Heterogeneity in Consumer Responses to Front-of-Package Nutrition Labels: Evidence from a Natural Experiment?
We use a market-level natural experiment to evaluate how the voluntary Facts Up Front style Front-of-Package (FOP) nutritional labeling system would affect consumer choices, and whether it can promote the consumption of healthier food products. The new FOP system provides a quick summary of the calories, sugar, saturated fat, and selected positive nutrients, and is listed on the front of food packages. Using data of household-level Ready-to-Eat cereal (RTEC) purchases and difference-in-differences (DD) approaches, we find that the new FOP labels induce consumers to buy less RTEC, consume fewer calories, and less sodium, but only in households purchasing two RTEC packages per month or fewer. For RTEC products containing new FOP labels, consumers are observed to substitute more vigorously from products with poor nutritional quality to healthier RTEC products. We also find that household heads with education levels of a high school degree or less show the greatest improvement in their food choices, suggesting that the FOP labels change consumer behavior primarily through reduced information costs.
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