Assessing consumers’ valuation for Front-of-Package ‘Health’ labeling under FDA guidelines

Abstract

Suboptimal diets contribute significantly to diet-related chronic diseases and mortality in the United States. To address this, Front-of-Pack (FOP) labels have been proposed to help consumers make healthier food choices. In 2022, the FDA introduced 15 potential health labels aimed at providing critical information and nudging consumers toward healthier food choices, yet the effects of these labels on consumer preferences remain ambiguous. Using the Becker–DeGroot–Marschak mechanism in a laboratory experiment, this study investigates the influence of health and taste labels, and information provision, on consumer willingness to pay (WTP) for yogurt qualifying for the FDA-endorsed health label. Findings indicate that health labels alone reduce WTP, potentially due to perceived compromises on taste and skepticism towards health claims. However, the addition of credible information regarding FDA qualification mitigates these negative effects. Exploratory subsample analyses reveal that the health label is discounted among consumers who are nutritionally knowledgeable, health-conscious, pleasure driven, and frequent label users. However, providing information about the health label mitigates this discount among the former three types of consumers. The study underscores the importance of providing credible, detailed information and targeted educational campaigns to enhance the effectiveness of health labels. These insights can inform policymakers and stakeholders in developing more effective food labeling strategies to promote healthier dietary choices and improve public health outcomes. By unraveling the nuances of how consumers respond to health and taste labels, our research offers valuable guidance for designing labeling strategies that resonate with consumer values and preferences.