At Bloomberg.com, Cass Sunstein sensibly weighed in on the ongoing state and federal proposals to mandate labeling of GMO foods. He argues that mandatory labels are a bad idea. His reasoning is that the science shows biotechnology to be safe with few unique environmental concerns; however, requiring a label would "signal" that something is unsafe.
Here is Sunstein:
GM labels may well mislead and alarm consumers, especially (though not only) if the government requires them. Any such requirement would inevitably lead many consumers to suspect that public officials, including scientists, believe that something is wrong with GM foods -- and perhaps that they pose a health risk.
His arguments are virtually identical to those I published in a paper with Anne Rozan in the Journal of Agricultural and Resource Economics back in 2008 entitled "Public Policy and Endogenous Beliefs: The Case of Genetically Modified Food." We wrote then:
Our argument is that policy can serve as a signal about the safety of GM food
Believing the government imposes a mandatory labeling policy on GM food could be consistent with a belief that GM food is perhaps not as safe as traditional food, but it is not so unsafe that GM food should be completely banned. Depending on a consumer's prior beliefs about the safety of GM food, the imposition of mandatory labeling could be taken to imply GM food is safer than previously thought (in the case where one's prior was that GM food is so unsafe it should be banned) or might be taken to imply GM food is riskier than previously thought (in the case where one's prior is that GM food is safe enough to warrant no labeling at all).
Empirically, we found:
that individuals who believed the government imposed a mandatory labeling policy for GM food believed GM food was less safe and were less willing to eat and buy GM food than consumers who either believed no policy was in place or were uncertain on the matter
As we discussed in that paper, and as I've discussed elsewhere, such findings make cost benefit analysis really complicated. How much would consumers "benefit" from a mandatory GMO label? That depends on how much they are willing to pay for non-GMO food. But, if our arguments are right, willingness-to-pay for non-GMO food depends on which policy is in place. Thus, the benefits (and costs) of the policy are not independent of whether the policy is in place. The act of passing (or failing to pass) the policy changes the benefits and benefits. Thus, there are no "objective" or "true" benefits and costs.
Although I agree with Sunstein on this point, I find it a little ironic coming from him. He has advocated using government "nudges", for example to change defaults or opt-in/opt-out options, to get people to make "better" choices that presumably the citizens themselves would prefer. But if his theory on GMO labeling is right, a "nudge" might very well serve as a signal about what is the appropriate behavior. Thus, a "nudge" isn't simply changing the default. It is changing people's preferences, and presumably toward that desired by the regulator/nudger. Thus, nudges aren't just getting people to make choices that presumably better match their "preference" - it might be very well changing their preference. I find that problematic both from a philosophical standpoint but also from a public choice perspective. You can get a sense of why in chapter 4 on behavioral economics in The Food Police.