California's Proposition 65 and the Limits of Information Economics

Abstract

This warning, similar to one mandated by California's Proposition 65,1 is supposed to help consumers identify dangerous substances. But what is a consumer faced with such a warning expected to do? Which chemical in the labeled product poses the danger? How great is the risk? These are precisely the questions that critics of Proposition 65, one of a growing number of state and federal statutes mandating warnings like the one printed above, have asked with increasing forcefulness. This note analyzes the force of that critique and proposes an alternative method of examining warning statutes that focuses on the effect of such laws on manufacturers.