A couple of weeks ago, the Food and Drug Administration passed sweeping new calorie-labeling rules for restaurants (which I covered in detail here). Tucked into the agency’s analysis is an estimate of “lost pleasure” by consumers who might change what they eat as a result of the calorie labels, Reuters reported Monday.
This cost is to the tune of just over $5 billion over 20 years, and it dramatically lowers the total benefit consumers get from the regulation. (This estimate derives from work by an economist at Yale, though the calculation was done by internal FDA staff.)
Here’s the basic insight:
Imagine I currently enjoy a diet consisting primarily of Doritos and Big Macs. I have presumably chosen that diet over, say, one of steamed broccoli and chicken breasts because I prefer the way it tastes. When calorie labels are introduced, I may switch to broccoli and chicken since the calorie labels make me realize the health costs of eating Big Macs.
On the whole, I’m made better off — this must be true, since I would still be free to choose the Doritos and Big Macs. But I’m not as happy as I would be if Doritos and Big Macs actually had the same calorie counts as the broccoli and chicken.
In other words: Learning the calories in foods improves people’s welfare overall. But we are still not as well off as we would be if all the foods that are bad for us but taste great were magically imbued with the calorie and nutrient content of Brussels sprouts.
The FDA calculation tries to quantify how much less well off we are. Not everyone agrees that this measure of wellbeing should be part of the calculation.
Some health experts — and economists — argue that because diet is a choice, it’s not appropriate to use this kind of framework, which would be more often used to evaluate costs of forced changes. A simpler argument in favor of labeling may be that if people are uncertain about calorie contents, they may be making choices they think are good ones, but turn out not to be.
The question may ultimately be an introspective one: If calorie labels have changed what you eat, are you in fact enjoying your diet less?