Estimating the Welfare Loss to Consumers When Food Labels Do Not Adequately Inform: An Application to Fair Trade Certification

Matthew Rousu and Jay Corrigan ()

Journal of Agricultural & Food Industrial Organization, 2008, vol. 6, issue 1, 26

Abstract: Government officials and other policymakers often face difficult decisions determining what information must be provided to consumers in the limited space available on food labels. An ideal label will cause consumers to make the same purchase that they would make if they had all relevant information, while an inferior label will induce a consumer to purchase a product he would not purchase if more information were available or to forgo purchasing a product that would have yielded positive consumer surplus. We present the design and results of an experimental auction that allows researchers to compare several alternative labels in order to determine the welfare loss from labels that do not adequately inform consumers. Further, we compare a set of candidate labels to assess whether one of the labels is better or worse at informing consumers.

Keywords: labeling; fair trade; value of information (search for similar items in EconPapers)
Date: 2008
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Citations: View citations in EconPapers (29)

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DOI: 10.2202/1542-0485.1212

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