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On Shedding Calories and Disclosing Information

On February 1, 2010, Philadelphia became the most recent city to require calorie listings at chain restaurants. This rule only applies to restaurants having more than 15 locations, although not all locations need be within Philadelphia.

Other states and municipalities are considering or planning to implement similar laws.  According to the Philadelphia Inquirer, though, the city’s new law is more stringent than others.  By April, all chain restaurants will need to “list saturated fats, trans fats, carbohydrates, and sodium, in addition to calories, with every item.”

Do nutrition disclosure laws have any effect on people’s eating habits? Although there is some anecdotal evidence from storeowners that customers are starting to order less fattening foods, at least one study has suggested that information disclosure has little effect. Consumers may claim their habits are affected, but their actual caloric intake appears to stay the same.

When the Philadelphia regulation begins in April to require disclosure of a more comprehensive array of nutritional characteristics, new questions will arise. Will consumers be able to choose between items with fewer calories but more salt, as against those with higher calories but no trans-fats? Will they have any baseline number of calories, salt, or fat content by which to make sound judgments? Will they pay any attention at all if confronted with 6-page menus filled with detailed nutritional information?

A recent study has suggested that the more complex a weight-loss diet, the more overwhelming it can be, which makes it more likely that people drop the diet. Will complex nutrition information yield similar diminishing returns? How much information can be disclosed before consumers find themselves in overload?

In other areas of regulation, of course, information disclosure has sometimes been viewed as a promising policy tool. By creating a context for “shaming” firms with the information disclosed, it is thought that firms may begin to adopt better practices.  For example, a 2003 paper in the Quarterly Journal of Economics by Ginger Jin and Phillip Leslie shows that a Los Angeles County ordinance requiring restaurants disclose the results of their governmental health and safety inspections corresponded with improvements in overall inspection scores and a reduction in nearby hospitalizations due to foodborne illnesses.

Legal scholar and current Administrator of the White House Office of Information and Regulatory Affairs, Cass Sunstein, in his book Nudge, treats information disclosure as somewhat of a cure-all, citing the Toxics Release Inventory (TRI) as “the most unambiguous success” of any environmental regulation in the United States. Under the TRI law, firms that use large quantities of toxic chemicals must report their release of these chemicals into the environment. Sunstein claims that TRI “has had massive beneficial effects, spurring large reductions in toxic releases throughout the United States.”

Given the Obama Administration’s emphasis on open government – or on what Sunstein has in a recent speech called the Administration’s emphasis on “democratizing data” – Washington has taken a particular interest in using information disclosure as a strategy to “drive behavior in a better direction.”

Despite the Obama Administration’s enthusiasm for information disclosure, it is far from clear how well disclosure as a regulatory strategy actually works.  Professor Cary Coglianese of the Penn Program on Regulation points out that, with respect to the effects of TRI, “studies have not adequately accounted for the contributions of more conventional regulation to the reported decline in TRI chemicals,” something he believes must be considered since amendments to the Clean Air Act imposed new regulatory controls on the same hazardous air pollutants covered by TRI, and did so around the same time as TRI.

The source Sunstein cites for his claim of TRI’s success – a 2005 book by Duke University’s James Hamilton entitled Regulation by Revelation – actually supports Coglianese’s caution and contradicts Sunstein’s exuberance. After providing a comprehensive analysis of TRI and the research on its effects on pollution levels, Hamilton concludes: “The separate and exact impacts that the provision of information has on toxic emissions are, to date, unknown.”

A study published in 2008 in the journal Regulation & Governance by another Duke researcher, Lori Bennear, suggests that a substantial portion of the supposed decline in pollution reported under the TRI program may stem from paperwork effects, essentially. Using data from Massachusetts, Bennear found that up to 40% of reported declines in toxic releases may be artificially created.

If one of the most “unambiguous successes” in applying information disclosure to environmental problems turns out not to be so unambiguous, perhaps enthusiasm for information disclosure regulation should at least be more tempered.  Of course, given Philadelphia’s and other cities’ use of information disclosure to attempt to change eating habits, there will be more chances to learn whether and when this regulatory strategy can prove effective.


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