Redundant Food Labels Affect Consumers' Willingness to Pay

Researchers from Purdue University conducted a survey that showed that some consumers are willing to pay more for labeled foods even if the label's claims are bogus. In their results, they state that the likelihood of overpricing redundant labels is associated with willingness-to-pay premiums for organic food, which may suggest that at least some of the premium for organic is a result of misinformation.

Researchers from Purdue University conducted a survey to determine whether premiums of redundant labels originate from misunderstanding, or if there are other factors to consider. Furthermore, their study aimed to investigate whether better knowledge of the food labels' claims decreases willingness to pay for redundant labels. For this, they focused on three labels: non-GMO sea salt, gluten-free orange juice, and no-hormone-added chicken breast.

The survey revealed that consumers who participated in the survey with farm experience paid lower premiums for non-GMO salt and no-hormone added chicken. Participants with better scientific literacy paid lower premiums for gluten-free orange juice. It was also indicated that when the information about the redundancy of the claims was provided, less than half of the respondents who were willing to pay extra in the beginning were convinced otherwise. Results of the survey showed that 39-43% of the respondents lower their premiums after seeing the information – a behavior attributed to being misled. And 14-27% of the respondents did not change their premiums, which may be due to the respondents discrediting the information. But what is more interesting is that 30% of the respondents counter-intuitively increase their premiums. This behavior is associated with less deduced scientific knowledge. The researchers stated that overpricing redundant labels is connected with the willingness-to-pay-premiums for organic food. This may suggest that at least some of the premium for organic is a result of misinformation.

The results of this study showed that providing the correct information is not often enough to discourage consumers from paying more for products with redundant claims. The challenge for food regulators is to find ways to provide consumers with the right information they need while avoiding misperceptions.

Further details of the study is made available by one of the paper's authors, Jayson Lusk.