Traffic lights and food choice: A choice experiment examining the relationship between nutritional food labels and price
Introduction
There is an ever-growing awareness and understanding of the relationship between food and the role it plays in health and well being. The importance of this relationship is increasing as the health implications of a poor diet in the UK, and elsewhere, have become ever more apparent (HMSO, 2007). In response, there are now a whole raft of policy approaches that attempt to address this issue including various health campaigns such as the Food Standards Agency (FSA) “The eatwell plate” (FSA, 2007), the FSA “6 g per day of salt intake” and the Department of Health “5-a-day campaign” for fruit and vegetable consumption. All of these campaigns have been accompanied by a drive to have food labelled in a manner that provides important dietary information to consumers.
In terms of nutritional food labelling, the UK has voluntarily adopted the Traffic Light System (TLS)1 which indicates the levels of four key nutrients i.e., fat, sugar, saturates and salt, which are found in processed food. The TLS system is relatively simple. A Red2 light indicates a very high level of a specific nutrient, Amber a medium amount and Green low. The choice of colour is based on the content of each of the nutrients per 100 g of any food type that can then be converted into a per portion quantity. Thus, for any food the resulting quantities of these nutrients are measured then compared against the TLS which in turn provides the colour coding on the food packaging. In practice, the TLS is meant to aid consumers in getting the balance of products right in terms of their overall diet. It can be used a means to monitor the amount of food being consumed that is high in one or more of the nutrients identified.
There already exists a large literature that has examined various aspects of the TLS and nutritional labels in general. In comprehensive reviews of the literature on consumer use and response to nutrition information on food labels, Cowburn and Stockley, 2005, Grunert and Wills, 2007 observe that it has been established that the use of label information can alter overall food purchase behaviour. Furthermore, research indicates that most consumers are interested in nutrition information and that they use nutrition labels. However, as many researchers note the use of nutrition labels in actual food choice is almost certainly lower than consumers claim in surveys. In addition, it has been observed that when consumers are confronted by complex food choices in terms of food selection they are less able to make informed choices. For example, Black and Rayner (1992) noted that consumers struggle to understand how to process information when they are shown several nutrients simultaneously. Indeed, there is evidence that consumers will employ a heuristic that sees food choices made in terms of a specific nutrient. Evidence from New Zealand reported by Mhurchu and Gorton (2007) indicates that consumers do not understand how to balance the consumption of nutrients in their diet and often make choices based on the fat content of food regardless of other nutrient levels. Grunert and Wills (2007) note that in terms of nutrition information interest, calories and/or fat are frequently cited as being of most interest to consumers followed by salt and sugar.
Given these important observations about how consumers cope when making complex food choices as well as preferences for specific nutrients we aim to reveal the relative value that consumers attached to specific nutrients. To do this we examine the TLS from a different perspective to that previously undertaken in the literature. We conduct a choice experiment (CE) to examine consumers’ willingness-to-pay (WTP) for reductions in the various nutrients as indicated by the TLS, i.e., fat, saturates, sugar and salt, in terms of a basket of shopping. This analysis allows us to reveal the relative values placed on the reduction of each specific nutrient in terms of going from Red to Amber and from Amber to Green.
The reason why we employ a basket of goods as opposed to specific products is that the TLS is designed to help food purchase choice as part of a healthy diet. Consumers need to consider the mix of all food being purchased and consumed, and assess consumption against ideal dietary requirements. Thus, there is nothing preventing a consumer from eating a bag of crisps, or a piece of cheese, as long as they compensate for these food types with moderation elsewhere in their diet. Importantly previous research on nutrition labels has identified that consumers find it difficult to employ nutritional label information to place a specific food item within an overall dietary plan (Cowburn and Stockley, 2005). Furthermore, Wansink and Chandon (2006) note that consumers who select a healthy food option frequently over compensate with some sort of indulgence, yielding a negative impact in terms of their dietary intake. For these reasons simply focussing on a single food item within a CE could lead to behavioural outcomes that will not capture how the TLS should be used in helping to achieve a healthy diet.
The emphasis here on a basket of goods as opposed to specific product is not without precedent. For example, a basket of goods as a means to assess dietary goals has previously been employed by Jetter and Cassady (2006) who examined the US Department of Agriculture Thrifty Food Plan diet guide that employs a specific basket of food items. Furthermore, most consumers will engage with the TLS as part of the weekly shopping experience and it is within this context that we should examine the impact of the nutrition label.
Given the design of our CE and the statistical methods we employ to analyse the data we make several contributions to the literature on TLS and nutritional labels in general. First, and our main contribution, is that our results provide information about changes in consumer choice in relation to the colours. Specifically, we find that the relative WTP of moving from Red to Amber is much greater than that from moving from Amber to Green. This is an important insight into how consumers respond to the TLS. In particular, it may help to explain and inform the food supply chain industry is responding to the dietary demands of consumers by modifying its processed foods products. Our analysis also reveals the relative importance of each of the nutrients as revealed by our WTP estimates.
Second, the use of CEs to undertake research on nutrition labelling is very limited in the literature to date. To date the only other paper that has employed a CE to examine issues relating to consumer use of nutritional labels is Berning et al. (2008). This study examines preferences for detailed versus summary nutritional information. It reveals that the alternative nutritional label formats appeal to different groups of respondents. Most other CE applications in the literature (e.g., Teratanavat and Hooker, 2006, Bond et al., 2008) examine health claims on food packaging as opposed to nutritional information. They examine presence or absence of claim or the strength of a claim for a specific product. In our CE the nutritional label represents the amount of each nutrient within a basket of goods using colour.
From a methodological perspective our paper adds to a small literature that having employed a CE to generate stated preference data then estimates the resulting Mixed Logit (MXL) model using Bayesian methods. In addition, the model is estimated in WTP space as opposed to preference space. As Balcombe et al. (2009) report, there are very few examples in the literature adopting this approach which is surprising given the number of important econometric benefits that emerge as a result. Finally, we also employ a model specification that allows respondents to be indifferent to the choices presented. We take this approach because of the observation that many consumers employ a simple heuristic when making food choices with respect to nutrients.
The structure of this paper is as follows. We begin by reviewing the literature on the TLS as well as economic issues related to nutritional labels of specific interest to our study. In Section choice experiment design and data we describe the design and implementation of the survey instrument used in our CE. Then in Section econometric methods we describe the method of analysis we employ in this paper. In Section results we present our survey results and in Section summary and conclusions we provide a summary and conclusions.
Section snippets
The TLS
The TLS has been the subject of ongoing research and development by the FSA since 2004 (see www.food.gov.uk for more details). As noted by Drichoutis et al. (2006) the development of the TLS can partly be explained as a response to difficulties which consumers had with earlier nutrition label systems. However, the emergence of the TLS has not been a simple or cooperative process on the part of the public and private sectors. Lang (2006) describes in detail the struggle that the FSA have had in
Designing and implementing the choice experiment
Our CE was design and implemented so as to examine consumers’ WTP for reductions in the nutrients in the TLS. As we have explained we decided to design our CE around a basket of goods as opposed to specific food items. We did this because the TLS is designed to help consumer food choice as part of achieving a healthy diet. As we will explain the design of the CE we employed allowed us to estimate the WTP for each nutrient in terms of going from Red to Amber and from Amber to Green.
A critical
Econometric methods
The main objective of this paper is to estimate consumer WTP from a CE designed to avoid high levels of nutrients as indicated by the TLS. To analyse our CE data we employ Bayesian methods to estimate the MXL model following Balcombe et al. (2009).
Formally, let xj,s,n denote a k × 1 vector of attributes from the CE presented to the jth individual (j = 1, ……, J) in the sth option (s = 1,…, S) of the nth choice set (n = 1,…, N). Next assume that Uj,s,n is the utility that the jth individual attains from x
Results
Our preferred specification allows for potential heterogeneity in all the parameters characterising preferences. The results we present are for a MXL estimated in WTP space. As previously indicated we allow for the possibility of indifference with respect to the various attributes by employing a censored normal distribution for all parameters except the price of the basket of goods, which we have modelled as a log-normal distribution. The model specification estimated takes the following form
Summary and conclusions
In this paper we have developed and analysed a CE to examine how consumers respond to the TLS introduced by the FSA. Overall our results indicate a very strong preference on the part of UK consumers to reduce the quantity of any nutrient associated with a Red Light. From this response we can conclude that the role of the TLS to inform consumers appears to be understood. We have also found that consumers are most concerned by Salt and Saturated Fats when it comes to judging nutrient content and
Acknowledgements
We acknowledge the financial support provided by the Food Standards Agency in helping us to undertake this research. We are appreciate the extensive comments made on earlier versions of this paper by three anonymous referees as well as seminar participants at the University of Kent, University of Portsmouth, University of Bradford La Trobe University, University of Sydney, and participants at the 12th EAAE Congress in Ghent.
References (25)
- et al.
Model selection in the Bayesian mixed logit
Journal of Environmental Economics and Management
(2009) - et al.
Do consumers perceive benefits from the implementation of a EU mandatory nutritional labelling program?
Food Policy
(2007) - et al.
The availability and cost of healthier food alternatives
American Journal of Preventative Medicine
(2006) - et al.
Nutrition labels and claims in New Zealand and Australia: a review of use and understanding
Australian and New Zealand Journal of Public Health
(2007) - Berning, J.P., Chouinard, H., McCluskey, J.J., 2008. Consumer Preferences for Detailed Versus Summary Formats of...
- Black, A., Rayner, M., 1992. Just Read the Label, The Stationary Office,...
- et al.
What to choose? the value of label claims to fresh produce consumers
Journal of Agricultural and Resource Economics
(2008) - Children’s Food Campaign 2007. Missing the Target, October...
- et al.
Consumer understanding and use of nutrition labelling, a systematic review
Public Health Nutrition
(2005) - et al.
Nutrition knowledge and consumer use of nutritional food labels
European Review of Agricultural Economics
(2005)
Cited by (163)
Who cares about meat carbon footprint? Exploring preferences for credence factors among Australian consumers
2023, Journal of Cleaner ProductionThe effect of information among established and new sustainability labelling on consumers’ preference and willingness to pay
2023, Cleaner and Responsible ConsumptionThe numerical stroop effect on consumer preference to order healthy food
2023, International Journal of Hospitality ManagementSustainable food: Can information from food labels make consumers switch to meat substitutes?
2022, Ecological Economics