The regulation of science-based claims in advertising

Abstract

This paper analyzes the effects of scientific information dissemination on consumer and producer behavior. The first section draws heavily from evidence on the ready-to-eat cereal market during a period in which information developed about the health benefits of fiber cereal consumption. Although producers were initially prohibited from advertising these benefits, the regulatory ban against advertising was lifted during the period we study. Our results indicate that advertising was an important source of information leading to increased fiber cereal consumption and product innovation. The second part of our paper discusses the potential for deception if science-based claims are allowed. In the final section we consider a number of regulatory proposals that have been raised in the context of health claims for food products. We evaluate these proposals against the three goals of encouraging the dissemination of truthful information and discouraging the dissemination of deceptive or misleading information and their ability to keep pace with the changing science.