Identifying Food Labeling Effects on Consumer Behavior

Abstract

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. We find that warning labels decrease demand and purchase probabilities in the cereal category only and the effect is larger on medium-low socioeconomic groups. Results are consistent with information disclosure influencing consumers' choices when the advertised information is unexpected.