The Long‐Term Impact of Positive and Negative Information on Food Demand

Abstract

We examine whether the effects of information about product labels change over time. The analysis is based on 110 adult (nonstudent) participants who participated in a two‐stage economic experiment taking place three months apart. In the first stage of the experiment, willingness‐to‐pay (WTP) was elicited for items that were stated to contain bovine growth hormones, genetically modified ingredients, ingredients that have been exposed to antibiotics, and ingredients that were irradiated. Depending on the treatment, each first‐stage auction was supplemented with positive or negative information about each of the labels. The second‐stage experiments re‐elicited WTP for the same group of participants and the same items accompanied with the original labels, but this time without any secondary information. Our results suggest that the adverse impact of negative information does not persist over time; whereas in the case of positive information, changes in WTP from the initial to the follow‐up auctions are not statistically significant. This study enhances our understanding of how consumers retain information over a longer time period and suggests that previous studies that measure labeling impacts on WTP using isolated, single‐shot experiments may overstate the longer term effects of labels and negative information.