It is one of the most basic premises of economics and decision theory. If you give a decision-maker better information about the consequences, he will make better choices.
This principle underlies one of the least controversial forms of paternalism: subsidizing information to improve welfare. It is uncontroversial because unlike policies which restrict or direct behavior, it doesn’t take a stand on what is good for the decision-maker. More information helps her achieve her desired outcomes, whatever they may be.
In New York City, fast food chains were required to conspicuously publish calorie counts for all of their offerings. This will enable customers to make better decisions, presumably in terms of health consequences. According to the theory, any change in behavior in response to the new information is evidence that the policy was a success. It reveals that people made use of the information.
…when the researchers checked receipts afterward, they found that people had, in fact, ordered slightly more calories than the typical customer had before the labeling law went into effect, in July 2008.
Here is the conclusion drawn by an author of the study:
“I think it does show us that labels are not enough,” Brian Elbel, an assistant professor at the New York University School of Medicine and the lead author of the study, said in an interview.
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October 7, 2009 at 4:20 am
Ross Parker
For what it’s worth, I think that this example may be skewed by the demographic in the poorer areas in which receipts were collected. Perhaps people are maximising their calories per dollar. This is, in many ways, the natural human instinct.
The recession may also play a role here. I would be interested to know if this receipt-collection exercise had a control – a measurement of whether calorie consumption had gone up in similar cities where these measures had not be introduced. Without that, how can you rule out the possibility that people comfort-eat in a recession?
October 7, 2009 at 4:08 pm
A Nudge in the wrong direction?
[…] the blog Cheep Talk, I came across a good example for the policy analysis unit of my Masters […]
October 7, 2009 at 7:21 pm
mike
One might have increased the information available, but does that increase the signal or the noise?
Did they take into account how familiar the people in the study are with actual calorie counts, and how that relates to how much they should be consuming for their meal? I can think of many ways a naive comparison of a bunch of numbers could result in worse decisions then simply relying on experience and intuition. For example, what would happen if there were a few a dishes with absurdly high calorie counts?
Many a salesperson has made a career out of fiddling with abstract numbers (ex: prices) in order to confuse people into buying more then what they wanted.
October 8, 2009 at 6:03 pm
Tomek
Maybe the health conscious ppl didnt buy anthing and went to a quality restaurant instead, so the average calories per receipt went up?
October 10, 2009 at 12:40 pm
billpetti
I was thinking the same thing as mike above–numbers are great, but without relevant comparison’s and context–i.e. how much are you supposed to take in per day, per meal, etc, I can imagine people still making poor choices.