Use the term “genetically engineered food,” chances are you’ll spark a debate. Some praise its societal benefits — lower greenhouse gas emissions and reduced food prices. Others believe that genetically engineered (GE) food is unhealthy, despite scientific consensus on its safety. But how do these beliefs play out when food labels allow consumers to readily identify GE food in the grocery store?
Economist Andrew Stevens and his colleagues set out to answer that question by comparing packaged food sales in Vermont to those in Oregon and Washington. Vermont was the first and only state to implement mandatory GE food labeling in the U.S. — but only during the month of July 2016. A month after the policy went into effect, a federal law repealed the Act 120 state law.
Despite the short duration of what economists call a “natural experiment,” Vermont provided a unique opportunity to study if and how food labels affect consumer behavior, as measured by grocery store sales.
“The strength of our study is that we analyzed real purchases made by real people under real-life conditions,” says Stevens, an assistant professor of agricultural and applied economics. “Previous studies of this topic mostly relied on experiments or survey data.”
The drawback of designed experiments, such as simulated auctions to study bidding behavior, is a much smaller sample size. Surveys usually evaluate hypothetical behaviors with “what would you do if…” questions.
To estimate the policy’s impact, the researchers had to make two decisions: which products to analyze and which “control state” to use as a policy-free reference point for grocery store sales during the time period of interest.
As the GE food item, the team chose soups from an undisclosed manufacturer that rolled out nationwide GE labels months before Act 120 went into effect. The company’s national press releases highlighted the transparency of its early, proactive decision as a potential selling point. This provided confidence that the same product information was available at the same time in Vermont, Oregon, and Washington.
To see if Act 120 affected sales of other labeled products, the researchers selected two types of food with a long history of labeled attributes: certified organic (GE-free) and non-GMO (genetically modified organisms). Both groups included a wide range of products from baby food and soups to frozen meals and snacks.
As a control state for Vermont, New Hampshire might seem like an obvious choice. However, its close proximity would create spillover effects. For example, the two states share the same wholesalers, New Hampshire residents may shop in Vermont grocery stores, and many local news outlets reported on Act 120 in both states.
Oregon and Washington, however, have similar political landscapes, comparable interest levels in GE food, and shared northern geography, making them appropriate control states without spillover effects. Sales trends for organic and non-GMO products were similar in the three states before July 2016, and earlier ballot initiatives in Oregon and Washington showed that many residents also supported mandatory GE food labeling.
The researchers analyzed scanned food purchases at around 200 major regional and national chain grocery stores throughout 260 weeks of sales. Since the scanner data did not indicate the presence of new mandatory GE labels, restricting the GE soup analysis to the transparent manufacturer was important. The analysis compared sales during July 2016 — the Act 120 implementation period — with appropriate pre- and post-periods and accounted for other factors that influence sales, such as price, local consumer preferences, and time of year. Due to the variable length of pre- and post-periods, the number of data points ranged from 318,000 (for GE soups) to 23 million (for organic foods).
By including data from the two control states, the researchers were able to attribute changes in Vermont sales to the implementation of Act 120. They found that the state law caused a decrease in GE soup sales of 5.9% and an increase in sales of non-GMO and organic products by 2.5% and 1.7%, respectively. After Act 120 was repealed and GE food labels were no longer mandated, sales of non-GMO and organic products returned to their original levels while GE soup sales increased by 6% from August 2016 to the end of 2017.
These results suggest that consumers have stronger short-term than long-term reactions to new food policies, especially when the policies are featured by local news outlets. Over time, processing the newly available information seems to improve consumer attitudes toward GE food.
An important broader lesson is that labels can be powerful. The term “salience” describes the ability of labels to increase the prominence and consumer awareness of certain product features. In this case, the attention garnered by Act 120 increased the salience of GE food labels in Vermont above and beyond the label information itself, which was equally available in Oregon and Washington. Other examples of salient labels include front-of-package labels that stand out visually and large shelf labels that highlight multiple locally sourced products.
The study provides further evidence that information salience influences consumer decisions in real-life settings. This may help guide future food policies, says Stevens. “Our results show that labels do much more than provide information by drawing attention to specific product attributes, and this can actually shape consumer preferences over time.”
This article was posted in Economic and Community Development, Food Systems, Natural Selections, Summer 2023 and tagged agricultural and applied economics, Andrew Stevens, consumer behavior, food labels, genetically-engineered food, GMO.