What is an Unregulated and Potentially Misleading Label Worth? The case of “Natural”-Labelled Groceries

Julianna Butler and Christian Vossler

Environmental & Resource Economics, 2018, vol. 70, issue 2, No 11, 545-564

Abstract: Abstract Motivated by a multitude of lawsuits and considerable public policy debate in the U.S., this study provides insight on the demand effects for an unregulated and potentially misleading phrase found on many grocery labels: “all natural”, and its common variations. Using a targeted sample of adult grocery shoppers, we employ an incentive-compatible approach to elicit the willingness to pay for a variety of “natural”-labelled food products, along with their counterfactual, standard-labelled counterparts. We find that consumers are willing to pay 20% more on average for “natural” products. Using elicited information on consumer beliefs, we find that this premium decreases when “natural” signals no artificial flavors or preservatives, and increases when consumers believe that “natural” means GMO-free. Interestingly, for those indicating that the “natural” designation is meaningless, they are willing to pay about one-third less for products labelled this way.

Keywords: Natural food labels; Genetically modified organisms; Consumer fraud protection; Framed field experiment (search for similar items in EconPapers)
JEL-codes: C91 D12 D18 K41 Q18 (search for similar items in EconPapers)
Date: 2018
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Citations: View citations in EconPapers (8)

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DOI: 10.1007/s10640-017-0132-9

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