Do nutrition labels improve dietary outcomes?

Abstract

The disclosure of nutritional characteristics of most packaged foods became mandatory in the United States with the implementation of the Nutrition Labeling and Education Act (NLEA) in 1994. Under the NLEA regulations, a 'Nutrition Facts' panel displays information on nutrients such as calories, total and saturated fats, cholesterol, and sodium in a standardized format. By providing nutrition information in a credible, distinctive, and easy-to-read format, the new label was expected to help consumers choose healthier, more nutritious diets. This paper examines whether the disclosure of nutrition information through the mandatory labels impacted consumer diets. Assessing the dietary effects of labeling is problematic due to the confounding of the label effect with unobserved label user characteristics. This self-selection problem is addressed by exploiting the fact that the NLEA exempts away-from-home foods from mandatory labeling. Difference-in-differences models that account for zero away-from-home intakes suggest that the labels increase fiber and iron intakes of label users compared with label nonusers. In comparison, a model that does not account for self-selection implies significant label effects for all but two of the 13 nutrients that are listed on the label.