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Heterogeneity in Consumer Responses to Front-of-Package Nutrition Labels: Evidence from a Natural Experiment?

  • Zhu, Chen

    ()

    (University of Connecticut)

  • Huang, Rui

    ()

    (University of Connecticut)

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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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File URL: http://www.cag.uconn.edu/are/zwickcenter/documents/workingpapers/wp27.pdf
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Paper provided by University of Connecticut, Department of Agricultural and Resource Economics, Charles J. Zwick Center for Food and Resource Policy in its series Working Papers with number 27.

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Length: 36 pages
Date of creation: May 2014
Date of revision:
Handle: RePEc:zwi:wpaper:27
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  1. 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.
  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. Kim, Sung-Yong & Nayga, Rodolfo M., Jr. & Capps, Oral, Jr., 2000. "The Effect Of Food Label Use On Nutrient Intakes: An Endogenous Switching Regression Analysis," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 25(01), July.
  4. Sebastian Galiani & Paul Gertler & Ernesto Schargrodsky, 2002. "Water for Life: The Impact of the Privatization of Water Services on Child Mortality," Working Papers 54, Universidad de San Andres, Departamento de Economia, revised Sep 2005.
  5. Andreas Drichoutis & Panagiotis Lazaridis & Rodolfo Nayga & Maria Kapsokefalou & George Chryssochoidis, 2008. "A theoretical and empirical investigation of nutritional label use," The European Journal of Health Economics, Springer, vol. 9(3), pages 293-304, August.
  6. Berning, Joshua P. & Chouinard, Hayley H. & Manning, Kenneth C. & McCluskey, Jill J. & Sprott, David E., 2010. "Identifying consumer preferences for nutrition information on grocery store shelf labels," Food Policy, Elsevier, vol. 35(5), pages 429-436, October.
  7. Andreas C. Drichoutis & Panagiotis Lazaridis & Rodolfo M. Nayga, 2005. "Nutrition knowledge and consumer use of nutritional food labels," European Review of Agricultural Economics, Foundation for the European Review of Agricultural Economics, vol. 32(1), pages 93-118, March.
  8. Mario F. Teisl & Nancy E. Bockstael & Alan Levy, 2001. "Measuring the Welfare Effects of Nutrition Information," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 83(1), pages 133-149.
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