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Erick Mas
Assistant Professor of Marketing at the Kelley School of Business-Indiana University
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Professor of Marketing at Michigan Ross School of Business
Quantifying the Heterogeneous Impact of FDA Changes to the Nutrition Facts Label
Synopsis: The US Food and Drug Administration (FDA) updated the Nutrition Facts label on the back of packaged food in 2016 to reflect new scientific information, including information about the link between diet and chronic diseases, such as obesity and heart disease. The objective of the update is to help consumers make more informed food choice decisions. In particular, the FDA requires all manufacturers with annual sales of $10 million or more to update the nutrition information on their labels by January 1, 2020, and those manufacturers with annual sales less than $10 million to do so by January 1, 2021. The mandate involves changes to several different components on the label, the most significant of which include enlarging the font size presenting calories per serving, including an item for “added sugar”, removing the item “calories from fat”, and adjusting serving sizes to better reflect actual consumption. Considering the substantial costs incurred by product manufacturers to implement the new label, it is important to understand the consequences of this new FDA regulation. Therefore, in this paper we first quantify the impact of the Nutrition Facts label change on consumer food consumption using a large-scale panel of retail sales at the week and UPC level and a comprehensive database that records label changes for different UPCs from 2016 - 2022. We investigate the prevalence of unintended consequences occurring as a result of some components of the change. We also quantify how the effects of the label change vary across product categories. Second, exploiting data that combines individual-level household purchases with longitudinal survey data on self-reported health conditions, we analyze the heterogeneous effects of the label change across households. Specifically, we address the question of whether the label change nudges unhealthy consumers to improve their food consumption. Finally, extant previous research has investigated the effectiveness of various components and styles of food labels. We compare our results to those reported from field and lab experiments performed in more restrictive situations.
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