Can Labeling Actually Harm Consumers?

That was the question asked in a recent study Stephan Marette and I just published in the Journal of Agricultural and Food Industrial Organization.  ​The answer is "maybe."  

Traditional economic models assume that more information (as long as it is accurate) can only help consumers (so long as the cost of providing the information isn't higher than the benefit).  After all, if a consumer doesn't find the information useful, it can simply be ignored.  ​

But, this model assumes consumers are perfectly informed about all controversial issues they confront and that they can fully pay attention to all these competing issues.​

What we show in our paper is that when consumers' attentions are limited (as they almost certainly are), that providing information (even if it is accurate) can - in some cases - actually make the consumer worse off.  How?  Because more information about one topic (like whether foods are made with genetically engineered ingredients) might distract consumers from paying attention from other important topics (like the number of carbs in the food) which has a bigger impact on long-term health.  ​

Here is the paper abstract:​

Information and labeling are popular food policy instruments because of their presumed positive influence on consumer welfare. 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.

Effects of Biotechnology on Corn Yields

In relative terms, this suggests that the presence of GM technology may have led to corn yield gains 1.4–1.5 times higher than would have been achieved with traditional crop breeding techniques alone.

​That's from the article The Contribution of Genetic Modification to Changes in Corn Yield in the United States by Elizabeth Nolan and Paulo Santos in the most recent issue of the American Journal of Agricultural Economics.

Two good links on GMO labeling

Wise words from ​Tyler Cowen and​ Jonathan Adler​

Want to Know What's In Your Food?

​The Huffington Post just published a piece by Brandon McFadden and me, discussing some of the results of our recent survey of Californians on how they intend to vote on Prop 37.

Our survey revealed most voters supported Prop 37 because they said they have the right to know what is in their food.  Yet:​

If consumers really want to know what's in their food, a bit of web searching would tell them. Yet, our survey revealed that Californians knew next to nothing about biotechnology in food. In fact, 43 percent didn't even know the subject-matter covered by Prop 37. Survey respondents thought about 47 percent of corn and soybean acres are planted with GE seed (as indicated, the reality is actually around 90 percent) and they thought 45 percent of wheat acres were planted with GE seed (the reality is close to zero percent). More than 69 percent didn't know whether any Coke products contained GE (they likely do), and more than 59 percent didn't know whether any Kellogg's products contain GE (they likely do). Maybe that's the point of mandatory GE labels -- to tell consumers things they don't already know. But, we're doing it now. Voluntarily. For free.

​After fully disclosing which crops in the US are genetically modified, we argue that:

It seems many people confuse the "right to know" with the "right to buy." Many people want to avoid foods made with GE, and fortunately there are ways for them currently to do so. Simply look at the back of the package to see if the word corn, soy, sugar beet, canola, or papaya is in the ingredient list. Even without Prop 37, consumers already have access to non-GE foods, which are currently labeled if they choose to buy organic. Sure, organic or non-GE food is more expensive, but the reality is that organic or non-GE food is more expensive to produce. Requiring labels through Prop 37 is not going to change that fact.

Don't Let the Perfect be the Enemy of the Good

That's how I'd sum up Matt Ridley's excellent piece in the Wall Street Journal​.  He starts by arguing that:

Generally, technologies are judged on their net benefits, not on the claim that they are harmless: The good effects of, say, the automobile and aspirin outweigh their dangers. Today, arguably, adopting certain new technologies is harder not just because of a policy of precaution but because of a bias in much of the media against reporting the benefits.

​He rightly argues that negative articles on topics like biotechnology and shale gas make catchier headlines and drown out all the positive information.  Case in point?

 A recent French study claimed that both pesticides and GM corn fed to cancer-susceptible strains of rats produced an increase in tumors. The study has come in for withering criticism from mainstream scientists for its opaque data, small samples, unsatisfactory experimental design and unconventional statistical analysis, yet it has still gained headlines world-wide. (In published responses, the authors have stood by their results.)

The French study contradicts a Japanese paper that used larger samples, longer trials and accepted experimental designs, yet received virtually no notice because it found no increase in cancer in rats fed on GM crops. This is a problem that’s bedeviled GM technology from the start: Studies that find harm are shouted from the media rooftops, those that do not are ignored.

​He goes on to document the potential environmental benefits from GMOs.   

While ​no one would argue we should ignore the potential dangers of new technologies (particularly biotechnologies), it would be equally crazy to ignore their potential benefits.