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When are Voluntary Labels Preferred to Mandatory Labels?
In a previous post, I argued that one of the key factors determining the ultimate effects of Prop 37 in California will be how retailers respond. Will they choose to label all products "may contain GE ingredients" or will they switch to non-GE and not label?
Pro-Prop 37 folks argue that companies will simply add a label and the thus the costs of Prop 37 will be trivial (the costs mainly being the addition of a few words on a package). Some economists argue the opposite, and suggest that the ultimate costs of Prop 37 will be very large because food prices will drastically increase due to retailers and processors switching to non-GE ingredients.
I recently exchanged emails with the author of the above mentioned report arguing labeling costs will be trivial. I asked why they thought firms will simply add "may contain GE" labels. The answer, in short, was that we shouldn't expect the costlier European outcome (i.e., all products are non-GE and there are no labels) because Americans are less concerned about biotechnology than Europeans.
I happen to agree with this assessment. But, I thought it was a curious response coming from a proponent of mandatory labeling. The economic research suggests that when demand for for non-GE products (as expressed by market behavior) is relatively low (as it seems is the case in the US given the size of the organic and non-GE market) voluntary labels are preferred to the mandatory labels that would be required by Prop 37.
Here is a summary of the economic research on the topic in a book chapter by Marks, Kalaitzandonakes, and Vickner (2004; pg., 36):
Protecting consumer’s ‘right to know’ and the ‘right to choose’ is advanced as the main reason for the current European policy stance. In principle, there can be little objection to the argument that consumers should be able to exercise such rights. Market transparency is the linchpin of well-functioning markets. However, mandatory labeling is not the only option that would allow consumers a choice. Indeed, given that mandatory labeling systems are costly to implement (Kalaitzandonakes et al., 2001) costs and benefits with such labeling regimes must be carefully weighted in order to decide their optimality (Giannakas and Fulton, 2002). In this context, the proportion of consumers that would effectively discriminate between GM and conventional foods in the market place is a key parameter (Giannakas and Fulton, 2002). Indeed, Caswell (1988, 2000) and Giannakas and Fulton (2002) have argued that a volunatary labeling programme may better serve a country where only a minority of the population is interested in separating GM from non-GM foods.
Whose Afraid of GMOs?
We humans are notoriously bad at judging relative risks. We worry about some things that are very unlikely to happen (e.g., getting bit by a shark while visiting the beach), while ignoring other activities that are much riskier (e.g., driving to the beach).
This economic meme by Art Carden humorously points out such an inconsistency in the way we think about many food risks
Childhood Obesity and Fast Food Restaurants
Yesterday Rudy Nayga, the Tyson Chair in Food Policy Economics from the University of Arkansas, visited my department and gave a seminar on the relationship between childhood obesity and the location fast food restaurants in relation to schools.
He gave a careful account of the difficulty in attributing causation (and not just correlation) between the distance of fast food restaurants to schools and children’s weights, and described the ways they tried to deal with the challenge. In short, he finds that for every extra fast food restaurant within a mile of an elementary school, the percentage of students at the school who are obese goes up by about 1 percentage point.
As you might imagine, the result provoked a lot of discussion. Some of it naturally revolved around the efficacy and effectiveness of new zoning laws. However, the most interesting part of the discussion for me was Rudy’s discussion on the sizes of cafeterias relative to the increasing study body, which results in many school children have to eat lunch as early as 10am! In many schools (including my own kids’ school), children have to be run through the cafeteria so quickly they hardly have time to eat. Couple that with the new federal guidelines limiting the number of calories that can be served, and it is no wonder many kids are starving by the time school gets out and beg to go to McDonalds!
In addition all the above, I'd also add that because of increased curricula requirements, PE has been cut to the bone in most schools.
Alas, it seems most of the discussions I hear about improving childhood health in schools revolve around "sexier" headline-grabbing issues like serving more fruits and veggies, serving more local foods, zoning rules, banning sodas, teaching gardening, and so on. It may just be that the less "sexy" (and potentially less costly) issues like encouraging exercise, increasing cafeteria time or size, or giving a small afternoon snack, may be more promising.
And, at the end of the day, we have to keep in mind that it is not just childhood obesity that is a concern. We also have to worry about childhood hunger.
The Government's Role in Combating Obesity
The Wall Street Journal had a nice forum on whether and to what extent the goverment should "combat" obesity from three experts with different perspectives. I come down on the issue somewhere between Tanner and Wansink.