcomes.