Identifying Food Labeling Effects on Consumer Behavior

Araya, S., Elberg, A., Noton, C., Schwartz, D.

forthcoming | Araya, S., Elberg, A, Noton, C., Schwartz, D.

Marketing Science

Identifying Food Labeling Effects on Consumer Behavior

We examine a large-scale mandatory food labeling regulation to identify its effects on consumer behavior. We take advantage of exogenous variation in product-labeling status from the gradual and asynchronous introduction of labeled products on store shelves many weeks before the legal deadline. We combine individual-level scan data from a large retailer with on-the-shelf information on the actual warning-label status for breakfast cereals, chocolates, and cookies. Warning labels decrease demand and purchase probabilities in the cereal category, and this effect is larger on medium-low socioeconomic groups. We find inconclusive results of the warning label on chocolates and cookies. Overall, results suggest that the warning label effect is consistent with information disclosure influencing consumers’ choices when the advertised information is unexpected.