frank nti rebecca manes dustin shearer effects of food stigma & labeling

FRANK NTIREBECCA MANESDUSTIN SHEARER

Effects of Food Stigma & Labeling

• Unsubstantiated or adulterated evidence

• Effects of stigma in consumption decisions

• Players involved: consumers, firms, &

government

• Cost-benefit calculations in decision-making

process

• Case studies

OUTLINE

FOOD STIGMA

A psychological phenomenon in which an object becomes viewed in a negative manner even when no actual problem or health risk has been identified.

Stigma is passed on via direct contact with a contaminated object in a phenomenon known as contagion

Effects of stigma in consumption decisions (Golan, et. al., 2001)

EXAMPLES OF STIGMA-INDUCING LABELS

Country of Origin labels Idea that domestically produced labels are superior

Local production, ethnocentricity, safety in recognized regulation

Nutrition Content e.g. differentiating as fat free

rBST Free Milk inherent connotation that rBST is harmful

GM Free Perception of ‘frankenfood’

Effects of stigma in consumption decisions

Unsubstantiated or adulterated evidence (Rosen, 2010)

ORGANIC FOOD

Soil Association’s Claims.:

“reviewed over 400 scientific papers”, found higher levels of “vitamin C, minerals, and trace elements”

confirm higher concentrations of antioxidants in organic peaches, tomatoes, and apples

Peer reviewed (UC, 2007) article results show higher vitamin C and total phenols than conventional kiwis

found higher levels of ‘beneficial’ vitamins, antioxidants, and omega-3 fatty acids in dairy cows raised on grass and clover

Results of QLIF study announced by Dr. Leifert to be published in next 12 months

Rosen’s Response:

Only 99 compared organic to conventional, 70 rejected under author criteria, 16 peer reviewed, and only 2 published in scientific journals

Reporter errors; differences in phenol content in peaches and tomatoes from one year to next; no statistical data in apple study

Miscalculated vitamin C and phenol content; then realized majority of phenols in thicker peels of organic kiwis, so never consumed

Higher ALA omega-3, but different carbon structure than EPA or DHA; still very small increase

Questioned two years later, and no new data

ORGANIC FOOD

Unsubstantiated or adulterated evidence (Rosen, 2010)

EMPIRICAL EVIDENCE: rBST MILK

Effects of stigma in consumption decisions

3 Part Experimental design

PART 1: introduce the Becker-DeGroot-Marschak (BDM) bidding mechanism which uses induced “cash values”

PART 2: submit bids using BDM to purchase a pencil

PART 3: elicite WTP values with the BDM mechanism for milk labeled with three production techniques (conventional, rBST-free, and organic) and three fat contents (0% skim, 1% low fat, and 3.25% whole)

(Kanter, et. al., 2009)

RESULTS



WTP Conventional

WTP rBST-Free

Difference from Conventional

WTP Organic


0% Skim $1.23 $1.03 -$0.20 $1.53 $1.201% Low Fat $1.37 $1.16 -$0.21 $1.39 $0.023.25% Whole $1.52 $1.24 -$0.28 $1.19 $0.05All Fat Types $1.28 $1.05 -$0.23 $1.37 $0.09

WTP Conventional

WTP rBST-Free


WTP Organic


0% Skim $0.55 $1.14 $0.59 $1.32 $0.771% Low Fat $0.64 $1.22 $0.58 $1.40 $0.773.25% Whole $0.63 $1.09 $0.46 $1.34 $0.71All Fat Types $0.61 $1.15 $0.54 $1.36 $0.75

Conventional rBST-FreeDifference from

Conventional OrganicDifference from

Conventional0% Skim 5.47 6.00 0.53 6.45 0.981% Low Fat 6.22 6.67 0.45 6.57 0.353.25% Whole 6.07 6.26 0.19 5.62 -0.45All Fat Types 5.92 6.31 0.39 6.21 0.29

Conventional rBST-FreeDifference from

Conventional OrganicDifference from

Conventional0% Skim 4.43 4.19 -0.24 6.25 1.821% Low Fat 5.07 5.22 0.15 6.93 1.863.25% Whole 5.43 5.16 0.27 6.45 1.02All Fat Types 4.98 4.86 -0.10 6.54 1.56

Table 3. Average WTP for Milk and Tasting Values by Fat Type, Production Method, and Order of Tasting

(b) Average Tasting Values for Milk

Tasted First

Tasted Last

Tasted First

Tasted Last

(a) Average WTP for Milk

BENEFIT OF LABELING TO CONSUMERS

Players involved: consumers, firms, & government

Differentiates the product from otherwise similar products

Enables economic efficiency

Ensures quality and safety, both in production and consumption

(Golan, et. al., 2001)

PRODUCT ATTRIBUTES

Search goods Characteristics which consumers can examine and compare

Experience goods Characteristics which consumers seek out after previous

purchase and evaluation

Credence goods Consumers must trust the label, since the attributes

are not observable

Players involved: consumers, firms, & government (Golan, et. al., 2001)

Misleading Ingredients

Players involved: consumers, firms, & government (Silverglade, et. al., 2011)

Misleading Claims on Functional Foods


More Unrelated Health Claims


Will adding an additional regulated but more encompassing label be more effective? Or add to confusion?

• Total Fat: <= 35% of calories from fat (or <= 3 grams per serving)

• Saturated Fat: <= 10% of calories from sat. fat. (or <= 1 gram per serving

• Trans Fat: <= 0.5 grams per serving (labeled as 0 grams per serving)

• Cholesterol: <= 60 mg per serving (not including meat & poultry)

• Added Sugars: <= 25% of total calories (except for breakfast cereals)


Improved Front-of-Package Labeling Schemes Being Tested by FDA


WHEN ARE LABELING POLICIES APPROPRIATE?

Consumer preferences differ

Information is clear & concise

Information enhances safety

Costs and benefits of consumption are borne by the consumer

Each of the steps along the labeling tree can be established

No political consensus on regulation


FIRMS: Voluntary Labeling

Problem Complexity in preferences

Considerations If revenue generated outweighs cost

Allows the firm to sell more without reducing the price or to raise the price without losing sales or market share (Schmalensee,1972)

Spillover effect: one firm includes information that applies to all similar products


ATTRIBUTE AWARENESS WITHOUT LABELING

Consumer Cynicism: belief that firms will be as “optimistic” as laws allow and anything not mentioned is negative or low quality

Warranties: allow for testimonial of product quality for credence goods

Competition: compels firms to reveal information


ECONOMICS OF MANDATORY LABELING

Mandatory labeling can result in higher additional per-unit costs for small firms leading to competitive disadvantage

Elasticity of demand and supply determines how much of the labeling cost will be passed onto consumers

Which consumers are impacted most? Robin Hood Effect


ROLE OF GOVERNMENT

Type of information involved

Distribution of the cost and benefits

Establish mandatory labeling laws

Correct asymmetric and imperfect information

Correct externalities (social welfare consequences)


ROLE OF GOVERNMENT CONT’D

Providing services to enhance voluntary labeling

Standard setting Testing Certification Enforcement

Not intervening at all


REASONS FOR THIRD PARTY INVOLVEMENT

Consumer choices & social objectives

Intelligibility and credibility of information

Fair competition among producers

Consumers’ access to information

Reduced risks to individual consumer safety and

health


COSTS

GOVERNMENT: Cost of program initiation Administration Enforcement (government)

FIRMS: Administrative: interpreting rule Costs of testing: determining nutrient content Printing costs: changing printing plates Inventory costs: labels made that can’t be used Reformulation, changing product recipes Changes to industry structure

CONSUMERS: Higher prices

(Golan, et. al., 2001)

Cost-Benefit Calculation

BENEFITS

Socially-desirable changes in consumption behavior

Economic efficiency in consumer choices

Product reformulation

Consumer confidence in product quality

Cost-Benefit Calculation (Golan, et. al., 2001)

CASE STUDY: DOLPHIN-SAFE TUNA FISHING

Marine Mammal Protection Act

Canned tuna consumer boycott

Tuna-canning firms buy & label ‘dolphin-safe’, as regulated by legal definition

Import ban on non-signatory tuna producing countries; contested

International Dolphin Protection Agreement

Definition of dolphin-safe changed to allow net-caught tuna

1972

1980’s

1990

1990

1997

1992

Case study (Golan, et. al., 2001)

BIBLIOGRAPHY

Works Cited

Golan, Elise, Fred Kuchler, and Lorraine Mitchell. "Economics of Food Labeling." Journal of Consumer Policy 24 (2001): 117-84. Print.

Kanter, Christopher. "Does Production Labeling Stigmatize Conventional Milk?" American Journal of Agricultural Economics 91.4 (2009): 1097-109. Print.

Rosen, Joseph D. "Nurtrition Claims Made by Proponents of Organic Food." Comprehensive Reviews in Food Science and Food Safety 9 (2010): 270-77. Print.

Silverglade, Bruce, and Irene R. Heller. Center for Science in the Public Interest. Rep. no. 54321. CSPI, Mar. 2010. Web. 7 Feb. 2012. <http://cspinet.org/new/pdf/food_labeling_chaos_report.pdf>.

frank nti rebecca manes dustin shearer effects of food stigma & labeling

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