Nothing Special   »   [go: up one dir, main page]
IDEAS home Printed from https://ideas.repec.org/a/wly/ajagec/v104y2022i2p853-872.html
   My bibliography  Save this article

Intended and unintended consequences of salient nutrition labels

Author

Listed:
  • Wenying Li
  • Eric Andrew Finkelstein
  • Chen Zhen
Abstract
Profit maximizing firms sometimes engage in voluntary informative advertising, usually to promote their reputation as honest brokers. One example of informative advertising is shelf nutrition labels that some supermarket chains voluntarily provide. Several studies have shown that voluntary shelf nutrition and similar front‐of‐pack nutrition labels positively influence food purchasing patterns. Yet these studies assumed that suppliers are price takers. Using one shelf nutrition label, NuVal, as an example, we revisit this assumption. We take advantage of the natural experiment that occurred when NuVal substantially changed its underlying scoring algorithm. As the NuVal label represents an independent expert assessment of the health quality of each food product, this natural experiment allows for testing the causal effect of the information on demand and price changes independent of the hype that comes with the rollout of a new information policy. After endogenizing prices, we find that price changes offset nearly 42% of the direct effects of the score changes. This result shows the potential benefits of this form of voluntary information disclosure but also that most previous analyses of nutrition labeling overstated the benefits because they failed to account for supply responses.

Suggested Citation

  • Wenying Li & Eric Andrew Finkelstein & Chen Zhen, 2022. "Intended and unintended consequences of salient nutrition labels," American Journal of Agricultural Economics, John Wiley & Sons, vol. 104(2), pages 853-872, March.
    • Handle: RePEc:wly:ajagec:v:104:y:2022:i:2:p:853-872
    DOI: 10.1111/ajae.12240
    as

    Download full text from publisher

    File URL: https://doi.org/10.1111/ajae.12240
    Download Restriction: no
    File URL: https://libkey.io/10.1111/ajae.12240?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Hilger, James & Rafert, Greg & Villas-Boas, Sofia Berto, 2007. "Expert Opinion and the Demand for Experience Goods: An Experimental Approach," CUDARE Working Papers 6055, University of California, Berkeley, Department of Agricultural and Resource Economics.
    2. Sofia B. Villas‐Boas & Kristin Kiesel & Joshua P. Berning & Hayley H. Chouinard & Jill J. McCluskey, 2020. "Consumer and Strategic Firm Response to Nutrition Shelf Labels," American Journal of Agricultural Economics, John Wiley & Sons, vol. 102(2), pages 458-479, March.
    3. David A. Reinstein & Christopher M. Snyder, 2005. "The Influence Of Expert Reviews On Consumer Demand For Experience Goods: A Case Study Of Movie Critics," Journal of Industrial Economics, Wiley Blackwell, vol. 53(1), pages 27-51, March.
    4. Gene M. Grossman & Carl Shapiro, 1984. "Informative Advertising with Differentiated Products," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 51(1), pages 63-81.
    5. Hunt Allcott & Rebecca Diamond & Jean-Pierre Dubé & Jessie Handbury & Ilya Rahkovsky & Molly Schnell, 2019. "Food Deserts and the Causes of Nutritional Inequality," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 134(4), pages 1793-1844.
    6. Christine Moorman & Rosellina Ferraro & Joel Huber, 2012. "Unintended Nutrition Consequences: Firm Responses to the Nutrition Labeling and Education Act," Marketing Science, INFORMS, vol. 31(5), pages 717-737, September.
    7. Rahkovsky, Ilya & Lin, Biing-Hwan & Lin, Chung-Tung Jordan & Lee, Jonq-Ying, 2013. "Effects of the Guiding Stars Program on purchases of ready-to-eat cereals with different nutritional attributes," Food Policy, Elsevier, vol. 43(C), pages 100-107.
    8. Chen Zhu & Rigoberto A. Lopez & Xiaoou Liu, 2016. "Information Cost and Consumer Choices of Healthy Foods," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 98(1), pages 41-53.
    9. repec:hal:pseose:halshs-01213319 is not listed on IDEAS
    10. Jerry A. Hausman, 1996. "Valuation of New Goods under Perfect and Imperfect Competition," NBER Chapters, in: The Economics of New Goods, pages 207-248, National Bureau of Economic Research, Inc.
    11. Christian Broda & David E. Weinstein, 2010. "Product Creation and Destruction: Evidence and Price Implications," American Economic Review, American Economic Association, vol. 100(3), pages 691-723, June.
    12. Rebecca L. C. Taylor & Scott Kaplan & Sofia B. Villas‐Boas & Kevin Jung, 2019. "Soda Wars: The Effect Of A Soda Tax Election On University Beverage Sales," Economic Inquiry, Western Economic Association International, vol. 57(3), pages 1480-1496, July.
    13. Timothy F. Bresnahan & Robert J. Gordon, 1996. "The Economics of New Goods," NBER Books, National Bureau of Economic Research, Inc, number bres96-1.
    14. Jonah Berger & Alan T. Sorensen & Scott J. Rasmussen, 2010. "Positive Effects of Negative Publicity: When Negative Reviews Increase Sales," Marketing Science, INFORMS, vol. 29(5), pages 815-827, 09-10.
    15. Jayachandran N. Variyam, 2008. "Do nutrition labels improve dietary outcomes?," Health Economics, John Wiley & Sons, Ltd., vol. 17(6), pages 695-708, June.
    16. Wolfram Schlenker & Sofia B. Villas-Boas, 2009. "Consumer and Market Responses to Mad Cow Disease," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 91(4), pages 1140-1152.
    17. Allais, Olivier & Etilé, Fabrice & Lecocq, Sébastien, 2015. "Mandatory labels, taxes and market forces: An empirical evaluation of fat policies," Journal of Health Economics, Elsevier, vol. 43(C), pages 27-44.
    18. Cawley, John, 2015. "An economy of scales: A selective review of obesity's economic causes, consequences, and solutions," Journal of Health Economics, Elsevier, vol. 43(C), pages 244-268.
    19. Sofia B. Villas‐Boas & Céline Bonnet & James Hilger, 2021. "Random Utility Models, Wine and Experts," American Journal of Agricultural Economics, John Wiley & Sons, vol. 103(2), pages 663-681, March.
    20. James Hilger & Greg Rafert & Sofia Villas-Boas, 2011. "Expert Opinion and the Demand for Experience Goods: An Experimental Approach in the Retail Wine Market," The Review of Economics and Statistics, MIT Press, vol. 93(4), pages 1289-1296, November.
    21. Chern, Wen S & Loehman, Edna T & Yen, Steven T, 1995. "Information, Health Risk Beliefs, and the Demand for Fats and Oils," The Review of Economics and Statistics, MIT Press, vol. 77(3), pages 555-564, August.
    22. Ginger Zhe Jin & Phillip Leslie, 2003. "The Effect of Information on Product Quality: Evidence from Restaurant Hygiene Grade Cards," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 118(2), pages 409-451.
    23. Justin P. Johnson & David P. Myatt, 2006. "On the Simple Economics of Advertising, Marketing, and Product Design," American Economic Review, American Economic Association, vol. 96(3), pages 756-784, June.
    24. Schlenker, Wolfram & Villas-Boas, Sofia, 2009. "AJAE appendix for ‘Consumer and Market Responses to Mad-Cow Disease’," American Journal of Agricultural Economics APPENDICES, Agricultural and Applied Economics Association, vol. 91(4), pages 1-12, March.
    25. Nicholas E. Piggott & Thomas L. Marsh, 2004. "Does Food Safety Information Impact U.S. Meat Demand?," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 86(1), pages 154-174.
    26. 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.
    27. Stiglitz, Joseph E & Weiss, Andrew, 1981. "Credit Rationing in Markets with Imperfect Information," American Economic Review, American Economic Association, vol. 71(3), pages 393-410, June.
    28. Schlenker, Wolfram & Villas-Boas, Sofia B, 2008. "Consumer and Market Responses to Mad-Cow Disease," Department of Agricultural & Resource Economics, UC Berkeley, Working Paper Series qt7995j7cm, Department of Agricultural & Resource Economics, UC Berkeley.
    29. Chen Zhen & Xiaoyong Zheng, 2020. "The Impact of NuVal Shelf Nutrition Labels on Food Purchase," Applied Economic Perspectives and Policy, John Wiley & Sons, vol. 42(4), pages 870-887, December.
    30. Deborah J. Brown & Lee F. Schrader, 1990. "Cholesterol Information and Shell Egg Consumption," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 72(3), pages 548-555.
    31. Ackerberg, Daniel A, 2001. "Empirically Distinguishing Informative and Prestige Effects of Advertising," RAND Journal of Economics, The RAND Corporation, vol. 32(2), pages 316-333, Summer.
    32. George A. Akerlof, 1970. "The Market for "Lemons": Quality Uncertainty and the Market Mechanism," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 84(3), pages 488-500.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Ezgi Cengiz & Christian Rojas, 2024. "Are food manufacturers reducing sugar content? Evidence from scanner data," Agribusiness, John Wiley & Sons, Ltd., vol. 40(3), pages 571-595, July.
    2. Grace Melo & Laura Chomali & Ariun Ishdorj, 2024. "From sweet tooth to healthy choices: How Chilean food policies are changing household diets," Agribusiness, John Wiley & Sons, Ltd., vol. 40(3), pages 550-570, July.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Nano Barahona & Cristóbal Otero & Sebastián Otero, 2023. "Equilibrium Effects of Food Labeling Policies," Econometrica, Econometric Society, vol. 91(3), pages 839-868, May.
    2. Sofia B. Villas‐Boas & Céline Bonnet & James Hilger, 2021. "Random Utility Models, Wine and Experts," American Journal of Agricultural Economics, John Wiley & Sons, vol. 103(2), pages 663-681, March.
    3. Ollinger, Michael & Houser, Matthew, 2020. "Ground beef recalls and subsequent food safety performance," Food Policy, Elsevier, vol. 97(C).
    4. Villas-Boas, Sofia B, 2020. "Reduced Form Evidence on Belief Updating Under Asymmetric Information," Department of Agricultural & Resource Economics, UC Berkeley, Working Paper Series qt08c456vk, Department of Agricultural & Resource Economics, UC Berkeley.
    5. Michela Ponzo & Vincenzo Scoppa, 2015. "Experts’ awards and economic success: evidence from an Italian literary prize," Journal of Cultural Economics, Springer;The Association for Cultural Economics International, vol. 39(4), pages 341-367, November.
    6. Rosa Ferrer Zarzuela & Helena Perrone, 2017. "Consumers’ costly responses to product-harm crises," Economics Working Papers 1571, Department of Economics and Business, Universitat Pompeu Fabra.
    7. Rosa Ferrer & Helena Perrone, 2023. "Consumers’ Costly Responses to Product-Harm Crises," Management Science, INFORMS, vol. 69(5), pages 2639-2671, May.
    8. Chantal Toledo & Sofia Berto Villas-Boas, 2019. "Safe or Not? Consumer Responses to Recalls with Traceability," Applied Economic Perspectives and Policy, John Wiley & Sons, vol. 41(3), pages 519-541, September.
    9. Philip Garland Gayle & Jin Wang & Shengnan Fang, 2023. "The Organic food price premium and its susceptibility to news media coverage: evidence from the US milk industry," Applied Economics, Taylor & Francis Journals, vol. 55(28), pages 3296-3315, June.
    10. Shimshack, Jay P. & Ward, Michael B., 2010. "Mercury advisories and household health trade-offs," Journal of Health Economics, Elsevier, vol. 29(5), pages 674-685, September.
    11. Fabrice Etilé, 2019. "The Economics of Diet and Obesity: Public Policy," PSE-Ecole d'économie de Paris (Postprint) hal-02154445, HAL.
    12. Jacobsen, Grant D., 2015. "Consumers, experts, and online product evaluations: Evidence from the brewing industry," Journal of Public Economics, Elsevier, vol. 126(C), pages 114-123.
    13. Sofia B. Villas‐Boas & Kristin Kiesel & Joshua P. Berning & Hayley H. Chouinard & Jill J. McCluskey, 2020. "Consumer and Strategic Firm Response to Nutrition Shelf Labels," American Journal of Agricultural Economics, John Wiley & Sons, vol. 102(2), pages 458-479, March.
    14. Adam Dvir, 2022. "Is mass media an effective channel for conveying nutritional information? Welfare implications of the WHO classification of processed meats as carcinogenic on consumers in Israel," French Stata Users' Group Meetings 2022 21, Stata Users Group.
    15. Lin, Wen & Ma, Baojie & Liang, Jiangyuan & Jin, Shaosheng, 2024. "Price response to government disclosure of food safety information in developing markets," Food Policy, Elsevier, vol. 123(C).
    16. Taylor, Mykel & Klaiber, H. Allen & Kuchler, Fred, 2016. "Changes in U.S. consumer response to food safety recalls in the shadow of a BSE scare," Food Policy, Elsevier, vol. 62(C), pages 56-64.
    17. Mary J. Benner & Todd Zenger, 2016. "The Lemons Problem in Markets for Strategy," Strategy Science, INFORMS, vol. 1(2), pages 71-89, June.
    18. Mariana Carrera & Sofia Villas-Boas, 2023. "Generic Aversion and Observational Learning in the Over-the-Counter Drug Market," American Economic Journal: Applied Economics, American Economic Association, vol. 15(3), pages 380-410, July.
    19. Amedeo Piolatto, 2015. "Online booking and information: competition and welfare consequences of review aggregators," Working Papers 2015/11, Institut d'Economia de Barcelona (IEB).
    20. Matthew Houser & Berna Karali, 2020. "How Scary Are Food Scares? Evidence from Animal Disease Outbreaks," Applied Economic Perspectives and Policy, John Wiley & Sons, vol. 42(2), pages 283-306, June.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:wly:ajagec:v:104:y:2022:i:2:p:853-872. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Wiley Content Delivery (email available below). General contact details of provider: https://doi.org/10.1111/(ISSN)1467-8276 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.