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

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

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.

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Paper provided by Department of Agricultural & Resource Economics, UC Berkeley in its series Department of Agricultural & Resource Economics, UC Berkeley, Working Paper Series with number qt6st6d0rr.

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Date of creation: 16 Dec 2009
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Handle: RePEc:cdl:agrebk:qt6st6d0rr
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  1. Roe, Brian & Teisl, Mario F., 2007. "Genetically modified food labeling: The impacts of message and messenger on consumer perceptions of labels and products," Food Policy, Elsevier, vol. 32(1), pages 49-66, February.
  2. Todd, Jessica E. & Variyam, Jayachandran N., 2008. "The Decline in Consumer Use of Food Nutrition Labels, 1995-2006," Economic Research Report 56466, United States Department of Agriculture, Economic Research Service.
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