By Sandra Contreras, Caitlin Lowe, and
Kyle Waldie
 Another
 Must
variable that can affect demand
differentiate product to maximize sales
 Companies
must assess what characteristics
are valued by consumers for labeling


Health needs: Low sugar,
gluten free, low sodium
The idea behind these
labels is that the
consumer who will
purchase them must know
what is in the product
before the purchase can
occur
Need Based




Nutritional preference:
Fat free, low calorie
Social preference: locally
grown, animal welfare,
native language labeling
Taste: Real sugar, real
butter
Science&Technology:
GMO, hormones,
antibiotics
Marketing Based
 Nutrition
Preference

Berning et al. (2011) performed a study using health
labels on microwave popcorn in the San Francisco area

Hypothesis: If the product contained a nutrition positive
label sales of these healthy popcorns should increase

Result: Nutrition labels in fact decreased sales of the
healthy popcorn while unhealthy popcorn products
increased in sales.
 Genetically
Modified Organisms (GMO)

Issue in domestic and international agriculture

Lack of knowledge, fear and moral reasons
influence perceptions of GM products

Colson et al. (2011) – two studies to assess WTP
for nutritionally enhanced GM foods

WTP for GM products measured through labeling
 WTP
for GM food with nutrition enhancing
benefits

Participants from Des Moines, IA and Harrisburg, PA
participated in nth price auction

Prior knowledge/perceptions of GMO’s was assessed

Labels: Plain, Transgenic GM, and Intragenic GM

Information: Pro-biotech, Anti-biotech, and both

Results: GM > Plain, Intragenic > Transgenic

Consumer acceptance of improved nutrient
content through GM

Same experimental design

Labels: GM-Free, Intragenic GM, and Transgenic GM

Information treatments were the same

Results: Source and type of information influenced
consumer demand and the premium they were WTP for the
GM product.


It was also shown that consumers preferred Intragenic over
transgenic; there was no clear preference for GM over GM-Free
Results were measured through labeling
Broccoli
Tomatoes
Potatoes
 Critique
of Berning et al. and Colson by
Jayson Lusk (2011)


Every study can always be improved upon and Lusk
points out some of the more glaring issues that he see’s
with the two studies along with what he agrees with
from the two studies
Lusk criticizes Colson et al. for their experiment method




Confusion as to whether plain label was GM just not labeled
The way and order in which information was presented biased
consumers thoughts on the plain labeled product
Colson et al. also simply omit relevant statistical information,
but include the very same in their second paper
Lusk liked the Berning article as it used actual grocery
store scanner data in a real life setting which is less
likely to bias consumers and reveal true WTP and
demand
1
Russet Potatoes
(5lbs.)
GM-Free
Product
2
3
Russet Potatoes
(5lbs.)
Russet Potatoes
(5lbs.)
Enhanced levels of
Antioxidants & Vit. C
Enhanced levels of
Antioxidants & Vit. C
Intragenic GM
Product
Transgenic GM
Product

Obesity Issue – how do we control this?

Labeling – put “healthy” on the product




Berning et al. (2011) found that labeling healthy popcorn
decreased their sale popcorn
Policy: CA in 2011 banned the sale of soft drinks in
schools
Combination approach
GMO Issue
Domestic Market: should the U.S. require labeling?
 Export Market: EU requires labeling of GM products
and acceptance process lags the U.S. 1-4 years


Information Type on Labels



Berning et al. (2008) Consumer Preferences for Detailed
vs. Summary Formats of Nutrition Labels
Summary label was preferred by consumers for those
that read the label
What percentage of consumers even read labels?


If a large percentage does not read them why invest
money in labeling?
Do people even care about making healthy choices? If
not, why should we label?
.
Berning, J. P. 2010. Do positive nutrition shelf labels affect consumer behavior? findings from
a field experiment with scanner data. American Journal of Agricultural Economics 93 (2):
364.
Berning, J. P.. 2008. Consumer preferences for detailed versus summary formats of nutrition
information on grocery store shelf labels. Journal of Agricultural Food Industrial
Organization 6 (1): 6.
Colson, G. J. 2011. Consumers’ Willingness to pay for Genetically Modified Foods with ProductEnhancing Nutritional Attributes. American Journal of Agricultural Economics 93 (2): 358.
Colson, G. J. 2011. Improving the nutrient content of food through genetic modification:
Evidence from experimental auctions on consumer acceptance. Journal of Agricultural and
Resource Economics 36 (2): 343.
Kiesel, K. 2011. Nutritional labeling and consumer choices. Annual Review of Resource
Economics 3 (1): 141.
Lusk, Jason.20011. Information, Prices, and Healthy Lifestyle choices of adults: discussion.
American Journal of Agricultural Economics 93(2):385