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Economic Efficiency and Consumer Choice Theory in Nutritional Labeling


Michael McCann


University of New Hampshire School of Law; Sports Illustrated and SI.com


Wisconsin Law Review, p. 1161, 2004

Abstract:     
As more Americans consume fast food each year, more Americans are contracting serious diseases related to obesity. Considering that obesity ranks second behind tobacco use as the largest contributor to mortality rates in the United States, and also that it gives rise to greater publicly funded health care expenses than does tobacco, this phenomenon begs the obvious question: To what extent does the growing consumption of fast food contribute to the obesity epidemic and the incidence of disease? If the answer indicates a meaningful contribution, a natural follow-up question then emerges: In a sensible legal system, what instruments would best ameliorate its effects?

In attempting to answer these questions, this Article explores obesity as an economic occurrence, and how varying legal remedies may curtail its deleterious effects on the American economy. In doing so, this Article surveys the proportional causes of obesity, and it identifies fast food consumption as an essential element. In accordance with that finding, this Article ponders whether an absence of nutritional labeling has precipitated overconsumption, and how the law may be optimally utilized to minimize associated inefficiencies.

Specifically, Part I appraises the primary determinants of obesity in the United States, as well as whether Americans knowingly contribute to their corpulence. This is an essential examination, since obesity has morphed into a material public expense, with taxpayers now bearing approximately half of the cost of the nation's girth. Through this analysis, Part I confirms the predictable: Most Americans already know that fast food consumption may impair their health. Yet, more engagingly, it also reveals that Americans often underestimate the extent of that impairment, in part because they tend to discount the negative contents of restaurant food. Accordingly, many Americans internalize a degree of risk less significant than the actual risk present, thus rendering their food decision-making process systematically optimistic. This is particularly evident among children, who prove uniquely sanguine.

Part II then scrutinizes federal governmental choices when imposing food labeling requirements, as well as the extent of regulatory authority that has been delegated to the Food & Drug Administration (FDA). Significantly, the federal government has exempted all restaurants from food labeling requirements. The merits of such a privilege bear query, since any exemption from product labeling presumes that consumers engage in a rational assessment of associated risks.

As explored in Part III, however, other relevant actors, such as the State of New York, have concluded otherwise, specifically that consumers often fail to engage in such rational assessment. While adhering to the confines of the federal labeling exemption, these actors have consummated voluntary agreements with fast food companies in hopes of efficiently engineering market incentives for nutritional disclosure. Similarly, certain industry participants, by offering healthy dishes, may implicitly signal the less nourishing content of their regular dishes. Thus, in order to fully evaluate the efficacy of the labeling exemption, the supplemental value of these existing and voluntary market influences must also be considered.

Part IV turns to the emerging, though largely quixotic, judicial remedies for Americans who have contracted obesity-related diseases, allegedly due to fast food consumption. Though such lawsuits have been dismissed as trivial by most commentators, they present an excellent vehicle for examining the comparative merits of prospective regulation and retrospective litigation. That is, they suggest something of a recurring miss: A discrete group of individuals appears uniquely inclined to overconsume fast food, thus intimating a traditional common law duty on the part of fast food companies to warn; yet, for purposes of establishing legal causation, identifying and quantifying the proportional causes for any one person's obesity and obesity-related disease proves exceedingly difficult, if not impossible. Thus, such lawsuits continuously fail to satisfy the requisite contours of a tort claim, even though they raise meritorious concerns for social scientists and policy makers alike.

By applying consumer choice theory to fast food consumption, Part V proposes a new theoretical framework that could both conceive a limited common law duty to warn of the dangers of overconsumption and, by immunizing a food seller from tort liability, reward compliance with such a duty. Specifically, this Article postulates revision of the Nutrition Labeling and Education Act of 1990 (NLEA) to require the divulgence of nutritional information for all fast food items marketed for childhood consumption. In this narrowly tailored setting, the food decision-making process appears both uniquely optimistic and capable of correction, as parents often dictate or significantly influence the food consumption of their children. In that particular decision-making process, parents internalize an anomalously high value in nutrition and diminished tolerance of risk. Moreover, the imposition of a targeted nutritional labeling requirement would prove strikingly less onerous than more regressive and costly measures, such as an obesity tax or a fast food tax. In short, this form of nutritional labeling would prove uniquely efficacious. Accordingly, regulatory and judicial alternatives may be combined to most efficiently curtail the effects of fast food overconsumption on public health and tax-funded expenditures, while simultaneously removing from the American tort system a legally implausible, though factually credible, claim.

Number of Pages in PDF File: 84

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Date posted: July 25, 2004  

Suggested Citation

McCann, Michael, Economic Efficiency and Consumer Choice Theory in Nutritional Labeling. Wisconsin Law Review, p. 1161, 2004. Available at SSRN: http://ssrn.com/abstract=567764

Contact Information

Michael A. McCann (Contact Author)
University of New Hampshire School of Law ( email )
Franklin Pierce Center for Intellectual Property
2 White Street
Concord, NH 03301
617.875.6132 (Phone)
HOME PAGE: http://law.unh.edu/about/personnel/faculty/michael-mccann
Sports Illustrated and SI.com
1271 Avenue of the Americas
New York, NY 10020
United States
HOME PAGE: http://sportsillustrated.cnn.com/writers/michael_mccann/archive/index.html
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