Sweet Deception: The Impact of Voluntary Labeling
Overview: In the paper titled, “The Impact of Voluntary Labeling,” NYU Stern Professor Raluca Ursu and co-author Anita Rao (Georgetown University) explore whether the use of voluntary food labels help consumers make better choices, or if they lead consumers to ignore other important product characteristics.
Why study this now: Consumer demand for transparency and healthier choices has increased, prompting companies to adopt voluntary labels like “no high-fructose corn syrup” (no HFCS). However, concerns arise that these labels may mislead consumers by highlighting a single favorable attribute while obscuring others, such as high sugar content. As policymakers and firms increasingly focus on labeling standards, it is crucial to evaluate the actual impact of such voluntary labels on consumer behavior and product differentiation.
What the authors found: Focusing on the specific case of the “no HFCS” label and a product’s corresponding sugar content, the researchers found that:
- Many companies eligible to use the “no HFCS” label do not adopt it
- Products with “no HFCS” labels often have similar or higher sugar content than their unlabeled counterparts
- Consumers are more likely to purchase higher-sugar products when the “no HFCS” label is present, even when sugar content is balanced across products in an experimental setting
What does this change: This research shows that labels like “no HFCS” can be misleading, and that companies may use them to distract people from noticing other unhealthy aspects of their products. For policymakers, this research highlights the importance of creating stricter rules about what companies can say on food labels.
Key insight: “A middle ground to resolve the problems that emanate from voluntary labeling could be achieved by third-party certification of labels. Precisely because health attributes have multiple dimensions, an agency should evaluate all attributes while certifying a label,” say the authors. “As this paper shows, the ‘no HFCS’ label and a product’s sugar content are positively correlated and could both be evaluated by a certifying agency to present to consumers a more complete picture of the product’s healthiness.”