DO POSITIVE NUTRITION SHELF LABELS AFFECT CONSUMER BEHAVIOR?FINDINGS FROM A FIELD EXPERIMENT WITH SCANNER DATA JOSHUA P. BERNING,HAYLEY H. CHOUINARD, AND JILL J. MCCLUSKEY Shoppers are exposed to an ever-growing num- ber of nutrition labels in grocery stores. Manu- facturers display nutrition claims such as “low fat,”“low calorie,” and “zero trans fat” on prod- uct packaging in attempts to draw favorable attention to their products. Certain manufac- turers have even created their own proprietary labels,such as Pepsi’s Smart Choice and Kraft’s Sensible Solution, designed to help shoppers evaluate healthy products within their brands. Health advocacy groups allow the use of their names on products, such as the American Heart Association’s Heart-Check label. Some gro- cery store chains offer their own proprietary nutrition labels, which they affix on products that meet their own definitions of healthy. Such nutrition labels are intended to reduce search costs for shoppers who want to identify prod- ucts with specific characteristics. For example, a diabetic shopper may use a label identifying “no sugar added,” while a hypertensive person may focus on “low sodium” labels. Nutrition labels may ultimately complement products by highlighting favorable quality characteristics (Becker and Murphy 1993). While it is reasonable for one to expect that positive nutrition information will com- plement a product, there may also be instances Joshua P. Berning is an assistant professor in the Department of Agricultural and Resource Economics at the University of Connecticut. Hayley H. Chouinard is associate professor in the School of Economic Sciences at Washington State University. Jill J. McCluskey is professor in the School of Economic Sciences at Washington State University. The authors gratefully acknowledge funding from the National Research Initiative of the Cooperative State Research, Education and Extension Service, USDA, Grant #2005-01743. We thank Sofia Villas-Boas and Kristin Kiesel for their help conducting the store experiments and discussions on related work. The research also benefited from discussions on related work with David Sprott and Ken Manning. This article was presented in an invited-paper session at the 2010 annual meeting of the Allied Social Science Associations in Atlanta, GA. The arti- cles in these sessions are not subjected to the journal’s standard refereeing process. in which nutrition labels are associated with quality characteristics that are unfavorable and therefore have a negative effect on the percep- tion of a food product. A nutrition label could highlight characteristics that negatively affect the perception of the product. If this is the case, shoppers could use nutrition labels to identify products that do not possess nutritional char- acteristics negatively associated with taste. For example, shoppers could use nutrition labels to avoid “low fat” ice cream because they antic- ipate a less satisfying taste than regular ice cream. Although shoppers might abstain from purchasing a product after observing a nutri- tion claim, they are still better off because they are allowed to make a more informed decision. In this sense, nutrition labels do not have to direct shoppers to select healthy choices to be beneficial. While this may not be a favorable outcome in terms of public policy, nutrition labels also increase consumer welfare by help- ing shoppers to identify preferred products ( Teisl, Bockstael, and Levy 2001). We conducted an experiment to examine the effect of nutrition labels that highlight spe- cific positive nutrition standards on microwave popcorn sales. We affixed nutrition labels on grocery store shelves below different types of microwave popcorn in five stores in the East Bay area of California. Specifying an incom- plete demand system, we estimate the impact of positive nutrition labels on sales of microwave popcorn products that merit a positive nutri- tion label based on Food and Drug Adminis- tration (FDA) standards and microwave pop- corn products that do not merit a nutrition label. We find that nutrition labels decrease sales of healthy popcorn and increase sales of unhealthy popcorn across all stores. While nutrition labels can reduce search costs for healthier foods, they may also signal less preferred taste. Shoppers may infer from Amer. J. Agr. Econ. 1–6; doi: 10.1093/ajae/aaq104 © The Author (2010). Published by Oxford University Press on behalf of the Agricultural and Applied Economics Association. All rights reserved. For permissions,please e-mail: journals.permissions@oup.com American Journal of Agricultural Economics Advance Access published December 9, 2010 at Washington State University Libraries on December 15, 2010 ajae.oxfordjournals.org Downloaded from