This paper investigates whether information costs under currently regulated nutritional labeling prevent consumers from making healthier food choices. We implement five nutritional shelf label treatments in a market-level experiment. These labels reduce information costs by highlighting and summarizing information available on the Nutritional Facts Panel. Following a difference-in-differences and synthetic control method approach, we analyze weekly store-level scanner data for microwave popcorn purchases from treatment and control stores. Our results suggest that consumer purchases are affected by information costs. Implemented low calorie and no trans fat labels increase sales. In contrast, implemented low fat labels decrease sales, suggesting that consumer response is also influenced by consumers' taste perceptions. A combination of these claims into one label treatment increases information costs and does not affect sales significantly.

In 1994, nutritional facts panels became mandatory for processed foods to improve consumer access to nutritional information and to promote healthy food choices. Recent applied work is reviewed here in terms of how consumers value and respond to nutritional labels. We first summarize the health and nutritional links found in the literature and frame this discussion in terms of the obesity policy debate. Second, we discuss several approaches that have been used to empirically investigate consumer responses to nutritional labels: (a) surveys, (b) nonexperimental approaches utilizing revealed preferences, and (c) experimentbased approaches. We conclude with a discussion and suggest avenues of future research.Page 1 of 30 information to signal their quality and to receive quality premiums. However, firms that sell less nutritious products prefer to omit nutritional information. In this market setting, firms may not have an incentive to fully reveal their product quality, may try to highlight certain attributes in their advertising claims while shrouding others (Gabaix & Laibson 2006), or may provide information in a less salient fashion (Chetty et al. 2007). Mandatory nutritional labeling can fill this void of information provision by correcting asymmetric information and transforming an experience-good or a credence-good characteristic into search-good characteristics (Caswell & Mojduszka 1996). Golan et al. (2000) argue that the effectiveness of food labeling depends on firms' incentives for information provision, government information requirements, and the role of third-party entities in standardizing and certifying the accuracy of the information. Yet nutritional information is valuable only if consumers use it in some fashion.Early advances in consumer choice theory, such as market goods possessing desirable characteristics (Lancaster 1966) or market goods used in conjunction with time to produce desirable commodities (Becker 1965), set the theoretical foundation for studying how market prices, household characteristics, incomes, nutrient content, and taste considerations interact with and influence consumer choice. LaFrance (1983) develops a theoretical framework and estimates the marginal value of nutrient versus taste parameters in an analytical approach that imposes a sufficient degree of restrictions to generality to be empirically feasible. Real or perceived tradeoffs between nutritional and taste or pleasure considerations imply that consumers will not necessarily make healthier choices. Reduced search costs mean that consumers can more easily make choices that maximize their utility. Foster & Just (1989) provide a framework in which to analyze the effect of information on consumer choice and welfare in this context. They argue that Page 2 of 30 when consumers are uncertain about product quality, the provision of information can help to better align choices with consumer preferences.However, consumers may not use nutritional labels because consumers still require time and effort to process the informatio...

This paper investigates the effects of banning soft drinks in schools on purchases outside of school. We utilize unique household-level and store-level data sources in combination with time-series and cross-sectional variation of state-level regulations in a difference-in-differences(DD) approach. We detect a decrease in the overall trend in sales, but observe this downward trend in households with and without children, as well as in states with and without regulation. Controlling for advertising allows us to further reject that leading brands intensify their advertising efforts and target children to potentially offset their reduced presence at schools. Finally, we find no evidence of substitution effects among possible beverage product alternatives. Our analysis therefore suggests that soft drink bans at school reduce overall soft drink consumption as school age children do not compensate for this limited availability at home.2

This paper investigates consumer reactions to changes in information provision regarding organic production. Quantitative analyses focus on the actual implementation of mandatory labeling guidelines under the National Organic Program. The unique nature of the fluid milk market in combination with these regulatory changes allows us to place a value on information sets under different labeling regimes. Hedonic price functions provide an initial reference point for analyses of individual responses. A random utility discrete choice model serves as the primary econometric specification and allows consideration of consumer preference heterogeneity along observable household demographics. Our results indicate that the USDA organic seal increases the probability of purchasing organic milk. An initial hedonic price function approach, as well as simulations within the discrete choice framework, suggests that consumers value the change in labeling regulations with regard to organic production. Our results further suggest that consumers substitute away from milk carrying the rBGH-free label. This may indicate that consumers pay less attention to these labels in the time period investigated compared to results found in studies that use earlier time periods. ____________________________ † We thank participants at the INRA conference in Toulouse, France, and Celine Bonnet for their suggestions. We also wish to thank Azzeddine Azzam and two anonymous reviewers for their helpful comments. Data access and funds for this research were provided via a cooperative agreement between UC Berkeley and the USDA-ERS. We wish to especially thank Elise Golan for her support. The views presented in this paper are those of the authors' and not necessarily those of the USDA, ERS. Our results indicate that the USDA organic seal increases the probability of purchasing organic milk. An initial hedonic price function approach, as well as simulations within the discrete choice framework, suggests that consumers value the change in labeling regulations with regard to organic production. Our results further suggest that consumers substitute away from milk carrying the rBGH-free label. This may indicate that consumers pay less attention to these labels in the time period investigated compared to results found in studies that use earlier time periods.2

This article examines the effects on the demand of voluntary labeling for the use of genetically modified growth hormone for retail fluid milk using supermarket scanner data. Retail fluid milk tracks one of the first biotechnology products approved, is fairly standardized and ubiquitous, and allows for cross-sectional differentiation between labeled and unlabeled products and between conventional and organic brands. The results indicate that voluntary labeling increases the demand for recombinant bovine growth hormone free milk. In addition, the estimated effects of labeling appear to have increased over time. Copyright 2005, Oxford University Press.