The Politics of Food Labeling and Certification - The Oxford Topic of Food, Politics, and Society - page 620

Because almost all products that Americans purchase are produced far from the point
of sale, until recently it has been impossible for consumers to observe the conditions
under which their food is produced, and, therefore, difficult to act on their desires for
value-consistent consumption. This lack of transparency has created an asymmetry of
information between consumers and producers. Certification and labeling offer a solu-
tion to this form of market imperfection, providing information that allows consumers
to distinguish among products and support a style of food production that reflects their
values (Elliott and Freeman 2003, Brown 2006).
By establishing a channel of information connecting the consumer with the produc-
tion process, labeled food also provides a sense of connectedness between consumers,
their food, and the people and place from which it came (Dolan 2011). As Luetchford
notes, “in ethical consumption the aim is to break down and demystify the distance
between parties in the exchange and accentuate the relation between them.” (Leutchford
2008, p. 3).
Finally, certification and labeling allow companies to “ethics-discriminate” (in a simi-
lar sense to premium-price discrimination) among customers to better tailor their offer-
ings to more nuanced patterns of demand. While most shoppers prioritize price and
quality over labor and environmental standards, some consumers care enough about
the conditions under which their food is produced that they are willing to pay more.
Certification and labeling allow firms to reduce deadweight loss by catering directly to
that otherwise untapped demand. Thus, Kellogg has developed the Kashi brand, which
uses certified organic and GMO-free ingredients in some of its cereals; PepsiCo has
acquired Naked Juice, whose beverages are made with bananas certified by Rainforest
Alliance; and Kraft has launched a line of certified Organic macaroni and cheese along-
side its conventional product offerings (Strom 2012, http:www.nakedjuice.com/ourpur-
pose/ and http:www.kashi.com/ourcommitment ). Food labeling allows companies to
target consumers willing to pay for particular production standards. In theory, this is
good for the farmer, the consumer, and the firm.
Different theories exist about what motivates consumers to buy ethically labeled
food.7 Understanding consumer motivations matters because the nature of those moti-
vations determines how widespread and robust demand will be for ethically certified
products, ultimately constraining the size and impact of the market.
One explanation for the decision to purchase ethically labeled food is that of altru-
ism. An altruistic consumer would buy organic, fair trade food because she gleans per-
sonal satisfaction from the advancement of a cause she cares about (“pure altruism”) or
because the act of contributing to a cause makes her feel good about herself (“impure” or
“warm glow altruism”) (Andreoni 1989).
An alternative explanation is that consumers purchase ethically labeled food because
their judgment is influenced by social norms. Norm-responsive consumers perceive
that buying fair trade or organic food is the “appropriate” thing to do, since others in
their reference group are doing it, too. Adherence to norms tends to be strongest when
there are personal and contextual similarities between an individual and the group that
embraces the given norm (Goldstein, Cialdini, and Griskevicius 2008). If a shopper is