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Demand for More Details on Food Labels

04 January 2014

Labels are becoming the “go to” place when people have questions about how food is produced.

But new Cornell University research finds that consumers crave more information, especially for the potentially harmful ingredients that aren’t included in the product.

The laboratory study of 351 shoppers carrid out by Jura Liaukonyte, Nadia A. Streletskaya and Bradley J. Rickard, all of the Dyson School, found consumers willing to pay a premium when a product label says “free of” something, but only if the package includes “negative” information on whatever the product is “free of.”

For example, a food labelled “free” of a food dye will compel some consumers to buy that product. But even more people will buy that product if that same label also includes information about the risks of ingesting such dyes.

The team investigated the impact of labels and secondary information on willingness to pay for foods that use various ingredients and processes that have been the subject of food policy discussions.

The researchers also found that there was a distinct asymmetry of willingness to pay sensitivity between “Contains X” and “Free of X” labels with negatively-framed secondary information.

The “Free of X” label has an impact only when secondary information is provided, and the negative impact of “Contains X” is mitigated by secondary information.

The team also considered how the results of the study can inform the ongoing debate about mandatory food labelling regulations in the United States: if mandatory labelling is adopted, providing additional information about what the product contains would significantly lessen the negative impact on demand.

“What did surprise us was the effect of supplementary information,” said Harry M. Kaiser, a Cornell professor whose field of study includes product labelling.

“Even seemingly negative information was valued over just the label itself.”

When provided more information about ingredients, consumers are more confident about their decisions and value the product more, Kaiser said.

Published as “Consumer Response to ‘Contains’ and ‘Free of’ Labeling” in the journal, Applied Economic Perspectives and Policy, the Cornell study is expected to interest CEOs of food-processing companies, government policy makers and American consumers alike.

The study was supported by internal funds from Cornell’s College of Agriculture and Life Sciences.

Further Reading

You can view the full report by clicking here.

November 2013

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