An Update on Food Labels

Dave Hoffman

Dave Hoffman is the Murray Shusterman Professor of Transactional and Business Law at Temple Law School. He specializes in law and psychology, contracts, and quantitative analysis of civil procedure. He currently teaches contracts, civil procedure, corporations, and law and economics.

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2 Responses

  1. Chris says:

    You missed an important caveat when talking about Whole Foods and Trader Joe’s – the customers that shop at those stores have demanded a higher level of labeling (or perceived safety, etc). They pay for that preference through somewhat higher prices – which is OK.

    It doesn’t really counter your argument (it favors federalism or free-markets actually) but some may read the post and think “well if people want it we should make everyone do it” which isn’t really what is going on.

  2. CDP says:

    Dave – I’m not sure you’ve thought through the effect of on-site labeling, and it doesn’t seem to me that there is any other practical way to comply with the requirements of 50 different states. Even small grocery stores have about 30,000 different SKUs. Under your regime, grocery stores would be responsible for (1) tracking labeling requirements for 30,000 different products, including 50 different state laws, manufacturer’s marketing slogans, and the ingredients of foods (including changes driven by ingredient shortages, etc.); (2) developing an organizational system that would allow them to track the 30,000 products, which right now for the most part arrive to grocery store warehouses in identical cardboard boxes, and make sure that the correct “sticker” was affixed to the correct product, without fail; (3) buying expensive labeling machines for each store; and (4) hiring a bevy of workers to apply the stickers by hand. This would be in addition to the current cost of the label. The above costs would be prohibitive, especially for smaller retailers who can only spread costs (1) and (2) over a handful of stores. Most likely, these retailers would be forced out of business, larger retailers would not stock the distinctive products they carry and consumers would have less choice and pay a lot more.

    Although I am generally skeptical of solutions that rely on the market, this happens to be a problem that the market has handled quite well. FDA’s requirements offer a minimum level of protection to people who either don’t know or don’t care about the content of products. People who are generally interested in safe, healthy foods can shop at retailers like Trader Joe’s and Whole Foods and pay a little more. People who really want to know what’s in the products they consume can shop at retailers like Vitamin Cottage, whose web site lists ‘in-depth nutritional information’ as one of the chain’s three major selling points. Of course, Vitamin Cottage consumers pay significantly more than even Whole Foods customers. Why should consumers who don’t care about nutritional information pay more to subsidize those who do?

    This is essentially an intellectual exercise – there is little danger even if the law doesn’t pass of states becoming aggressive on this issue. My experience has been that most state legislators are too busy being captured by the developers’ lobby to worry about something like labeling laws.