Matt's primary interest is in the biotech industry and ag policy.
Will including the words ‘Genetically Modified’ on food labels really serve to inform the public?
Mar 29, 2013
By Matt Bogard
The Role of Information Asymmetry
Whenever one party has better information about their product or service than the buying public, information asymmetries may exist. Proponents of proposition 37 claimed that their initiative was to reduce information asymmetry and improve the functioning of markets, as stated in this recent Forbes article:
"Free markets only work when there is transparency and people are able to make decisions based on information, which does not exist in the case of GMOs. If Prop 37 is enacted, and, armed with this information, a significant enough number of consumers decide not to buy these products, the onus will be on the companies to conduct more research and produce better data."
Will including the words ‘Genetically Modified’ on food labels really serve to inform the public or create more confusion? This form of labeling won’t do any thing to decrease information asymmetry in and of itself. The actual language in the law may in fact make it worse. This is made clear on page 10 of a report by Northbridge Environmental Management Consultants (The Genetically Engineered Foods Mandatory Labeling Initiative Overview of Anticipated Impacts and Estimated Costs to Consumers):
"The Genetically Engineered Foods Mandatory Labeling Initiative (A.G. File No. 11-0099 – hereinafter the Initiative) would have a substantial impact on California consumers. The Initiative would change how many of the foods they eat are produced and would make that food more expensive. At the same time, however, the Initiative would provide relative little by way of consistent and useful information to consumers because of the loopholes and exceptions in its language and the uneven ways in which it would apply to the same food consumed in different settings. "
If informing consumers were the primary goal, then there are much more effectivet ways to do so, perhaps in the ingredients listing following industry standards (instead of using ‘genetically modified' if a product contains GMO corn, list instead ‘rCORN’, an idea I reluctantly entertain here) If it alarms otherwise apathetic consumers, are they really going to invest the time researching the safety of biotech foods to close the information gap or are they going to turn to the unqualified opinions of celebrities and activits? I would bet that the special interests are counting on consumers weighing heavily the opinions of celebrities and conspiracy theorists, and therefore letting the information asymmetries associated with biotech direct them to their own products. In this way, Prop 37 is specially designed by special interests to take advantage of information asymmetries and exploit the fears of the public in an effort to drive market share or punish companies that they have philosophical or political issues with.