the impact of mandatory disclosure laws on product choices an analysis of the salad dressing market abstract the nutrition labeling and education act nlea requires most food products to include a nutrition label prior to the nlea labeling was voluntary this study uses nutrition label information and supermarket scanner data pre and post nlea to examine the impact of moving from a voluntary to a mandatory labeling regime on consumer product choice the voluntary unraveling of information is shown to be an important market mechanism prior to the nlea all low fat salad dressings had a nutrition label while the majority of the higher fat dressings did not however there remained large variation in fat content among dressings that did not voluntarily label those with the highest fat levels experienced a significant decline in sales after they were required to disclose the results indicate that even in markets with credible low cost mechanisms to disclose mandatory labeling can have an impact on consumer behavior and health

nonmonetary effects of financial crises abstract this paper empirically examines the nonmonetary effects of financial crises it exploits the special nature of the great depression in canada to test propositions linking financial structure and aggregate economic activity canada s large domestic debt and shrinking banking system had little impact on the course of the depression in comparison with results for the united states this implicates bank failures as a prime factor in the real effects of financial crises

nonmonetary effects of the financial crisis in propagation of the great depression this paper examines the effects of the financial crisis of the 1930s onthe path of aggregate output during that period our approach is complementary to that of friedman and schwartz who emphasized the monetary impact of the bank failures we focus on non monetary primarily credit related aspects of the financial sector output link and consider the problems of debtors as well as those of the banking system we argue that the financial disruptions of 1930 33 reduced the efficiency of the credit allocation process and that the resulting higher cost and reduced availability of credit acted to depress aggregate demand evidence suggests that effects of this type can help explain the unusual length and depth of the great depression this abstract was borrowed from another version of this item

strategic information disclosure the case of multi attribute products with heterogeneous consumers we examine the incentives for firms to voluntarily disclose otherwise private information about quality attributes of differentiated products in particular we focus on the case of differentiated products with multiple attributes and consumers that are heterogeneous in their preferences over these attributes we show that there exist certain configurations of consumer preferences under which a firm producing a high quality product even with zero costs of disclosure may choose not to reveal the quality of its product this failure of firms to voluntarily disclose the quality of their products will arise when providing consumers with more information results in more elastic demands for these products which in turn triggers more intensive price competition and leads to lower prices and profits for all firms as a result the equilibrium in which disclosure is voluntary may diverge from that in which disclosure is mandatory

value of parsimonious nutritional information in a framed field experiment abstract this study investigates consumers beliefs about the tastiness and healthiness of 173 food items in a framed field experiment designed to mirror a grocery shopping environment using data collected from 129 food shoppers in grenoble france demand models are estimated to determine how product choice is affected by price taste and perceived healthiness and how choices change with the provision of objective health information unlike previous studies focusing on relatively complex nutrition labels we elicit and convey health information using simple nutritional indices meant to lower search and cognitive processing costs the results indicate that consumers are willing to pay for tastier foods and for healthier foods particularly if the consumers have objective information as opposed to perceived subjective information on nutrient content the estimates suggest that the value of the type of nutritional information provided in the experiment is 0 98 per day the figure refers to the daily welfare benefits that arise from being able to make a set of choices that better reflect people s preferences by receiving the nutrient index information on all 173 food items versus not having such information

monopoly pricing of capacity usage under asymmetric information the design of monopoly pricing strategies is examined in a general framework with an unknown population distribution of consumer characteristics and downward sloping multi unit consumer demand in addition the monopolist has increasing marginal cost three pricing strategies are shown to implement the profit maximizing allocation reference point pricing multi unit competitive bidding with variable outputs and generalized priority service the analysis of pricing also is extended to include random capacity copyright 1993 by blackwell publishing ltd

price flexibility credit availability and economic fluctuations evidence from the united states 1894 1909 the importance of disturbances in financial markets for real economic activity and the positive association between price level and output movements typically are explained by appeal to a combination of nominal aggregate demand shocks particularly money supply shocks and rigid prices we argue that this view is inconsistent with evidence for short run responsiveness of prices and gold flows to nominal disturbances during the pre world war i gold standard era we offer an alternative explanation that connects financial markets and real activity through disturbances to the availability of credit this approach links comovements in prices and output through real effects in credit markets associated with price level shocks empirical analysis using monthly data for the pre world war i period supports the assumption of rapid price adjustment and the credit supply interpretation of the transmission of financial shocks disturbances to credit availability including price shocks contribute substantially to our empirical explanation of output fluctuations during this period

imperfect price discrimination and welfare we develop a model in which a monopolist uses differences across consumers in their valuation of time to imperfectly price discriminate though it is customary to analyse price discrimination problems by the calculus of variations after postulating a continuum of types we assume a finite number of types and exploit the geometry and duality of the contract set and the structure of the programming specification we analyse in detail the qualitative properties of the model s solution and show by construction that our results exhaust the implications of the model for equilibrium contract pairs we show that imperfect discrimination is not bounded in welfare terms between perfect discrimination and single price monopoly and that the deadweight loss consumer surplus and output comparisons between single price monopoly and imperfect discrimination are ambiguous

the effects of proximate determinants of the money supply in the interwar period recent studies of the role of monetary policy in the interwar period and the great depression of 1929 33 typically focus on the money supply or the monetary base for several reasons however it is instructive to study the separate impact of money s three proximate determinants in this paper we focus on the interwar period and present empirical evidence on the importance of the three proximate determinants of the money supply in explaining fluctuations in output and prices we define the interwar period as july 1922 june 1938 for reasons explained in beard and mcmillin 2 as developed by friedman and schwartz 15 and extended by cagan 10 changes in the m2 stock of money can be attributed arithmetically to changes in three proximate determinantsthe monetary base the ratio of currency to deposits the currency ratio and the ratio of reserves to deposits the reserve ratio 2 the three proximate determinants are affected by different economic forces or react differently to the same variables each is under the immediate control of different economic agents changes in any one of the three proximate determinants can have and have had important effects on the stock of money cagan 10 analyzed in detail the contribution of changes in each of the three proximate determinants to cyclical fluctuations in the rate of change in the money stock over the long period 1877 to 1954 the base and the reserve ratio were each responsible for about one fourth of these variations the currency ratio was the most important single contributor being responsible for roughly one half of the variations while the contribution of the currency ratio varied from cycle to cycle major deviations occurred at times of financial panics when it often played a dominant role cagan found that the establishment of the federal reserve reduced the relative importance of changes in the reserve ratio and increased the relative importance of changes in the base while the amplitude of cyclical movements in the reserve ratio fell after 1914 and the ratio itself trended downward there was a sharp increase in the reserve ratio in the 1930s

optimal nonlinear pricing and contingent contracts rationing of output may be required to allocate resources when it is costly to operate a system of spot markets in electric power markets for example interruptible service is the most frequently used form of capacity sensitive allocation after time of use pricing this paper examines the welfare properties and ease of implementation of alternative rationing rules and the pricing of contracts based on rationing rules the model allows for both demand and supply shocks the theoretical analysis is illustrated by application to curtailment rules and pricing in electric power markets rationing rules are a means of sharing risk and joint costs insurance provides a means of sharing the financial costs of random events however there are additional welfare gains to be obtained from pooling physical quantities of goods in the presence of random demand and supply see spulber 1985 by rationing goods the common costs of production or productive capacity can be reduced while also reducing individual risk this explains in part the extensive attention devoted to rationing of electric power electric power is subject to significant randomness in both supply and demand allocation mechanisms based on prices that adjust in real time on complete contingent contracts or on renegotiation of contracts in response to new information can involve prohibitive transaction costs avoidance of the need to ration would require inefficiently high capacity investment electric utilities must therefore employ rationing rules these rules must be

new products quality changes and welfare measures computed from estimated demand systems this paper examines the construction of a price index based on an estimated demand system in principle the method examined can produce a price index that takes account of the introduction of new p

the effect of standardized information on firm survival and marketing strategies we argue that standardized information disclosure information using a common format and uniform metrics creates asymmetric opportunities for firms which affects their strategies and survival we test our predictions using a longitudinal quasi experimental field study involving the nutrition labeling and education act of 1990 nlea and we focus on firm market share within a category as a key asymmetry findings indicate that in general the nlea had no effect on firm responses however when accounting for firm differences we observe that the nlea led to 1 an increase in small share firm exits and 2 a greater increase in distribution for large share firms no concurrent increase in price by large share firms following the nlea was observed we conclude by discussing the implications of these effects for firm strategy the design of public policy and theories regarding the impact of information on markets

monopolistic provision of congested service with incentive based allocation of priorities because of the uncertainty associated with capacity availability as well as demand all consumers in a public utility face a chance of not getting the service however small that chance may be in electric utilities for example the reserve margin the percent excess capacity over the peak demand determines the reliability of service to the consumer we will show in this paper that utilities can employ a priority service scheme i e offer a menu of prices and priorities that can work to the advantage of consumers as well as the utility unreliability in service obviously results in shortage costs to consumers and these shortage costs can vary a lot among consumers depending on how the consumers value the service and how well they are prepared to cope with any interruptions since it is uneconomical to provide a highly reliable service to everyone it would be desirable to have a scheme by which those with higher shortage costs get a higher priority of service two major points arise when we consider allocating service by priorities first the utility can not know the shortage cost to each consumer but only a distribution of the shortage costs in the population perhaps through a sample survey the utility thus is not in a position to determine what priority a consumer should have and has to let the consumer choose the priority from a menu of prices and priorities second the utility must have a mechanism by which consumers may be cut off in their priority order if priority service is to be feasible

atheoretical macroeconometrics a critique abstract the spurious nature of the restrictions used to identify many macroeconometric models has led some researchers to advocate a style of econometric inquiry that is less dependent on prior theoretical restrictions of the sort that were central to the approach of the cowles commission this development which we call atheoretical macroeconometrics is summarized and evaluated in the current paper it is contrasted with an updated version of the cowles commission approach we conclude that while some of the exercises of atheoretical macroeconometrics are valid those that have attracted the most attention and appear the most innovative exogeneity testing impulse response analysis and policy analysis using estimated vector autoregressions are based on incorrect analysis

the influence of expert reviews on consumer demand for experience goods a case study of movie critics an inherent problem in measuring the influence of expert reviews on the demand for experience goods is that a correlation between good reviews and high demand may be spurious induced by an underlying correlation with unobservable quality signals using the timing of the reviews by two popular movie critics siskel and ebert relative to opening weekend box office revenue we apply a difference in differences approach to circumvent the problem of spurious correlation after purging the spurious correlation the measured influence effect is smaller though still detectable positive reviews have a particularly large influence on the demand for dramas and narrowly released movies

the impact of mandatory trans fat labeling on product mix and consumer choice a longitudinal analysis of the u s market for margarine and spreads abstract the impact of changes in food labeling policy on food consumption depends on how market participants both firms and consumers react to the changes across all products in the market we investigate how both responded to the u s food and drug administration s 2006 rule mandating that the quantity of trans fat in food products be separately labeled on the mandatory nutrition facts panel across an entire differentiated product category using a longitudinal data set tracking both product offerings and consumer purchases in the market for margarine and spreads for over a decade we analyze how product mix and consumer purchase behaviors were influenced by the new regulatory requirement we find that the number of products bearing voluntary trans fat free labels increased after the labeling regulation was implemented however a large number of the newly introduced products exited the market within five years as a result the fda s 2006 rule had a stronger short run than long run effect on product offerings even after the introduction of additional trans fat free labeled products such products remained only a small percentage of margarine and spreads product offerings increasing from a pre regulation level of 2 3 of the market to a peak of 6 5 in 2007 before dropping to 3 1 by 2011 in addition to firm response we examine demand side reactions to the 2006 rule and find that consumers significantly increased their expenditures on trans fat free labeled products soon after the labeling changes were implemented increasing from about 1 2 of the market in 2001 to a peak of 5 9 in 2007 before returning to 1 8 in 2011 we further explore variations in responses across different demographic characteristics although long run effects are small the market for trans fat free labeled margarine and spreads settled into a new equilibrium with a somewhat higher level of products in the market than prior to the 2006 rule taking effect and a somewhat higher share of expenditures in the category overall our category wide analysis of both firm and consumer behavior indicates that the effects of the labeling policy change were smaller in the longer run in this market than would be indicated by an analysis of only new product introductions in response to the policy change

financial intermediation business failures and real business cycles in this paper a general equilibrium business cycle model is construct ed that when subjected to real disturbances mimics observed qualita tive comovements among real output money business failures risk pr emia intermediary loans and prices in contrast monetary disturban ces generate cycles that have several inconsistencies with empirical evidence thus providing support for real business cycle theory at th e expense of monetary theories of the business cycle financial inter mediation arises endogenously in the model and intermediation matters for business cycle behavior a credit supply mechanism acts in tande m with an intertemporal substitution effect in propagating stochastic disturbances copyright 1987 by university of chicago press

firm heterogeneity internal finance and credit rationing this paper assesses the role of internal net worth holding constant investment opportunities in the allocation of credit in the presence of asymmetric information in the capital market the authors consider an economy in which both symmetric information and information intensive entrepreneurs seek funds from the capital market and they develop a simple general equilibrium model of credit allocation their emphasis is on shocks to borrower net worth depending on levels of net worth the symmetric information allocation a credit collapse or intermediate allocations are possible the model yields predictions corresponding to accelerator effects on investment and output as well as real effects of collateral redistributions copyright 1990 by royal economic society

nutrition information in the supermarket lists of nutrition information posted in supermarkets were designed to reduce the information processing costs of comparing alternative foods in experiment 1 lists of vitamins and minerals increased nutrition knowledge but had no influence on actual purchases in experiment 2 a list of added sugar a negative component of food increased the market share of low sugar breakfast cereals at the expense of high sugar brands we conclude that effort reducing displays are a successful technique for increasing information use especially for the more highly valued negative nutrients

asymmetric information financing constraints and investment the results of a number of theoretical papers lead to the hypothesis that financial variables affect capital sp ending because of asymmetric information in capital markets the auth ors review the relevant theory and test this hypothesis with a large sample of firm data the results show that financial variables such a s cash flow and interest expense add significant explanatory power to investment equations based on dale jorgenson s neoclassical model w ith a capm specification for the firm s cost of capital and a sales accelerator model the analysis therefore links recent theoretical work on capital markets to long standing empirical debates in the inv estment literature copyright 1987 by mit press

third party product review and firm marketing strategy product reviews by third parties are growing in popularity this paper examines when and how a manufacturing firm should adapt its marketing strategies to such reviews for example should a firm receiving an unfavorable review reduce its price or adjust its advertising should a winning product of a product review e g editor s choice boost its advertising expenditure to spread the good news how should firms strategic responses to product reviews differ across different types of product reviews description vs recommendation and different advertising media the reviewer s publication vs other media we develop a theory to address these issues and derive firms optimal responses to product reviews under different product market review media conditions we show that firms should chooseadvertising rather thanprice as a strategic variable in response to product reviews when enough consumers value horizontal product attributes surprisingly we find that using a review endorsedadvertising format i e advertisements containing third party award logos to broadcast its victory can hurt the winning product of a product review also it is not necessarily wise for the winning products to boostadvertising expenditures to spread the good news data from two industries printers and running shoes are used to illustrate some of our findings

the effect of information on product quality evidence from restaurant hygiene grade cards this study examines the effect of an increase in product quality information to consumers on e rms choices of product quality in 1998 los angeles county introduced hygiene quality grade cards to be displayed in restaurant windows we show that the grade cards cause i restaurant health inspection scores to increase ii consumer demand to become sensitive to changes in restaurants hygiene quality and iii the number of foodborne illness hospitalizations to decrease we also provide evidence that this improvement in health outcomes is not fully explained by consumers substituting from poor hygiene restaurants to good hygiene restaurants these results imply that the grade cards cause restaurants to make hygiene quality improvements

the nonmonetary effects of financial factors during the interwar period i introduction in a monetary history of the united states friedman and schwartz 1963 attributed the enormous decline in real output and prices during the great depression of 1929 1933 to an unprecedented fall in the supply of money while there is much support today for the view that money played an important role in this episode many economists feel that this variable alone does not provide a sufficiently complete explanation of the link between the chaotic conditions in the u s financial sector and aggregate output and prices bernanke 1983 contended in an influential paper that financial shocks had important nonmonetary effects on aggregate economic activity in addition to their effects via the supply of money rather than consider the 1929 33 episode outside of its context bernanke widened his sample to include the entire interwar period which he defined as january 1919 december 1941 the major purpose of this paper is to present empirical evidence on the importance of the nonmonetary effects of financial factors in explaining fluctuations in real output and prices during the interwar period we define the interwar period as august 1922 june 1938 by omitting from our sample a few years immediately following world war i and immediately preceding world war ii we avoid the potential problems connected with war related government expenditures and autonomous gold flows discussed in joines 1985 our interwar period corresponds closely to the four peacetime cycles identified by firestone 1960 the theoretical literature on the nonmonetary effects of financial factors focuses on two related but distinct aspects 1 first studies by bernanke and blinder 1988 williamson 1987a 1987b bernanke and gertler 1987 and scheinkman and weiss 1986 demonstrate that the efficiency with which banks perform their intermediation function is an independently important determinant of the level of real economic activity second bernanke and gertler 1989 1990 gertler and hubbard 1988 and calomiris and hubbard 1990 focus on the effects of shocks to borrowers net worth positions on aggregate economic activity this approach suggests that exogenous shocks to borrowers net worth may be a source of economic fluctuations therefore for example to the extent that a deflation is unanticipated it is likely to erode borrowers net worth and thereby adversely affect aggregate economic activity beginning with fisher 1933 this deflation story has played an important role in studies such as bernanke 1983 hamilton 1987 and bernanke and james 1990 that attempt to explain the great depression in evaluating the effects of financial sector shocks during the great depression bernanke 1983 argued that in addition to the traditional monetary effects of adverse shocks to financial intermediation stressed by friedman and schwartz 1963 these shocks increased the cost of credit intermediation which in turn led to credit contraction rejection of otherwise profitable projects and subsequent falls in output to test this hypothesis bernanke included the deposits of failing banks and the liabilities of failing businesses as joint proxies for the cost of credit intermediation in a barro 1977 type output equation that also included unanticipated money both the deposits of failing banks and liabilities of failing businesses were found to be significant moreover dynamic simulations of the path of output for the period between mid 1930 and march 1933 accounted for substantially more of the actual decrease in output than was captured when only unanticipated money was included in the output equation in place of the joint proxies bernanke also used the yield differential between baa corporate and long term u s government bonds as a proxy for credit intermediation costs in all cases entry of the credit cost proxies significantly increased the percentage of the decline in output that was captured

the impact of restaurant calorie labels on food choice results from a field experiment i introduction in 2009 americans spent 42 of their food dollars on meals away from home morrison mancino and variyam 2011 consumers choose to eat outside the home for a variety of reasons but there is mounting concern that this spending pattern will have a detrimental effect on americans diet and overall health todd mancino and lin 2010 estimated that for each additional meal eaten away from home consumers ate an additional 134 calories by their estimation the average person will gain two pounds each year just by eating out one meal a week not only does food away from home tend to be higher in calories its nutrient quality pales in comparison to meals prepared in the home todd mancino and lin 2010 the combined increases in eating away from home and u s obesity overweight rates have caught the attention of policymakers in an effort to help promote healthier food choices several cities counties and states have passed or are considering legislation which would require nutrition labeling on restaurant menus cspi 2010 with the passage of the 2010 healthcare bill a standardized menu labeling system will soon be required in chain restaurants and vending machines across the country the labeling guidelines currently being set by the food and drug administration fda will take precedence over local labeling laws although the specific guidelines have not been released they were expected to be released by the end of 2011 but have still not been finalized to date it is probable that chain restaurants those with 20 or more outlets will be required to provide 1 calorie information for all menu items on all menus menu boards food tags and drive throughs 2 additional nutrition information for all menu items available upon request and 3 a statement of the recommended daily caloric intake 2 000 calories day for the average individual however vending machines will only be required to post calorie counts for all items fda 2011 while the literature on menu labeling in restaurants is growing large gaps in knowledge remain this research was designed to fill many of these gaps by explicitly calculating the value of information voi present in two types of calorie labels using data collected from a field experiment in which restaurant diners were unaware of the ongoing study the innovativeness of our approach can be seen by briefly surveying the existing literature on the topic past research on the effectiveness of nutrition labeling has been remarkably inconclusive both in grocery store see moorman ferraro and huber 2012 for a discussion and restaurant settings some studies concluded that providing nutritional information on restaurant menus lowers caloric intake e g milich anderson and mills 1976 roberto et al 2010 wisdom downs and loewenstein 2010 yet other studies found that the information has no effect e g elbel et al 2009 finkelstein et al 2011 harnack et al 2008 mayer et al 1987 schwartz et al 2012 even among studies finding an effect the size of the effect tended to be small for example balfour et al 1996 and yamamoto et al 2005 found that only a small proportion of consumers 16 and 29 respectively changed their menu item selection when presented with nutrition information importantly no previous studies have provided an estimate of the economic value of nutritional information on restaurant menus which could be used in a cost benefit analysis one of the primary weaknesses of previous research relates to external validity in particular many of the previous studies were conducted in artificial settings where participants were aware of the on going research the earliest studies on restaurant menu labeling were not actually conducted in restaurants but in laboratory or cafeteria settings balfour et al 1996 cinciripini 1984 harnack et al 2008 mayer et al 1987 milich anderson and mills 1976 roberto et al

an historical decomposition of the great depression to determine the role of money abstract the innovation accounting technique of historical decomposition seems ideally suited as a vehicle for a re examination of money s role during the depression its application using u s monthly data for 1919 to 1941 reveals that innovations in money exerted a considerable influence on prices and output after october 1929 although the depth of the depression and the extent of the subsequent recovery cannot be attributed solely to monetary factors an important albeit occasionally diminished monetary effect is also identified even when a passive contemporaneous response by money to price and output fluctuations is assumed not to contribute to the effect

shrouded attributes consumer myopia and information suppression in competitive markets bayesian consumers infer that hidden add on prices e g the cost of ink for a printer are likely to be high prices if consumers are bayesian firms will not shroud information in equilibrium however shrouding may occur in an economy with some myopic or unaware consumers such shrouding creates an inefficiency which firms may have an incentive to eliminate by educating their competitors customers however if add ons have close substitutes a curse of debiasing arises and firms will not be able to profitably debias consumers by unshrouding add ons in equilibrium two kinds of exploitation coexist optimizing firms exploit myopic consumers through marketing schemes that shroud high priced add ons in turn sophisticated consumers exploit these marketing schemes it is not possible to profitably drive away the business of sophisticates it is also not possible to profitably lure either myopes or sophisticates to nonexploitative firms we show that informational shrouding flourishes even in highly competitive markets even in markets with costless advertising and even when the shrouding generates allocational inefficiencies

genetically modified food labeling the impacts of message and messenger on consumer perceptions of labels and products abstract we analyze responses to a survey designed to elicit consumer reaction to various approaches to labeling genetically modified gm foods consumers were shown sample labels that differed with respect to claims concerning the presence and potential effects of gm ingredients and the agency that certified these claims a sample of 1898 us consumers rated 3681 labels with regard to the credibility and adequacy of the information content with regard to perceived health and environmental impacts of the product and with regard to purchase intent simple claims that a product contains gm ingredients are viewed as most credible while simple claims of no gm content are viewed as most adequate label claims certified by the us food and drug administration fda are in general viewed as most credible and adequate and products with fda certified claims are perceived to have fewer long term health problems several practical policy implications of the results are discussed including how different label messages may impact consumer reactions in markets involving gm products

effects of carbon reduction labels evidence from scanner data we investigate the effects of carbon reduction labels using a detailed scanner data set using a difference in differences estimation strategy we find that having a carbon label has no impact on detergent prices or demand we also investigate possible heterogeneous effects of carbon labels using the synthetic control method we find no evidence to indicate that the prices for the counterfactual detergents without the label would have been any different from the prices of the carbon labeled detergents we investigate the reasons for these results and conclude that the specific design of the carbon label is responsible for its lack of success jel d12 d83 l15 q54

a test of nutritional quality signaling in food markets prior to implementation of mandatory labeling in may 1994 new nutrition labeling regulations went into effect in the united states requiring mandatory disclosure of information on the nutritional content of foods this article uses grossman s model of totally effective quality signaling to evaluate whether markets were effective in information provision prior to the new regulation if markets were effective in providing information to consumers on the nutritional quality of foods the new regulation would be unnecessary the results of the logistic model where the probability of voluntary information disclosure is linked to the nutritional quality of food products and their prices indicate that private quality signaling was not reliably at work in food markets prior to implementation of the mandatory nutrition labeling regulation copyright 2000 oxford university press

measuring the welfare effects of nutrition information cost benefit analysis justifies regulations altering the amount of health related information presented to consumers the current method of benefit analysis the cost of avoided illness is limited it assumes the benefits of health related information are adequately represented by changes in illnesses the manuscript develops a benefit estimation method to measure the welfare impacts of providing nutrient information nutrient labeling significantly affects purchase behaviour but may not lead to increased consumption of health foods nutrient labeling may increase welfare without any change in health risk thus the cost of avoided illness approach can underestimate the social benefits of providing nutrient information copyright 2001 oxford university press

information cost and consumer choices of healthy foods this article examines whether or not a reduction in consumer search cost for nutritional information increases the probability that heterogeneous consumers will choose healthier food products empirical results from the ready to eat breakfast cereal rtec market confirm the conceptual analysis that lowering information cost via simplified nutritional labeling increases the healthfulness of consumer choices the healthfulness attribute weighs 28 44 more heavily in consumers decision making with simpler labeling systems on average introducing front of package labeling increased the probability of a consumer choosing a healthy rtec by 3 49 and reduced the probability of choosing an unhealthy rtec by 3 81 calories sugar saturated fat and sodium consumption decrease by 0 31 2 63 6 94 and 1 97 respectively fiber intake increases by 3 24 further results show that less educated and smaller households with less frequent purchases benefit the most from a reduction in information cost overall this article shows the potentially positive role that voluntary more convenient labeling could play in improving market and public health outcomes

an empirical analysis of oil price shocks in the interwar period i introduction post world war ii experience demonstrates that disturbances to aggregate supply are important determinants of aggregate economic performance a casual glance at the post 1970 data strongly suggests a correlation between shocks to the price of oil and recession hamilton 1983 formally demonstrates that this correlation arises from what appears to be a causal link that runs from oil price increases to reduced economic activity the sequence of oil price increases followed by recession characterizes every post world war ii economic downturn in the u s with the exception of 1960 61 other research confirms the critical role of supply shocks in explaining post world war ii macroeconomic performance burbidge and harrison 1984 employ vector autoregressions vars to examine the impact of oil price shocks over the 1962 82 period for several countries they conclude that these shocks played a large role in deepening the recessions of the 1970s with the impact on the 1973 74 recession much greater than that of 1979 80 tatom 1988 estimates the impact of the 1979 80 increase in the relative price of oil and reports that this shock reduced the amount of output that could be produced with available labor and capital by 5 7 percent thoma 1992 re examines the work of litterman and weiss 1985 and finds that the ex ante real interest rate is not exogenous to supply shocks contrary to what is reported in litterman and weiss using annual data over the 1948 82 period loungani 1986 shows that any correlation between an index of the dispersion of unemployment across industries and the aggregate unemployment rate is due to the dispersion index s collinearity with oil price shocks once this collinearity is accounted for the dispersion index has no explanatory power to account for movements in the aggregate unemployment rate while the evidence for the causal link between supply shocks and output appears most dramatic for the post 1970 data hamilton 1983 argues that the entire post war period be treated as a continuous whole the enduring regularity of the oil price shock recession relation in this period leads to a natural question is there any evidence that oil price shocks either positive or negative played any role in the cyclical fluctuations and secular expansion of the 1920s and the great depression figure 1 presents a plot of the relative price of oil defined precisely in section ii for the 1921 1 1938 6 period we observe a number of sharp movements in the relative price of oil that suggest an assessment of the empirical impact of oil price shocks during the interwar period is warranted accordingly we investigate the effects of oil price shocks during the interwar period within the context of a small macroeconomic model 1 the empirical framework is a var model that consists of output the price level the monetary base the m2 money multiplier the commercial paper rate government spending a financial intermediation variable and a measure of oil price shocks these are variables frequently found in small macroeconomic models monthly data for the period 1924 2 1938 6 are used to specify and estimate the model we evaluate the impact of oil price shocks on prices and output through computation of variance decompositions the standard errors reported are generated through monte carlo simulations historical decompositions for the 1929 9 1938 6 period are also computed so we can specifically examine the effects of oil price shocks over the sample period that includes the great depression we chose the var modeling approach because there is little agreement on the appropriate structural model and var estimation places few restrictions on the way in which the system s variables interact in the specification and estimation of the model all variables are treated as jointly determined no a priori assumptions are made about the exogeneity of any of the system s variables at this stage of analysis

on the economics of labels how their introduction affects the functioning of markets and the welfare of all participants are labels good or bad for consumers and firms the answer may seem straightforward since labels improve information yet economic theory reveals situations where their introduction reduces the welfare of at least some market participants this essay reviews the theoretical literature on labels in order to identify and explain the main reasons that may cause labeling to produce undesirable side effects in contrast to earlier reviews that either concentrate on narrow topics or treat the subject in a more or less informal way we bring together the main results from all the relevant topics by presenting and discussing the assumptions and model building techniques that underpin them the advantage of this approach is that it identifies the origin of the differences between results thus allowing the synthesis of results that sometimes appear even to be contradictory we focus on quality labels and examine the impact of labeling on market structure the side effects of costly certification issues related to the label s trustworthiness the rationale for mandatory vs voluntary labeling the level at which the label s standard is set according to the agency that selects it the political economy of labels that is pro or anti label lobbying lobbying to affect the label s standard and lobbying in favor or against the label s mandatory imposition these topics cover a wide range of applications including genetically modified organism gmos organic produce geographic indicators controlled origin eco labels etc we conclude by identifying topics that require further research

what makes you grab low carb beers what makes people choose low carbohydrate high protein food low carb food which is good for health but usually tastes bad using panel data on us beer consumption in which each consumption occasion is uniquely associated with various companion based consumption contexts and exposure levels to diet information we analyse the variations in consumers preferences for low carb food the results show that there exist considerable gender differences in the preference variation under peer pressure first single females behave in a way they dislike drinking low carb beer in front of friends spouses and significant others second male both married and single and married females pretend to choose low carb beer when accompanied by spouses or significant others finally the elasticity of demand for healthy food with respect to news articles about low carb diets is positive yet with substantial differences in the degree of elasticity across demographic groups

school quality and information disclosure evidence from the housing market i introduction tiebout s 1956 theory tying residential sorting patterns to the provision of local public goods provided the foundation for a large and growing literature assessing the relationship between school quality and housing markets many of these studies have used housing prices to directly estimate the monetary value of improvements in student test scores to parents and homeowners few have focused on the role of information in mediating relationships between buyers sellers schools and housing values 1 fewer still have examined the behavior of home sellers and their role in the provision of information on school quality this article takes a step toward filling these gaps in the literature building on the unraveling theory of information disclosure in the industrial organization literature grossman 1981 milgrom 1981 we first investigate the behavior of home sellers in revealing information about local schools we ask whether and how school quality affects the likelihood that a seller will reveal the identity of a property s assigned school in an online real estate listing empirical tests of unraveling are rare as the true quality of a product is typically unobserved the housing market provides a novel context to test this theory if sellers selectively reveal information on schools then information on its own controlling for school quality may have an impact on sales prices if the cost to buyers of obtaining information on school quality is sufficiently high we explore these issues empirically both in a period where the costs of gathering information are relatively high years 2001 and 2002 and in a period where these costs are presumably much lower years 2006 and 2007 between these two periods the mandates of the 2001 no child left behind nclb act coupled with the growth of the internet undoubtedly reduced the cost of information gathering for potential buyers and perhaps also lowered the costs of disclosure for sellers drawing on multiple listing service mls data of residential sales in fairfax county virginia the largest suburb of washington dc our results confirm that sellers of units located in high quality school assignment zones are on average more likely to disclose the school s identity in an online listing an increase of just ten points in an elementary school s passage rate on statewide tests increases the likelihood of information disclosure by a sizeable 5 percentage points in the 2001 2002 period a finding that is robust to a variety of alternative specifications and controls including the addition of real estate agent fixed effects predictably selective disclosure appears to be present but weaker in the 2006 2007 period when the cost of gathering information on school quality was likely lower a ten point increase in test scores yields a 2 to 4 percentage point increase in the likelihood of disclosure our findings of moderate selective disclosure in the latter period hold even when we apply a school boundary discontinuity design and are robust to alternate measures of school quality including measures of adequate yearly progress under nclb in both periods we observe more selective disclosure for single family homes and those with three or more bedrooms presumably families with children than for smaller units we also find more selective disclosure in neighborhoods with high concentrations of young children our results support the findings of several previous studies bayer ferreira and mcmillan 2007 figlio and lucas 2000 confirming that school quality is more important in housing transactions involving families with children than for those without we also investigate the extent to which information disclosure is capitalized in housing prices using school fixed effects to control for school quality we find that information disclosure does not have an independent effect on a home s price

can information costs affect consumer choice nutritional labels in a supermarket experiment this paper investigates whether information costs under currently regulated nutritional labeling prevent consumers from making healthier food choices we implement five nutritional shelf label treatments in a market level experiment these labels reduce information costs by highlighting and summarizing information available on the nutritional facts panel following a difference in differences and synthetic control method approach we analyze weekly store level scanner data for microwave popcorn purchases from treatment and control stores our results suggest that consumer purchases are affected by information costs implemented low calorie and no trans fat labels increase sales in contrast implemented low fat labels decrease sales suggesting that consumer response is also influenced by consumers taste perceptions a combination of these claims into one label treatment increases information costs and does not affect sales significantly

information and advertising the case of fat consumption in the united states the role of information in markets has become a mainstay of the economics literature theoretical work has focused on the market effects of asymmetric information and costly search incentives for voluntary disclosure contracting and other market and policy solutions to information issues see michael katz 1989 and joseph stiglitz 1989 for recent reviews and on how consumers ability to use information could affect market outcomes as in the recent work on information cascades e g sushil bikhchandani et al 1992 the empirical literature testing informational theories is more limited in large part because the key variable of interest information is so difficult to measure most of the literature relies on indirect tests usually based on regulatory differences as in the study of state restrictions on advertising for eyeglasses lee benham 1972 or on new information or public education campaigns typified by the studies of smoking see w kip viscusi 1992 for a recent summary other studies examine cross sectional differences in behavior in an effort to assess whether human capital or other individual or household differences are important in explaining responses to evolving information this paper follows these traditions specifically this study examines changes in fat and saturated fat consumption in the united states as information spread connecting these lipids to heart disease and cancer risks 1 the study examines changes in consumption during two regulatory regimes the years 1977 1985 when government and general information sources continued their efforts to educate the public about the links between fats and disease risks and when producers were free to label these characteristics on food packages and in advertising and the years 1985 1990 when the regulatory ban was lifted that prohibited producers from explaining the reasons why consumers should be interested in the content of foods this controversial regulatory change allowed the use of so called health claims in labeling and advertising subject to the normal deception rules for all advertising and labeling claims 2 comparison of these two periods allows us to provide evidence on whether and how consumers reacted to the general flow of information prior to 1985 and whether advertising appears to have added information to the market or as many critics believe provided deceptive or sufficiently incomplete information to undermine public education efforts

deficits and money growth in the united states 1872 1983 abstract this paper reports empirical evidence on the relation between government budget deficits and the growth of high powered money in the united states high powered money growth appears to be positively related to war spending during periods when such spending is a substantial fraction of gnp there is little evidence that the growth of high powered money is related to the non war government deficit measured either in cash or in real terms after controlling for the level of overall economic activity

unintended nutrition consequences firm responses to the nutrition labeling and education act this paper investigates how firms responded to standardized nutrition labels on food products required by the nutrition labeling and education act nlea using a longitudinal quasi experimental design we test our predictions using two large scale samples that span 30 product categories results indicate that the nlea reduced brand nutritional quality relative to a control group of products not regulated by the nlea at the same time among regulated products brand taste increased although this reduction in nutrition represents an unintended consequence of regulation there were a set of category firm and brand conditions under which the nlea produced a positive effect on brand nutritional quality we find that firms were more likely to improve brand nutrition when firm risk or firm power is low lower risk occurs when the firm is introducing a new brand rather than changing an existing brand and weaker power in a category is reflected by lower market share in a category furthermore firms competing in low health categories e g potato chips or small portion categories e g peanut butter improved nutrition more than firms competing in high health categories e g bread or large portion categories e g frozen dinners recommendations for firm strategy and the design of consumer information policy are examined in light of these surprising firm responses

monetary factors in the great depression this paper examines the role of monetary policy in the early stages of the great depression and considers the mechanism whereby this policy may have affected real activity i conclude that the depression was preceded by a dramatic shift towards a highly contractionary monetary policy the economic impact of this policy seems unlikely to have come through the conventional keynesian channels of a shortage of liquidity and high ex ante real interest rates but instead may have operated through unanticipated deflation and after 1930 through the disruption of financial intermediation as a consequence of the banking panics

the relative importance of foreign and domestic disturbances for aggregate fluctuations in the open economy switzerland 1964 1981 abstract this paper studies whether the advent of floating exchange rates served to insulate switzerland from economic shocks of foreign origin it estimates a vector autoregression comprising four swiss and three world aggregate time series and interprets the results in terms of the properties of the vector moving average representation implied by the estimates the chief finding is that foreign shocks explain most of the systematic variation of the swiss variables in both regimes

restructuring constructive processing of information displays in consumer choice this research examines the construction of information displays by consumers this aspect of constructive processing in which data may be transformed edited or inferred is termed restructuring subjects notes and verbal protocols generated during a study are used to examine restructuring behavior when making choices among brands these methods enable the examination of restructuring and its effect on evaluative processing throughout the course of making a choice results demonstrate that consumers do restructure that restructuring is done in a contingent opportunistic manner and that restructuring may influence the type of choice heuristic used e g alternative based vs attribute based

quality standards versus nutritional taxes health and welfare impacts with strategic firms the goal of this paper is to better understand firms strategic reactions to nutritional policies targeting food quality improvements and to derive optimal policies we propose a model of product differentiation taking into account the taste and health characteristics of products we study how two firms react to alternative policies an mqs policy linear taxation of the two goods on the market and taxation of the low quality good the mqs and the taxation of the low quality product are the preferred options by a social planner if taste is moderately important the mqs policy is chosen by a populist and a paternalist social planner if taste is a major component of choice the populist planner chooses to tax the low quality product whereas the paternalist planner prefers the mqs policy finally for a paternalist social planner an mqs based policy always allows for higher levels of welfare than an information policy alone