Study: GM food labels do not act as a warning to consumers

There is an economic and political battle taking place in America over the labeling of genetically modified (GM) foods. In 2015, 19 US states considered GM food labeling legislation and three States, Connecticut, Maine and Vermont have passed mandatory GM labeling laws.

The US House on July 23 passed the Safe and Accurate Food Labeling bill (HR 1599), which will move to the Senate and, if passed, will prohibit both state-level legislation regarding GM labels and the labeling of products that contain GM ingredients.

Proponents of HR 1599 argue that GM labels will act as a warning. Another reason people oppose labeling is that they say scientific evidence has shown GM foods are safe.

Opponents of this legislation call it the DARK (Denying Americans the Right to Know) Act. Food and biotechnology companies reported more than US$60 million in anti-GM labeling lobby expenditures in 2014, almost three times what was spent in 2013.

As an applied economist who studies the economics of information and consumer choice, I wondered what the evidence was regarding the labels-as-warnings argument.

It turned out that there is scant, if any scientific evidence to show that GM food labels will act as warning labels. Surveys of people in Vermont show that people are unlikely to see GMO labels as an indicator of a dangerous or inferior product. And for some people, the label can actually build trust in the technology.

The Vermont situation

In the US, there have been only two published studies about whether GM labels will serve as warning labels. Neither study provides strong evidence that GM labels will signal a warning to consumers. A 2014 study on GMO labeling concluded, “any (negative) signaling effects, should they exist, are likely to be small.“ Another in 2008 found that labels are likely to affect consumers' views toward GM-labeled food with the caveat that their results are based on consumer beliefs that a labeling law is in effect, not whether they support such a law or the existence of a law.

In Vermont, where a GM labeling law will go into effect in July 2016, we have been collecting information from citizens for over 15 years about their attitudes, beliefs and intentions toward GM technology and products derived from it. We have five years of data (2003, 2004, 2008, 2014 and 2015) where questions about both support for and opposition to GM were asked. We also have information on whether and what kind of labeling citizens prefer.

These questions were asked as part of the annual Vermonter Poll administered by the University of Vermont’s Center for Rural Studies.

The Vermonter Poll is a representative statewide poll that includes questions about a variety of issues important to consumers, ranging from employment and health care to agriculture and community development. We analyzed the data from 2,102 respondents to better understand whether labels change people’s preferences toward GM foods or whether they provide information which provides a basis for choosing products to purchase.

Labels help consumers make choices. In some products, consumers cannot determine whether a product contains an attribute or quality they prefer by looking or handling it, which is the case with GM foods. Research shows it is for these kinds of goods that labels play a more important role in choice.

The data

I presented the results of the study at the annual conference of the Agricultural and Applied Economics Association in San Francisco on July 27.

On average, across all five years of the study, 60% of Vermonters reported being opposed to the use of GMO technology in food production and 89% desire labeling of food products containing GMO ingredients. These numbers have been increasing slightly since 2003. In 2015, the percentages were 63% and 92%.

The study focuses on the relationship between two primary questions: whether Vermonters are opposed to GMOs in commercially available food products; and if respondents thought products containing GMOs should be labeled.

When analyzed in a way that accounts for the possibility that labels influence opposition, we found no evidence that GMO labeling would act as warning labels and scare consumers away from buying products with GMO ingredients.

Results also found that for some demographic groups, GM labels decrease opposition toward GM technology. For people with less education, who live in single-parent households and those earning the highest incomes, a GM label builds more trust in GM technology.

Opponents to labeling often refer to consumers' lack of education on the issue as a reason not to label. In addition, twostudies have shown that higher income households and households with children have been found to be more willing to pay for labeling. Households with children may also be more risk-averse regarding foods.

Men are the least opposed demographic overall. The analysis found that for men and people living in middle-income households, desiring a GM label increases opposition. For all of these demographic characteristics, the change in opposition toward GMOs was not larger than three percentage points in the positive or negative direction.

Overall, we found that supporting labeling (including after Vermont’s labeling law was passed) has no direct impact on opposition to GM foods. This conclusion is not what I had expected and runs counter to the reasoning behind the introduction of The Safe and Accurate Food Labeling bill.

Beyond Vermont

In Vermont, GMO food labels would provide consumers with information on which to base their purchasing decisions.

Consumers who wish to avoid GMO ingredients would do so and those who either want GMO ingredients or are indifferent can also make that choice. The label would not signal to consumers that GMO ingredients are inferior to those produced using other agricultural production methods.

The study was conducted in one state. Because there are no labels currently in the marketplace, the study is based on survey data. Using a statistically valid methodolgy, it seems that for Vermont, where a labeling law has been passed, the law will act as intended: it will provide consumers with the information they want in order to make choices about the food they want to buy and it will not scare them away from GM technology.

More research is needed to determine whether these results are generalizable to consumers in other states.

For other studies on GMO labeling, see:

- Caswell, J. A. (1998). Should Use Of Genetically Modified Organisms Be Labeled? AgBioForum, 1(1), 22-24. http://www.agbioforum.org

- Caswell, J. A., & Mojduszka, E. M. (1996). Using informational labeling to influence the market for quality in food products. American Journal of Agricultural Economics, 78(4), 12481253.

- Costanigro, M., & Lusk, J. L. (2014). The signaling effect of mandatory labels on genetically engineered food. Food Policy, 49, Part 1(0), 259-267.

- Fulton, M., & Giannakas, K. (2004). Inserting GM products into the food chain: The market and welfare effects of different labeling and regulatory regimes. American Journal of Agricultural Economics, 86(1), 42-60.

-Loureiro, M. L., & Bugbee, M. (2005). Enhanced GM foods: Are consumers ready to pay for the potential benefits of biotechnology? Journal of Consumer Affairs, 39(1), 52-70.

-Loureiro, M. L., & Hine, S. (2004). Preferences and willingness to pay for GM labeling policies, 467-483.

- Lusk, J. L., & Rozan, A. (2008). Public Policy and Endogenous Beliefs: The Case of Genetically Modified Food. Journal of Agricultural and Resource Economics, 33(2), 270-289.

Jane Kolodinsky receives funding from Vermont Agricultural Experiment Station for this research. She is affiliated with the Vermont Public Health Association, the Agricultural and Applied Economics Association, Vermont Chapter of the American Heart Association. None of her findings represent the views of funding organizations or affiliations. I have received funding from a host of funders for a variety of researchers over the past 30 years to conduct applied research in a variety of areas.