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Information shapes most economic choices, and information on food is no
exception. The Federal Government provides consumers access
to nutrition information and education through a variety
of channels, and ERS studies how this information affects
food choices and diet quality:
Since the early 1990s, the Federal Government has been
providing food and nutrition guidance to Americans. See America's
Eating Habits: Changes and Consequences, which
discusses the history of Federal dietary recommendations,
the public’s awareness of these recommendations,
and the influence of information channels, such as advertising,
health claims, and nutritional knowledge on dietary outcomes.
The Federal Government currently provides nutritional information and dietary guidance in:
An ERS literature review concluded that motivational messages
along with clear and relevant information were essential
to change consumer decisionmaking (see Consumer
Use of Information: Implications for Food Policy).
ERS research indicates that changes in consumption patterns
are linked to increasing awareness of the relationship
between specific nutrients (such as fat,
cholesterol or fiber)
and health, but differences between perceived and actual
diet quality may limit how much consumers respond to such
information (see New
Health Information Is Reshaping Food Choices).
Another ERS report finds that short-term factors, such as hunger and time constraints, also limit how much dietary knowledge influences food choices. When it comes to eating vegetables, dietary knowledge influences choice rather subtly, affecting the mix of vegetables consumed more than the total quantity (see Understanding Economic and Behavioral Influences on Fruit and Vegetable Choices).
For children, parent’s nutritional knowledge is an important determinant of diet quality, more so for preschoolers than school-age children (see Maternal Nutrition Knowledge and Children's Diet Quality and Nutrient Intakes).
 Food labeling is one area where the Federal Government uses regulatory mechanisms to streamline the provision of information to consumers. Food markets provide much information to consumers about attributes such as price, taste, convenience, and nutrition, but may overlook negative attributes of food products, that is, nutritional and health attributes that may increase the risk of adverse health outcomes. For a discussion of food labeling related to food safety, see the Food Safety briefing room section “Labeling and Traceability.”
The 1990 Nutrition Labeling and Education Act (NLEA) standardized the provision of health and nutritional information to consumers by food manufacturers on food packages. In effect, new mandatory disclosure regulations lower consumers’ information search costs. Benefits are realized if new information enables consumers to make food choices that better reflect their preferences, encourages consumers to substitute more nutritious foods, or leads suppliers to reformulate food products to include more healthful attributes.
ERS research investigates the government’s role in regulation; the degree to which current labeling influences the nutritional quality of food in the market and consumers’ food choices; and the potential impact of expanding labeling regulation to the food-away-from home sector.
An ERS study, Economics of Food Labeling, examines the economic theory behind food labeling and presents five labeling case studies—nutritional labeling, dolphin-safe tuna labeling, organic products labeling, country-of-origin labeling, and biotech labeling. This report concludes that the appropriate role for government—to establish mandatory labeling laws, provide services to enhance voluntary labeling, or not intervene at all—depends on the type of information involved and the level and distribution of costs and benefits of providing that information (see also “Do Food Labels Make a Difference?...Sometimes”).
 Nutrition label regulations may also encourage food manufacturers to compete through product reformulation. Using supermarket scanner data for five food categories (entrees, soup, salted snacks, cookies, and processed meats and bacon) in a New England supermarket during 1992-95 and 1997, an early ERS study analyzed changes in nutritional quality of product offerings due to new regulations. No significant change was found in the average nutritional quality of products offered in any of the five categories, suggesting that there was limited reformulation toward greater nutritional quality following the implementation of the NLEA in 1994.
Another ERS study that examined the low-fat salty snack market between 1995 and 1999 observed that “food manufacturers … introduced 1,914 new reduced/low-fat products in 1995 and 2,076 in 1996. The market for these products, however, never grew as anticipated, as food processors dramatically cut their new product introductions of lower fat products after 1996, introducing only 481 new products in 1999.” Thus, while a certain degree of reformulation may occur in the aftermath of a labeling policy, this phenomenon may decline as firms observe consumer response to the reformulated offerings.
Consumer use of nutrition labels is another important
factor influencing the extent of benefits from food labeling.
ERS research
indicates that when consumers use labels, intake of certain
nutrients does improve.
While a majority of Americans read nutrition labels when
shopping for food, however, ERS found that use declined
over the 10-year period following implementation of NLEA.
The decline in label use has been greatest among adults
under 30 (see The Decline
in Consumer Use of Food Nutrition Labels, 1995-2006). A notable exception to decreased label use was an increase in the use of information about fiber content. The relationship between health and fiber intake has been featured prominently on food packages and in advertising campaigns, particularly with the emphasis on consumption of whole grains in the most recent Dietary Guidelines for Americans.
Because of an increase in U.S. consumption of foods prepared away from home, the role of government regulation in providing nutritional information in the food-away-from-home market is under debate. The ERS report Nutrition Labeling in the Food-Away-From-Home Sector: An Economic Assessment, examines the dietary implications of increased food consumption away from home, discusses the economics of information dissemination in this sector, reviews empirical evidence on the impact of information provision in food-away-from-home settings, and presents the potential costs and benefits of a mandatory labeling policy in this sector.
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