The Labeling Problem

(Part 1 of 2)

“Labeling” is a big thing these days. After all, as I hope you have concluded if you’ve read many (any?) of my previous posts, information (or lack thereof) is one of the biggest challenges for an effective market-based economy. But does that mean “labeling” is necessarily a good thing?

I bet you thought I was going to talk about food, didn’t you? A little bit, but first…

The university where I work has a “Writing Intensive” requirement for which students must take at least two courses that are designated as “writing intensive” or WI. WI courses have to be approved as satisfying certain criteria, including a minimum number of pages of revisions and a significant portion of the overall grade being based on students’ writing. It’s largely up to the instructor as to whether to apply for the WI designation in any particular course.

Naturally, not all students are thrilled about taking WI courses that actually require them to write, in real English, with some evidence of proper grammar and structure and all those nasty, time-consuming details. (Like OMG uv got 2 b kidding!)

Some students complained about unwittingly enrolling in courses that were WI. You know, because heaven forbid they end up in a class that requires writing they could have avoided. Professional advisors and administrators concurred, and contrived a labeling scheme to make it clear that a course is approved as WI–because the language in the course description itself was apparently insufficient. (Perhaps the dislike for writing stems from a dislike for reading as well.) Now courses have to be reviewed and approved in time to be listed in the course catalogue for registration the following semester so the course number can be affixed with a W on the end (e.g., ABM 4971W vs ABM 4971).

But this course designator has created a different kind of problem: Students are now upset anytime a course without a W on the number includes any substantive amount of writing.

The presence of a WI label changes students’ expectations and perceptions
about all courses, not just WI courses.

And this is part of the problem in the larger ‘labeling’ debates we face as a society. When we add information on labels, it doesn’t just provide information; it shapes consumers’ perceptions not just of the labeled product, but of all similar products. This is especially true for mandatory labels for attributes that consumers do not fully understand and for which consumers’ personal valuations are more subjective and varied.

Take foods containing genetically modified (GM), or genetically engineered (GE), organisms, for instance. Survey results suggest that a majority of US consumers has little knowledge or understanding about what GM foods are (for instance, see here and here), never mind the fact that a consensus report from the National Academy of Sciences, Engineering and Medicine (p. 2) “found no substantiated evidence that foods from GE crops were less safe than foods from non-GE crops.”

Notwithstanding that lack of knowledge, a large majority of consumers, if asked, will agree with the idea that consumers have a right to know what’s in their food and that GM content should be labeled. Kind of like college kids who object simply to the idea of writing. That said, only a small percentage of consumers (1 in 6) actually care deeply about having that information themselves.

Despite the value of more information, GM labeling runs a couple different risks. First, if food products containing GMOs are required to be labeled as such, most all food would carry the label because most prepared foods contain products derived from soybeans and corn, which are predominantly grown using GM biotechnologies. If everything in a store carries the same ‘warning’ label, the label doesn’t convey any relative information. That is, it doesn’t help distinguish between products. In fact, it would be harder to find the products without the label. Imagine students scrolling through the 90%+ of courses marked “Not WI” in order to find the 10% that are WI. A “GMO-Free” label, on the other hand, would communicate more effectively by standing out relative to other products.

Second, even with a (voluntary) “GMO-Free” label, the label itself implies that GMOs are bad by comparison, just like having WI courses marked “W” seemingly implies courses without “W” don’t involve much writing. In that case, the label actually misinforms consumers, or at least misleads them, relative to the science of GM foods and their safety (or to instructors’ pedagogy, as the case may be).

The presence of a GM label changes consumers’ expectations and perceptions
about all food products, not just the ones labeled.

Having labels that misinform or mislead consumers, whether explicitly or implicitly, defeats the purpose of labeling to begin with, and is therefore an ineffective policy tool. There is also the issue of what is an economically sensible policy for providing information in the market place, even if labeling were to be effective. Stay tuned for a follow-up post on that.