Information Cost and Consumer Choices of Healthy Foods

13 Pages Posted: 15 Apr 2020

See all articles by Chen Zhu

Chen Zhu

China Agricultural University - College of Economics and Management; China Center for Genoeconomic Studies (CCGS)

Rigoberto A. Lopez

affiliation not provided to SSRN

Xiaoou Liu

Renmin University of China

Date Written: January 2016

Abstract

This article examines whether or not a reduction in consumer search cost for nutritional information increases the probability that heterogeneous consumers will choose healthier food products. Empirical results from the ready‐to‐eat breakfast cereal (RTEC) market confirm the conceptual analysis that lowering information cost via simplified nutritional labeling increases the healthfulness of consumer choices. The healthfulness attribute weighs 28.44% more heavily in consumers' decision‐making with simpler labeling systems. On average, introducing front‐of‐package labeling increased the probability of a consumer choosing a healthy RTEC by 3.49% and reduced the probability of choosing an unhealthy RTEC by 3.81%. Calories, sugar, saturated fat, and sodium consumption decrease by 0.31%, 2.63%, 6.94%, and 1.97%, respectively. Fiber intake increases by 3.24%. Further results show that less‐educated and smaller households with less frequent purchases benefit the most from a reduction in information cost. Overall, this article shows the potentially positive role that voluntary, more convenient labeling could play in improving market and public health outcomes.

Keywords: Healthfulness, information cost, consumer choices, food labeling

Suggested Citation

Zhu, Chen and Lopez, Rigoberto A. and Liu, Xiaoou, Information Cost and Consumer Choices of Healthy Foods (January 2016). American Journal of Agricultural Economics, Vol. 98, Issue 1, pp. 41-53, 2016, Available at SSRN: https://ssrn.com/abstract=3575906 or http://dx.doi.org/10.1093/ajae/aav057

Chen Zhu (Contact Author)

China Agricultural University - College of Economics and Management ( email )

Beijing
China

China Center for Genoeconomic Studies (CCGS) ( email )

Rigoberto A. Lopez

affiliation not provided to SSRN

No Address Available

Xiaoou Liu

Renmin University of China ( email )

Room B906
Xianjin Building
Beijing, Beijing 100872
China

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