Do price and display policies encourage consumers to make healthier food purchases - Does the coupling of these policies make them more effective - Researchers at INRAE have studied the separate effects of these two policies on the nutritional quality of food baskets. Through an experimental study, they show that price and nutrition labelling policies have no additive effects. The study was published on December 19 in the Journal of Economic Behaviour and Organization.
To encourage consumers to buy healthier products, public authorities use two types of incentive: information (nutritional labelling) and prices (taxes and subsidies). Numerous studies have measured the effectiveness of variants of each of these policies separately. Few have examined the effectiveness of their combination.
Researchers at INRAE, specialists in applied economics, tested the complementarity of these two tools using an experimental method involving 386 Grenoble residents, representative of the diversity of the French population. Browsing a virtual grocery store, they were asked to fill their food baskets twice, choosing from 290 commercial products: once without a policy and once with one of the tested policies. In this way, the changes brought about by these incentive tools could be evaluated in relation to the first reference basket.
Three distinct policies were compared:
- Display policy alone, via the Nutri-Score.
- Pricing policy alone, with a tax of 10% on D products, 20% on E products; a subsidy of 10% on B products and 20% on A products.
Modality 1 with explicit price: the post-policy price is displayed alongside the old price, which is crossed out.
Modality 2 with implicit price: only the price with policy is displayed.
- Combination of price and display policies, with price presented explicitly
Modality 1: same price changes as for price-only policies (10% and 20%)
Modality 2: small price change (plus or minus 1 or 2 euro cents).
The results of the experiment show that the Nutri-Score alone has a positive effect on the nutritional quality of the products purchased, greater than the effect of a pricing policy alone for these tax levels, with the explicit pricing policy being more effective than an implicit price change. To assess nutritional quality, the researchers use the FSA score, ranging from -15 to 35, with the lowest figure indicating the best nutritional quality. An average basket has an FSA score of 3.1 without a food policy; with the Nutri-Score, this basket drops to a score of 0.97. In contrast, this score falls from an average before policy of 2.93 to 1.57 with an explicit pricing policy.
By combining the Nutri-Score with this pricing policy, the nutritional quality of purchases is not significantly improved compared to the Nutri-Score alone, even though the policy with high price modification is more effective than the one with low price modification. Between the first and second baskets, the average score difference is 3.23 with the best combination of the two policies, compared with 2.67 with Nutri-Score alone and 1.86 with the best price policy. The effects of these two policies are therefore not additive. Here, consumers react more to normative messages than to the fairly significant monetary incentives tested (10-20%).
Little effect on household spending, whatever the policy tested
In economic terms, these different food policies have little impact on household food budgets, although we note that the normative Nutri-Score policy alone has an impact on the price per calorie of the average basket (+¤0.22 /2,000 kcal purchased).
Finally, what about the cost to the State of these policies - By extrapolating the daily data obtained to one year, the researchers estimated the fiscal cost per household per year of the different modalities (total annual public expenditure on subsidies - total annual fiscal gains from taxes). While this fiscal cost is ¤0 for the Nutri-Score, it rises to ¤233 per household per year with a policy of strong price modification, and even to ¤279 when this price policy is combined with the Nutri-Score.
Reference
Crosetto P., Muller L., Ruffieux B. (2024). Label or taxes: why not both? Testing nutritional mixed policies in the lab. Journal of Economic Behaviour and Organization. DOI: https://doi.org/10.1016/j.jebo.2024.106825