Getting Noticed on the Shelves--Are Consumer Interests and Firm Incentives aligned?

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When shopping for granola bars, consumers are now reassured that favorite brands have "5 net carb" right on the front of the box.

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Retrieved on: 
Thursday, February 13, 2020 - 2:00pm
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Agricultural & Applied Economics Association
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Key Points: 
  • When shopping for granola bars, consumers are now reassured that favorite brands have "5 net carb" right on the front of the box.
  • Kiesel says, "Our nutrition label experiment suggests that consumers do not fully utilize all of the nutrition information currently reported on Nutrition Facts Panel.
  • Posting a comprehensive list of claims on a shelf label instead results in an increase in consumer surplus and the largest overall welfare change in our simulations.
  • If you are interested in setting up an interview with Kiesel, please contact Allison Scheetz in the AAEA Business Office.


Getting Noticed on the Shelves--Are Consumer Interests and Firm Incentives aligned?

MILWAUKEE, Feb. 13, 2020 /PRNewswire-PRWeb/ -- The Keto diet is just one example of the many specialized diets that has been on the rise in recent years and food marketers are taking notice. When shopping for granola bars, consumers are now reassured that favorite brands have "5 net carb" right on the front of the box. But do these labels really benefit consumers?

In the new article "Consumer and Strategic Firm Response to Nutrition Shelf Labels" featured in the American Journal of Agricultural Economics, the authors Sofia Berto Villas-Boas, Kristin Kiesel, Joshua Berning, Hayley Chouinard, and Jill McCluskey release their new research on nutrition claims and discuss implication for labeling regulations.

Kiesel says, "Our nutrition label experiment suggests that consumers do not fully utilize all of the nutrition information currently reported on Nutrition Facts Panel. We find that consumers respond when we highlight healthier products by providing nutrition information in a more salient fashion on experimental shelf labels, but that they also react differently depending on which and how many claims we display. Consumers increase sales of products highlighted by single low calorie claims, for instance, but the almost identical set of products would need to be discounted to be sold when labeled with a low fat claim. Once we allow firms to adjust their prices in response to these labels and simulate welfare changes, we find significant consumer welfare losses when adding single claim shelf labels consumers prefer. Posting a comprehensive list of claims on a shelf label instead results in an increase in consumer surplus and the largest overall welfare change in our simulations. Neither manufacturers nor retailers would voluntarily label their products in this way in concentrated retail markets, however, as this labeling option does not maximize profits. Our most important result reported here is that voluntary nutrition front of package or shelf labels may not be a panacea when trying to inform consumers about healthier food options."

If you are interested in setting up an interview with Kiesel, please contact Allison Scheetz in the AAEA Business Office.

ABOUT AAEA: Established in 1910, the Agricultural & Applied Economics Association (AAEA) is the leading professional association for agricultural and applied economists, with 2,500 members in more than 60 countries. Members of the AAEA work in academic or government institutions as well as in industry and not-for-profit organizations, and engage in a variety of research, teaching, and outreach activities in the areas of agriculture, the environment, food, health, and international development. The AAEA publishes two journals, the American Journal of Agricultural Economics and Applied Economic Perspectives & Policy, as well as the online magazine Choices and the online open access publication series Applied Economics Teaching Resources. To learn more, visit http://www.aaea.org.

 

SOURCE Agricultural & Applied Economics Association