Consumers are willing to pay a premium for chicken that is labeled hormone-free, even if they know the food label is superfluous, says Jason L. Lusk, a Distinguished Professor and Head in the Department of Agricultural Economics at Purdue University.
Shoppers put a lot of value in package or food label claims. For poultry products, the label hormone-free continues to attract a lot of attention. However, the claim is unnecessary. The U.S. Department of Agriculture (USDA) requires that all poultry raised for food be hormone-free.
Manufacturers are only allowed to label a poultry product as “no hormones” when it is accompanied by the disclaimer “federal regulations prohibit the use of hormones.” Likewise, guidelines have been issued preventing food to be labeled as non-GMO when no GMO is available.
Does education help?
Lusk recently co-authored a working paper with Lacey Wilson, a graduate student at the same university that examined whether “greater knowledge of the claims – the form of expertise in food production and scientific literacy – decreases willingness to pay for redundant labels.”
Respondents overwhelmingly were willing to pay more for three redundantly labeled products: non-GMO sea salt, gluten-free orange juice and no-hormone-added chicken breast, according to an online survey of 1,122 U.S. adults.
“In fact, no-hormone-added chicken breast carrying a federally mandated disclaimer had the highest average premium, as a percentage of willingness to pay, among all the products studied,” the authors wrote.
Having agricultural or scientific experience seemed to decrease the likelihood that a respondent would be tricked by superfluous claims. Those with farm experience offered lower premiums for the salt and the chicken, while those with a higher scientific literacy paid less for the orange juice.
Doesn’t eliminate the willingness to pay a premium
In a move that seems counter-intuitive, 30% of respondents increased the amount they were willing to pay for these products once they were presented with information about the redundancy of these claims.
“Redundant labels may encourage overspending by uninformed consumers. It is tempting to conclude that more consumer education is needed, but as our results show, provision of corrective information is often not enough to eliminate the willingness to pay more for products with redundant claims. Finding ways to provide consumers with food attributes they desire while avoiding misperceptions is a key challenge for regulators and the food sector,’ the authors wrote.
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