Misconceptions on Food Date Labels and Consumer Welfare Implications

Abstract

When multiple food date label phrases are allowed, consumers may misinterpret these labels, causing inefficiency. Using data collected in China, we find considerable consumer misinterpretation even when only one type of food date label is permitted by regulation. Furthermore, consumer preference diverges according to their own interpretation of the label and depending on the type of food. Misinterpretation also leads to consumer welfare loss. Through a value of information (VOI) framework and when misinterpretation is taken into consideration, we show that changing a Sell by label to a Not use if after label generates the largest welfare gain. Our findings advise food manufacturers and policymakers on understanding consumer perspectives of food date labels and creating efficient labeling regulations given consumer misinterpretation.