Truthful, Misguiding Labels: The Implications of Labeling Production Processes rather than their Outcomes

Using a best-worst ranking exercise we compare the inferences made by consumers regarding the nutritional value and healthiness of fluid milk and soymilk beverages under several combinations of three labeling regimes: front label, back label ( including the nutritional information panel), and an index measure of nutrition value, the Ratio of Recommended to Restricted nutrients (RRR score). We find that, when only front label (process) information is available, consumers tend to overstate the relevance of certain product attributes (e.g. organic) and underestimate the effect of others (soy vs. cow milk). Indeed, product rankings significantly change when the information treatment includes the nutritional panel and/or RRR scores (outcome labels). Interestingly, nutritional panel and RRR scores are found to induce similar product rankings. A similar experiment is conducted to measure consumers’ ability to assess the (relative) environmental impact of alternative milk and soymilk products. We find that rankings and judging criteria are much more heterogeneous for this task, suggesting that environmental impact information contained in existing labels is minimal or subjectively interpreted