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Abstract
Ahead of the January 1, 2006 deadline for mandatory labeling of trans fat, Nabisco, a leading brand in the market for crackers - a $1 billion processed food category and ranked amongst the top sources of trans fat - reformulated a subset of their existing products and voluntarily labeled them as trans fat-free. New products were also introduced in the market and labeled as trans fat-free as well. The purpose of this study was to determine the implicit price of products voluntarily labeled as trans fat-free. Using a national level weekly scanner data set and controlling for the other observable product attributes, such as non-PHO fat labels, whole grain labels, sodium labels, variety, and package size, in addition to market conditions, the implicit price of the voluntary trans fat-free label was estimated to be $0.53 per pound, or a premium over the base case of 17.64 percent.
JEL classification numbers: D12, M38, Q18
Keywords: Food Labeling Policy, Hedonic Pricing, Retail Scanner Data, Trans Fat.
1Introduction
On December 12, 1912, the President of the Royal Swedish Academy of Sciences presented the Nobel Prize in chemistry two Frenchmen, Victor Grignard and Paul Sabatier [24]. Though working independently of each other in separate fields of organic chemistry each shared one-half of the coveted award. Professor Sabatier of Toulouse University, however, earned his share of the Nobel Prize for his seminal research in the Nineteenth century on the hydrogenation of organic compounds. This technology was later embraced by food scientists circa 1900 to make partially hydrogenated oil (PHO) or artificial trans fat.2 In 1911, Proctor & Gamble launched Crisco, possibly the first PHO product targeted to consumers in the food-at-home distribution channel [2]. Over the years, thousands of other consumer food products using trans fat appeared on shelves throughout a typical grocery store.3
Approximately a century later, on January 1, 2006, the U.S. Food and Drug Administration (FDA) required manufacturers of both food and dietary supplements to declare the quantity of trans fat per serving in the Nutrition Facts panel (NFP) on the line just below saturated fat (Federal Register).4 Incidentally, the NFP was a major tactical component of the underlying public health strategy of the Nutrition Labeling and Education Act (NLEA) of 1990 to help inform...