Consumer Acceptance of Traffic-light Labelling on Food vs. Financial Products

For products with risky characteristics, there are many debates about the best way to inform consumers. Traffic-lights have been already implemented in the UK on food products to guide consumers in making healthier food choices. In response to the recent financial crisis, a discussion about the compulsory usage of traffic-light labels on financial products has started by politicians and media in the UK and Germany. Similarly to foods, a green label on financial products would highlight a positive product attribute level (such as an above average rate of return); yellow that special attention is needed, whereas red would identify an adverse attribute level. This paper presents results of a choice experiment conducted in Germany to evaluate the impact of traffic-light labelling on food purchases in comparison to financial product purchases. Special attention is given to consumers’ involvement level in food and financial product purchases. In general, results indicate that traffic-lights affect consumers’ purchases of both product groups. While the low-fat attribute has no significant impact on food choices without traffic-lights, it has a positive impact on choices once signalled with a traffic-light label. We find that traffic-lights on financial products result in a halo-effect for the variance of returns: without traffic-lights, a product with a high variance of returns is chosen less often but more often if the product is labelled with a traffic-light.