Chile recently introduced an innovative food warning label system that intends to reduce current overweight and obesity levels among the Chilean population. This initiative has been generally commended worldwide. Chile’s new food labeling system mandates food producers to include a warning label that resembles a stop sign when the product exceeds a certain level of calories, fat, sodium, and sugar per 100 mg. The idea behind this regulation is that by making health risks more salient to eaters with simplified disclosures, people will change their eating behavior.
As a consequence of this new law, many product markets show a clear change in production recipes so that products can be offered with no (or fewer) warning labels. This is the case of Coca-Cola, and many desserts, including yogurts, flans, and even ice creams. Surveys report that many consumers—especially those from high-income backgrounds and the elderly—consider the warning labels when they purchase food and drinks. Yet the only econometric study conducted with observational data that analyzed the impact of the food warning labels reported ambiguous results (i.e., some products despite the labels increased their demand, while others showed lower sales).
People who commend the Chilean food labeling model tend to assume that disclosure is cheap and easy. This work adopts a different view. The assessment of shifts in consumer demand has neglected the substitution of those components subject to the warning labels and the impact of this re-placement on the nutritional value of food, as well as the impact of people’s misperceptions of the labels on their diet and health. On a positive level, the preceding effect casts doubt on what skeptical authors predict about disclosure policies, who claim that people are inattentive and irresponsive to warning labels. However, on a normative level, the actual effects of this law are unclear or ambiguous. And given the prohibition to sell products with labels in preschools and schools, children are particularly vulnerable to the over-looked consequences of this regulation.
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Omar Patricio Vasquez DuqueView Publications