Can a sustainability facts label reduce the halo surrounding organic labels?

A couple years ago I wrote a post about a hypothetical sustainability facts label that is analogous to exiting the nutrition facts panels. In that post, I conjectured that a sustainability facts panel might help alleviate some of the misperceptions some consumers have with regard to various labeling claims. Turns out Sofia Villas-Boas at Berkeley and Zack Neuhofer, a PhD student working with me at Purdue, were simultaneously having similar ideas. As such, we teamed up to test some of these conjectures.

The result is a new paper forthcoming in Applied Economics Perspectives and Policy. Here’s the abstract.

“Consumers often form beliefs about credence attributes unsupported by the best available evidence. In particular, prior research has revealed many consumers have overly-optimistic beliefs about the environmental and nutritional impacts of organic food. We propose and study the effects of a sustainability facts label (SFL), which displays quantitative environmental information related to global warming potential, land use, and energy use per serving size of the product. The SFL is akin to a nutrition facts label (NFL), which we also study. We surveyed a nationally representative sample of milk consumers in the United States (USA) to measure their choices and beliefs about organic vs. conventional milk under one of three different label information treatments; the NFL only, the SFL only, and both labels relative to a control without any nutrition or sustainability information. Unexpectedly, our results show that the SFL increased the likelihood of organic purchases. Facts panels altered beliefs; The participants exposed to the SFL increased their perception that organic performs better on environmental metrics, despite the fact the information contained in the label provided a nuanced picture with organic better in some dimensions and worse in others. Consistent with the information provided, consumers exposed to the NFL decreased their perception that organic had fewer calories and more protein than conventional milk. Prior beliefs about organic were found to be important determinants of choice and information acquisition.”

Kudos to Zack who did the heavy lifting on this project. As it turns out, we didn’t find much support for the original conjecture but instead found a more complex and nuanced set of reactions to “objective” sustainability labels.

Public Understanding of and Attitudes Toward Bio-Based Labels and Claims

I recently completed a new study for the Plant Based Product Council exploring consumer understanding and attitudes toward bio-based labels and claims.

Given the lack of harmonization and potential public confusion around terms used to describe the bioeconomy, a survey was designed to to determine consumer knowledge, beliefs, and preferences for the following 10 terms: biobased, biodegradable, bioeconomy, bioplastics, biopolymer, circular economy, compostable, organic, plant-based, and recyclable. I conducted a nationwide survey of about 1,500 U.S. residents to explore these issues (note: topline results reporting the share of respondents falling in every response category for every question asked in the survey is provided here).

Here are some of the key findings:

• Self-assessed, subjective knowledge of bio-based related terms is low. About half the public has never heard the terms biopolymer, circular economy, or bioeconomy; more than half have either not heard or indicate not knowing the meaning of the terms biobased and bioplastics. By contrast, a majority of respondents said they were either somewhat or very knowledgeable of the terms: recyclable, organic, plant-based, biodegradable, and compostable.

• Generally, respondents indicated ignorance in knowing whether products that were biopolymers, bioplastic, biobased, or from the circular economy or bioeconomy were or could be recyclable, compostable, or organic.

• Responses to true/false and definition-matching questions reveal wide dispersion across the public in objective knowledge of bio-based and related terms. Only 0.6% of respondents answered 90% or more of the questions correctly. Forty six percent of respondents answered more questions incorrectly than correctly, and another 11% answered as many questing right as wrong. For example, only 27% of respondents correctly indicated it was false that “All biodegradable products are compostable.”

• More respondents than not provided incorrect definitions for biodegradable, compostable, organic, and biobased. Respondents were particularly likely to mistake the definition of biodegradable for composable, biobased for organic, and plant-based for biobased. White, non-Hispanics, middle-aged, higher educated individuals, particularly those with graduate degrees, exhibited higher objective knowledge of biobased and related terms, on average, than non-white, young, elderly, or people whose highest education was a high school degree.

• Compostable, plant-based, organic, biodegradable, and recyclable products were perceived to be high in sustainability and environmental friendliness; the opposite was true of animal-based and especially fossil-fuel based products. Recyclable and compostable products were viewed as relatively affordable whereas organic products were not. Recyclable products were perceived as relatively low in quality whereas organic was perceived as high quality.

• Perceptually, respondents tend to view terms like organic and plant-based as being highly similar and related to another grouping of perceptually similar terms: biodegradable, compostable, and recyclable. Perceptually, respondents view all other terms with a “bio” prefix similarly: biobased, biopolymer, bioplastic, bioeconomy. Terms viewed as most dissimilar to the rest include circular economy, fossil-fuel based, and animal-based.

• Simulated shopping choices indicate respondents are willing to pay significant premiums for take-away food in compostable, plant-based, or recyclable packaging while placing discounts on biobased and bioplastic packaging. Preferences for plant-based, compostable, and bio-based packaging are heavily influenced by the presence/absence of other label/claims, indicating consumers view these terms as having strong complementarity or substitutability relationships with other labels/claims.

• Choices are significantly impacted by disclosures providing definitions of label terms. Providing definitional disclosures increased willingness-to-pay and choice likelihood for compostable packaging while having the opposite effect for biodegradable packaging, at least when these labels appeared in isolation.

• Providing definitional information tends to reduce the size of the preference interactions between labels. When packaging already contains many competing claims/labels, provision of information disclosures increases the value of adding a new biobased claim in all instances. However, when adding a single label/claim in the absence of any others, definitional information reduces willingness-to-pay and choice probability for four terms (biodegradable, recyclable, plant-based, and biobased) while increasing it for two terms (bioplastic and compostable). These findings indicate definitional information tends to cause respondents to be more likely to

You can read the whole report here.

Measuring sustainable consumer food purchasing and behavior

That’s the title of a new paper I’ve co-authored with Sam Polzin and Ahmad Wahdat that was just released by the journal Appetite. The paper explores and validates the sustainability-related measures used in our monthly Consumer Food Insights survey. A key result is that although sustainability experts often define the concept using multiple dimensions, consumers’ views are not as nuanced and are captured my a smaller number of indicators.

Here’s the abstract:

“Consumer food purchasing and willingness to adopt a sustainable healthy diet (SHD) is a key factor affecting the sustainability of the entire food system. Studies have developed scales to measure consumer preferences for particular consumption patterns, while others have sought to empirically define the multiple dimensions of a sustainable food system (environmental, social, economic, etc.). This paper builds on these literatures by tracking consumers’ SHD behaviors using a large-scale, longitudinal survey of adults in the United States and mapping them onto multiple systems-level indicators. We wanted to know whether consumers interact with the sustainability of their food along the same principles developed by experts. Our study defines 18 food purchasing behaviors that support the sustainability goals of leading scientific institutions, uses factor analysis to identify the unobserved drivers behind these behaviors, and creates SHD scores to investigate their correlations with other consumer characteristics and behaviors. Factor analysis results show consumer food purchasing is motivated by three underlying sustainability dimensions—Economic Security, Socio-Environment, and Nutrition—which are fewer constructs than often defined by academic researchers. SHD scores reveal higher adoption of behaviors that fall under Economic Security relative to the other two dimensions. All three sustainability constructs are impacted by socio-economic and demographic characteristics.”

Animal Welfare vs. the Environment

“Global population is projected to reach 9 billion by the year 2048. Increased global affluence will result in an increase in global protein requirements per capita. With more people wanting to consume meat, production of animal protein will need to increase by 70% from 2005 to 2050. Increased global demand for animal protein has the potential to exacerbate environmental problems associated with climate change and biodiversity loss. Meat-containing diets worldwide have been estimated to require 6 times more land than wheat-based diets, calling into question the ability of animal agriculture to efficiently meet growing caloric needs. One potential way to meet protein demand while mitigating environmental damages is to intensify animal agriculture, which can reduce the environmental impact per unit of food produced. However, intensification practices (e.g., battery cages, gestation crates, feedlots) are often argued to decrease farm animal well-being.”

That’s from the opening paragraph of a recently released a paper I co-authored with now PhD student, Jacob Schmiess in The Journal of Agricultural and Resource Economics (references removed for clarity).

Jacob and I invested this issue from the consumers’ point of view by looking at the tradeoffs consumers were willing to make between different attributes when buying ground beef with different environmental and animal welfare characteristics and claims. We surveyed over 1,500 consumers who were randomly assigned to choices that varied by how the welfare and environmental outcomes of beef were communicated (text only, text+visual cues, or via label claims) and by what information was presented to respondents (none, pro-welfare, or pro-environment).

Here is a summary of our results excerpted from the paper:

Across all presentation designs and information treatments, participants are far more willing to pay for animal welfare attributes than for environmental efficiencies. The three attributes representing animal welfare (particularly grassfed and AGH [added growth hormone] free) elicited higher overall WTP [willingnes-to-pay] than the three attributes representing environmental sustainability. Results indicate that [presentation format] can have a significant impact on consumer responses. Participants shown the purely informational presentation (text design) disregarded all numerically presented attributes (land use, water use, CO2 emissions, mortality rate). Instead, they chose options solely on price and whether the beef was grassfed with no AGH. The visual presentation incorporated color and size to illustrate the numeric attributes more intuitively. This group had significantly higher WTP for environmental attributes than those in the other presentations, although still lower than their WTP for animal welfare attributes. The label presentation was designed to more realistically mimic a grocery store setting, using images of packages of ground beef with labels representing each attribute besides price. Participants shown the label design had the lowest variance across attributes for WTP and relatively lower attribute WTP overall. Somewhat surprisingly, the land protection certified label produced slightly higher WTP than the grassfed label.

The use of pro-animal welfare information in the text design produced a significant increase in WTP for animal welfare attributes as well as lower preference for [beef overall]. Pro-environment information had no effect on any design.

In the label design, participants’ WTP for a meat option over a “purchase neither” option was 1.5–2 times higher than that of participants the other designs. This group was also the most heavily influenced by price and had relatively low attribute WTP overall. One potential reason for this is that the label design does not display a “less desirable” level of each attribute, only the absence of a desirable label. It is possible these labels are seen as bonuses to an already desirable product rather than as a better alternative to an explicitly “undesirable” quality.

You can read the whole thing here.

Impact of plant-based meat alternatives on cattle inventories and greenhouse gas emissions

That’s the title of a new paper just published in Environmental Research Letters I co-authored with Dan Blaustein-Rejto, Saloni Shah, and Glynn Tonsor. Here’s the abstract.

“New plant-based meat (PBM) alternatives that aim to mimic the taste and texture of beef could have significant economic, environmental, and animal welfare impacts if they replace traditional animal-based meats and reduce livestock production. Whether PBM alternatives can achieve these ends depends on the extent to which consumers are willing to substitute for PBM alternatives, the structure of the meat industry, and the inter-linkages of the livestock industry with the other parts of the economy. We construct and calibrate an economic model to estimate how a reduction in PBM prices, or increase in demand for PBM, in the United States affects cattle production. For every 10% reduction in price or increase in demand for PBM, we estimate U.S. cattle production falls approximately 0.15%, U.S. cattle producers’ economic welfare falls by $300 million year per year, and U.S. consumer welfare rises by $513 million year per year. Key variables affecting model outcomes include the supply elasticity of cattle, the share of the total cost of cattle used to produce ground beef, and cross price-elasticity of demand between PBM and ground beef. Increases in U.S. demand for PBM alter trade patterns, leading to a reduction of beef imports and an increase in beef exports, a phenomenon that further reduces global greenhouse gas emissions and land use given the relative efficiency of U.S. beef production. For every 10% reduction in the price of PBM alternatives, we estimate that the global reduction in emissions is equivalent to 0.34% of U.S. emissions from beef production and 1.14% when including reduced land-use change emissions. Even substantial reductions in prices of PBM alternatives are unlikely to have substantive impacts on the U.S. cattle population and emissions, suggesting the need to also pursue alternative mitigation strategies, such as innovations to reduce the methane emissions per head.”

As indicated, the modeling results are partially driven by the relatively low cross-price elasticity of demand between plant-based meat alternatives and traditional meat that we have found in previous studies, mainly based on surveys. I just ran across this new paper in the Journal of Economic Perspectives and Policy by Shuoli Zhao, Lingxiao Wang, Wuyang Hu, and Yuqing Zheng that estimates these cross-price elasticities using grocery store scanner data based on actual purchase histories. They find, surprisingly, that plant-based and traditional meet are demand complements rather than substitutes. This would mean that a fall in plant base meat alternative prices would lead to an increase in the quantity of beef demanded! (note: the estimated effect is small - a 1% reduction in plant-based prices would lead to a 0.003% increase in beef demand). They find only chicken is a demand substitute for plant-based meat alternatives. Thus, the Zhao et al. paper re-enforces our finding that a reduction in plant-based meat alternative prices is likely to have very small impacts on U.S. cattle inventory - at least based on current preferences and current market structure.

You can read our new paper here.