Econometrica

Journal Of The Econometric Society

An International Society for the Advancement of Economic
Theory in its Relation to Statistics and Mathematics

Edited by: Guido W. Imbens • Print ISSN: 0012-9682 • Online ISSN: 1468-0262

Econometrica: May, 2023, Volume 91, Issue 3

Equilibrium Effects of Food Labeling Policies

https://doi.org/10.3982/ECTA19603
p. 839-868

Nano Barahona, Cristóbal Otero, Sebastián Otero

We study a regulation in Chile that mandates warning labels on products whose sugar or caloric concentration exceeds certain thresholds. We show that consumers substitute from labeled to unlabeled products—a pattern mostly driven by products that consumers mistakenly believe to be healthy. On the supply side, we find substantial reformulation of products and bunching at the thresholds. We develop and estimate an equilibrium model of demand for food and firms' pricing and nutritional choices. We find that food labels increase consumer welfare by 1.8% of total expenditure, and that these effects are enhanced by firms' responses. We then use the model to study alternative policy designs. Under optimal policy thresholds, food labels and sugar taxes generate similar gains in consumer welfare, but food labels benefit the poor relatively more.


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Supplemental Material

Supplement to "Equilibrium Effects of Food Labeling Policies"

Nano Barahona, Cristóbal Otero, and Sebastián Otero

Data and Programs

Supplement to "Equilibrium Effects of Food Labeling Policies"

Nano Barahona, Cristóbal Otero, and Sebastián Otero

Online Appendix