Labelling Genetically Modified Food: Heterogeneous Consumer Preferences and the Value of Information

TLDR

Public debate on GM food centers on labeling policies for products derived from GM processes. The study analyzes how different GM labeling policies affect consumers’ choices of pre‑packaged sliced bread. The authors use a simulation‑based bias‑adjusted model to estimate the value of information from labeling and translate consumer benefits into average market prices for comparison with potential labeling costs. Consumers exhibit substantial heterogeneity in preferences for bread attributes, and they value information from mandatory labeling more than from voluntary labeling.

Abstract

One facet of public debate associated with genetically modified (GM) food focuses on labelling policy for products derived from GM processes. This paper reports on the analysis of effects on consumers' choices of pre‐packaged sliced bread under different GM food labelling policies. Substantial heterogeneity is found to exist among consumers' tastes for various bread attributes, including the presence/absence of GM ingredients in bread products. A simulation‐based bias‐adjusted measure is applied to estimate the value of information, as opposed to the value of the presence or absence of GM ingredients, revealed to consumers by different labelling procedures for the GM attribute. The information that is provided in a mandatory labelling context is considerably more valued by consumers than the information provided in a voluntary labelling context. In a final section, estimated consumer benefits from labelling policies are expressed in terms of average market prices for bread products, providing a measure of benefits against which potential cost increases that may be associated with labelling policies may be compared in the context of any future benefit–cost analysis of GM labelling.