Food Labeling

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Food markets provide a lot of information to consumers about the attributes of food products such as price, taste, convenience, and nutrition. Labels can provide valuable information to consumers, increase demand for producers' products, and permit new attributes within products to be marketed. However, if all information was provided voluntarily, some information that would be valuable to consumers may not show up on labels. Food suppliers may not offer much information about product attributes that consumers would view as negative, such as nutrition and health information linking consumption of a particular food with a risk of adverse health outcomes.

Food labeling is one area where the Federal Government uses regulatory mechanisms to overcome situations where suppliers have no financial incentive to provide information about their products or to provide information that is truthful. By mandating disclosure of certain nutrients on the food label, the Federal Government increases consumers' access to this information. Such labeling may help consumers make food choices that better reflect their preferences, encourage consumers to choose more nutritious foods, or lead suppliers to reformulate food products to include more healthful attributes. However, labels can sometimes still be misleading; consumers may not fully understand label claims; and instead of improving societal outcomes, labels may increase inefficiency in the marketplace. In sum, there are lingering questions about what information should be provided and who should provide it (public or private sector) so that information fulfills its role in solving the coordination problem—that is, matching diverse food demands with food supplies.

ERS studies whether consumers have enough information to make informed food choices, what the private sector can do to provide informative food labels, what role the public sector can play in providing information, and the costs and benefits of mandatory labeling in both the food-at-home and food-away-from-home sectors.

Food package nutrition labels

The Nutrition Facts Label (NFL), mandated through the 1990 Nutrition Labeling and Education Act (NLEA), has become a familiar feature on packaged food. The label has changed only slightly since its inception in 1994, with trans fat being added to the nutrients required to be listed on the label in 2006. In a 2012 report, ERS researchers found that between 2005 and 2010, the trans fat content of food declined, and the number of products marketed as containing no trans fat increased. See:

New Food Choices Free of Trans Fats Better Align U.S. Diets With Health Recommendations

In 2016, the Food and Drug Administration released revised rules for the NFL to help make the information contained easier to understand for consumers and more relevant to today’s nutritional needs. (See: Changes to the Nutrition Facts Label). These rules are currently set to take effect in July 2018. Future research can investigate if the changes improve Americans' diet quality.

A vast set of other label claims on food packaging

ERS research analyzes how nutrition information can create new markets for food attributes, especially those related to farm production methods.

The share of new products that included voluntary health- and nutrition-related claims on the packaging fell between 1989 and 2001 from 34.6 to 25.2 percent, following the introduction of the NFL. However, between 2001 and 2010, the share of all new products with such claims increased to 43.1 percent. A larger share of these claims focused on highlighting no- or low-calorie items, whole grains, high fiber, and no- or low-sugar content, as well as the absence of gluten, trans fats, and higher levels of antioxidants and omega-3. See:

Introduction of New Food Products With Voluntary Health- and Nutrition-Related Claims, 1989-2010

Another ERS report presents case studies of five food labels for which the Federal Government has played different roles to show the economic effects and trade-offs in setting product standards, verifying claims, and enforcing truthfulness. In addition to the NFL, the report examines the USDA organic label, the raised without antibiotics label, the non-GMO label (advertising foods made without genetically-engineered ingredients), and the Federal country-of-origin label (COOL). See:

Beyond Nutrition and Organic Labels—30 Years of Experience With Intervening in Food Labels

Restaurant menu labeling

Motivated by an increase in U.S. consumption of foods prepared away from home and their negative effect on diet quality, the Patient Protection and Affordable Care Act of 2010 authorizes the Food and Drug Administration (FDA) to set uniform requirements for restaurants with 20 or more locations under the same name and offering similar menu items (see Menu Labeling Requirements). Businesses covered by the regulations are required to be in compliance by May 7, 2018. Although some restaurants posted this information voluntarily and others posted in response to State or local requirements, the new law supersedes any State or local legislation. For more information about the effect of food away from home on diet quality, see:

The effect of this requirement on diet quality is as yet unknown, as many factors influence food choices, especially when dining out (see "Will Calorie Labeling in Restaurants Make a Difference?").

ERS research finds that during 2007-10, those who eat out more often are less likely to use restaurant calorie and nutrition information than those who eat out infrequently, and using that information in restaurants is correlated with higher diet quality at home. Moreover, women and participants in the Supplemental Nutrition Assistance Program (SNAP) are more likely to use the nutrition information in restaurants compared to men and those not participating in SNAP. It follows that those who would most likely use restaurant nutrition information in the future would be those who value health more. See:

Consumers' Use of Nutrition Information When Eating Out

Another ERS study finds that those who used restaurant nutrition information between 2007 and 2014 consumed fewer total calories per day than those who noticed but did not use such information. See:

The Association Between Restaurant Menu Label Use and Caloric Intake

Other research found that body weight declined following New York City’s menu labeling law (see "Body Weight Fell Following Mandatory Calorie-Labeling Laws for New York Restaurant Menus"), which suggests that the national law may help to lower obesity in the U.S.