THE IMPORTANCE OF NUTRITION LABELING AND HEALTH CLAIM REGULATION ON PRODUCT CHOICE: AN ANALYSIS OF THE COOKING OILS MARKET

The Nutrition Labeling and Education Act (NLEA) prohibits health claims for foods containing more than a certain amount of fat per serving. This disqualifier level eliminates health claims for cooking oils since these products have approximately 14 grams of fat per serving, above the acceptable threshold. However, a number of scientific studies indicate that, from a heart-health perspective, cooking oils lower in saturated fat and higher in monounsaturated fats are superior to other oils. Prior to the NLEA, firms actively competed on this basis, with manufacturers of cooking oils making explicit heart-health claims in print advertising and labeling. This study utilizes supermarket scanner data from twenty stores to examine the type of cooking oil chosen by consumers. The results indicate that after implementation of the NLEA, consumers shifted purchases toward cooking oils higher in saturated fat and lower in monounsaturated fat. This study does not address whether consumers changed their total consumption of cooking oil after implementation of the NLEA.Consumer/Household Economics, Food Consumption/Nutrition/Food Safety,

Factors Affecting Consumer Choice and Willingness to Pay for Milk Attributes

This study used weekly scanner data to determine within the milk market the factors that affect consumer choice of non-rBST and organic products and the implications for the development of niche markets. This was accomplished by first understanding what product attributes affected demand for milk and then determining how much consumers were willing to pay for these attributes. The former was done within the multinomial logit framework while the latter used the hedonic price model to infer WTP. Results showed the price effect for rBST-free was the largest while the price effect for organic was the smallest and that consumers were willing to pay more for both rBST-free and organic milk compared to conventionally produced milk.Consumer/Household Economics,

Regulating Advertisements: The Case of Smoking Cessation Products

In this paper we investigate how direct-to-consumer (DTC) advertising of pharmaceutical products in affected by regulations of the Food and Drug Administration and by market conditions. We focus on a relatively under-studied segment of the pharmaceutical market -- the market for smoking cessation products. Because of their proven effectiveness, these products could be the key to meeting public health goals to reduce smoking. However, in many ways, smoking cessation products have been more heavily regulated than cigarettes. Our empirical analysis uses data on advertising expenditures and data from an archive of print advertisements. The archive includes all smoking cessation product advertisements that appeared in over 13,000 issues of 28 magazines between January 1985 and May 2002. Our study period begins shortly atfer the first nicotine replacement product was introduced, and covers the evolution of the market as new products are introduced while some of the older products move from prescription to over-the-counter (OTC) status. OTC status eases the disclosure requirements imposed on advertisements of prescription pharmaceuticals, substantially reducing the costs of a print advertisement. Our results suggest that OTC status is associated with an increase in advertising expenditures and the number and pages of magazine advertisements. A current proposal to reduce disclosure requirements on all DTC advertisements of prescription drugs could have similar effects. Our results also suggest that advertising increase with the introduction of new products and with market competition.

Youth Smoking, Cigarette Prices, and Anti-Smoking Sentiment

In this paper, we develop a new direct measure of state anti-smoking sentiment and merge it with micro data on youth smoking in 1992 and 2000. The empirical results from the cross-sectional models show two consistent patterns: after controlling for differences in state anti-smoking sentiment, the price of cigarettes has a weak and statistically insignificant influence on smoking participation; and state anti-smoking sentiment appears to be a potentially important influence on youth smoking participation. The cross-sectional results are corroborated by results from discrete time hazard models of smoking initiation that include state fixed effects. However, there is evidence of price-responsiveness in the conditional cigarette demand by youth and young adult smokers.

THE IMPORTANCE OF NUTRITION LABELING AND HEALTH CLAIM REGULATION ON PRODUCT CHOICE: AN ANALYSIS OF THE COOKING OILS MARKET

The Nutrition Labeling and Education Act (NLEA) prohibits health claims for foods containing more than a certain amount of fat per serving. This disqualifier level eliminates health claims for cooking oils since these products have approximately 14 grams of fat per serving, above the acceptable threshold. However, a number of scientific studies indicate that, from a heart-health perspective, cooking oils lower in saturated fat and higher in monounsaturated fats are superior to other oils. Prior to the NLEA, firms actively competed on this basis, with manufacturers of cooking oils making explicit heart-health claims in print advertising and labeling. This study utilizes supermarket scanner data from twenty stores to examine the type of cooking oil chosen by consumers. The results indicate that after implementation of the NLEA, consumers shifted purchases toward cooking oils higher in saturated fat and lower in monounsaturated fat. This study does not address whether consumers changed their total consumption of cooking oil after implementation of the NLEA

Factors Affecting Consumer Choice and Willingness to Pay for Milk Attributes

This study used weekly scanner data to determine within the milk market the factors that affect consumer choice of non-rBST and organic products and the implications for the development of niche markets. This was accomplished by first understanding what product attributes affected demand for milk and then determining how much consumers were willing to pay for these attributes. The former was done within the multinomial logit framework while the latter used the hedonic price model to infer WTP. Results showed the price effect for rBST-free was the largest while the price effect for organic was the smallest and that consumers were willing to pay more for both rBST-free and organic milk compared to conventionally produced milk

The Impact of Alternative Forms of State Regulation of AT&T on Direct-Dial, Long-Distance Telephone Rates

Federal and state regulatory agencies have traditionally used rate-of-return regulation to set profit and rate levels for utilities. A "price cap" framework, in which the regulatory agency sets a maximum rate below which the regulated utility has pricing flexibility, is possibly a more efficient alternative to rate-of-return regulation. This article presents an econometric analysis that compares AT&T's prices of intrastate, long-distance telephone service in states that allow AT&T pricing flexibility with those in states that do not. The results of this analysis suggest that AT&T's daytime, evening, nighttime, and weekend rates are significantly lower in states that allow pricing flexibility than in states that use rate-of-return regulation.

Information, Advertising and Health Choices: A Study of the Cereal Market

This article examines the effects of information on consumer and producer behavior by focusing on the ready-to-eat cereal market during a period in which information developed about the health benefits of fiber cereal consumption. Although cereal producers were initially prohibited from advertising these health benefits, the regulatory ban against producer advertising was lifted during the period we study. Our results indicate that consumers changed their behavior once informed of the health benefits and that advertising was an important source of information once the ban was lifted. Producer health claims about fiber also led to significant product innovation and did not cause adverse effects in other health dimensions of cereal consumption. Government and general information sources had limited impact on fiber cereal choices in the years prior to the advertising. Analysis of individual food consumption data indicates that theories of information acquisition are important in explaining who responds most quickly to new information; household and individual characteristics that reflect costs of acquiring information, ability to process information, and valuation of health are all important determinants of fiber cereal choices. Moreover, the evidence suggests that advertising reduced the differences across consumers by lowering the costs of acquiring information for broad segments of the population. In contrast, the information processing advantages due to education were not reduced by advertising.