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Can Information Costs Confuse Consumer Choice?---Nutritional Labels in a Supermarket Experiment

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  • Kiesel, Kristin
  • Villas-Boas, Sofia B.

Abstract

This paper investigates whether information costs prevent consumers from making healthier food choices under currently regulated nutritional labels in a market-level experiment. Implemented nutritional shelf labels reduce information costs by either repeating information available on the Nutritional Facts Panel, or providing information in a new format. We analyze microwave popcorn purchases using weekly store-level scanner data from both treatment and control stores in a difference-in-differences and synthetic control method approach. Our results suggest that information costs affect consumer purchase decisions. In particular, no trans fat labels significantly increase sales, even though this information is already available on the package. Low calorie labels significantly increase sales, while correlated low fat labels significantly decrease sales, suggesting that labeling response may also be influenced by consumers' taste perceptions. Finally, combining multiple claims in a single label reduces the effectiveness of the implemented labels. Our results provide direct implications for changes to the format and content of nutritional labeling currently considered by the Food and Drug Administration.

Suggested Citation

  • Kiesel, Kristin & Villas-Boas, Sofia B., 2009. "Can Information Costs Confuse Consumer Choice?---Nutritional Labels in a Supermarket Experiment," Department of Agricultural & Resource Economics, UC Berkeley, Working Paper Series qt6st6d0rr, Department of Agricultural & Resource Economics, UC Berkeley.
  • Handle: RePEc:cdl:agrebk:qt6st6d0rr
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    References listed on IDEAS

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    Cited by:

    1. De Borger, Bruno & Fosgerau, Mogens, 2012. "Information provision by regulated public transport companies," Transportation Research Part B: Methodological, Elsevier, vol. 46(4), pages 492-510.
    2. Kiesel, Kristin & Villas-Boas, Sofia B., 2013. "Can information costs affect consumer choice? Nutritional labels in a supermarket experiment," International Journal of Industrial Organization, Elsevier, vol. 31(2), pages 153-163.
    3. Allais, Olivier & Etile, Fabrice & Lecocq, Sebastien, 2011. "Mandatory Labelling: Evidence from the French Fromage Blanc and Yogurt Market," 2011 International Congress, August 30-September 2, 2011, Zurich, Switzerland 120382, European Association of Agricultural Economists.
    4. Olivier Allais; & Fabrice Etile; & Sebastien Lecocq, 2012. "Mandatory labelling, nutritional taxes and market forces: An empirical evaluation of fat policies in the French fromage blanc and yogurt market," Health, Econometrics and Data Group (HEDG) Working Papers 12/14, HEDG, c/o Department of Economics, University of York.

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