Coming to a Grocery Store Near You: A New Nutrition Facts Panel

According to this story from the AP:

After 20 years, the nutrition facts label on the back of food packages is getting a makeover.

and

The FDA has sent guidelines for the new labels to the White House, but Taylor would not estimate when they might be released. The FDA has been working on the issue for a decade, he said.

and

The revised label is expected to make the calorie listing more prominent, and Regina Hildwine of the Grocery Manufacturers Association said that could be useful to consumers. Her group represents the nation's largest food companies.

Hildwine said the FDA also has suggested that it may be appropriate to remove the "calories from fat" declaration on the label.

It's not yet clear what other changes the FDA could decide on. 

Personally, I think it is a good idea to bring research to bear on the design of the nutrition facts panel.  I've been critical of certain aspects of the implications people draw from the research in behavioral economics.  But, here is an area where the research is useful and has direct relevance.  

The government is going to provide nutrition information anyway (and has been doing it for 20 years), and as such, shouldn't it at least be presented in a way that is most understood by the consumer?  It is impossible to believe that the current little black box with dozens of horizontal lines is the most effective format.  

How do we know which type of information is "most effective"?  Effective, of course, could have many meanings.  One definition could relate to the extent to which the information is accurately understood by the consumer (I'd prefer that over whether the label causes some change in behavior desired by particular nutritionist).  Another way is to see what types of information arise in markets (i.e., what information consumers demand and how companies provide it).  For example, I've notice cereal boxes with color coded labels on the front of the package in the upper left-hand corner.  Similar private initiatives abound.

I'm  sure interest groups on all sides - from food companies to health activists - will want a say.  I just hope solid consumer research is brought to bear on the issue as well.

Is More Information Always Better?

Last year, I wrote a report for the Council on Food, Agricultural, and Resource Economics (C-FARE) on the value of USDA data products.  There, I reviewed much of the literature on the value of providing information about market conditions, and discuss the ability of information provision to resolve some asymmetric information problems.

Thus, I was interested to see this paper published in the American Economic Journal: Policy by Sacha Kapoor and Arvind Magesan (earlier ungated version here).  They write:

We find that although countdown signals reduce the number of pedestrians struck by automobiles, they increase the number of collisions between automobiles. They also cause more collisions overall, implying that welfare gains can be attained by hiding the information from drivers. Whereas most empirical studies on the role of information in markets suggest that asymmetric information reduces welfare, we conclude that asymmetric information can, in fact, improve it.

Asymmetric information improving outcomes?  That is an interesting result - I wonder whether there are examples in markets where something similar is at play?  

I should note that it is possible to imagine other situations where more information isn't always better.  In a paper I published last year with Stephan Marette, we wrote:

In a one-good case with unlimited attention, we show consumer welfare is always improved with the provision of accurate information. However, in a two-good case with limited attention, we show that consumer welfare is not always improved with the provision of accurate information. When attention is constrained, welfare may fall with information provision policies irrespective of their costs. The results suggest information and labeling polices may sometimes be counterproductive when attention is limited

Want to Learn about Experimental Auctions?

Rudy Nayga, Andreas Drichoutis, Maurizio Canavari, and I are set to hold what is now the 4th summer school on "Experimental Auctions: Theory and Applications in Food Marketing and Consumer Preferences Analysis."

The last three years, the course has been in Italy (check out some of the photos here or here).  This year, with the help of Wu Xiao, we are moving the course to Xinjiang Agricultural University in China.  

If you have interest in attending, applications are now being accepted.

Experimental auctions are a technique to measure consumer willingness-to-pay for new food products, which in turn is used to project demand, market share, and benefits/costs of public policies.  The approach requires people to "put their money where their mouth is", and it represents an attempt to generate data about consumer preferences that is more accurate than what is often obtained from surveys.  The content is mainly targeted toward graduate students or early career professionals (or marketing researchers interested in learning about a new technique).

Longer School Lunch = Less Obesity?

A while back, I wrote:

. . . 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.

Of course, we'd want empirical evidence that length of lunch had a substantive impact on dietary choice and weight.  I see one piece of evidence was just published in the Southern Economic Journal this month.  The piece is by Rachana Bhatt entitled "Timing is Everything: The Impact of School Lunch Length on Children's Body Weight."  The abstract

The large number of overweight children in the United States has prompted school administrators and policy makers to identify practices in schools that contribute to unhealthy weight outcomes for children and develop strategies to prevent further increases. Advocates for school nutrition reform have suggested that it is important for children to have an adequate amount of time to eat meals in school in order to maintain a healthy weight. This article examines whether the length of time children are given to eat lunch in school has an impact on their weight. I find evidence that an increase in lunch length reduces the probability a child is overweight, and this finding is robust across various econometric specifications, including a two-sample instrumental variable model and difference-in-differences model that account for the potential endogeneity of lunch length.

The paper indicates:

extending lunch length by 10 minutes is associated with a 1.2% reduction in BMI, and it reduces the probability a child is considered overweight for his/her age and gender by 2.4 percentage points.  

I'll be curious to see if these results hold up in randomized controlled trials.  

How high are the food companies standards?

"Big Food" is often vilified, and there are often calls for more regulation of food production and processing.  Is it possible, however, that private companies' food standards are actually "too high"?  Or, that food companies' standards are higher than government standards?  A recent paper in the American Journal of Agricultural Economics by Thijs Vandemoortele and Koen Deconinck sheds some light on these issues.  

They start with an interesting (if not widely mis-perceived) observation:

Empirical evidence shows that 70-80% of retailers assess their own private standards slightly or significantly higher than public standards

They offer several possible reasons for this phenomenon.  First,

private standards may reduce consumers’ uncertainty and information asymmetry about product characteristics such as safety, quality, and social and environmental aspects, thus increasing consumer demand.

Second, 

firms may use private standards as strategic tools to differentiate their products, thus creating market segmentation and softening competition.

Third,

firms may use private standards strategically to improve bargaining power over their suppliers.

Fourth,

private standards may also serve to preempt government regulations.

The authors construct a conceptual model, in which they argue that market power is a primary motive.  This is something of a counter-intuitive outcome: a "bad" (market power) creates a "good" (high standards).  As they point out, the political economy relationship between companies and government probably also has something to do with the extent to which private standards are greater than public ones.  So does consumer demand; if consumers want an are willing to pay for higher standards, there will be an incentive for companies to provide it.  But, as this article points out, high standards can also be used to create barriers to competition.