More info for consumers can backfire: Column

In the same month the U.S. Department of Agriculture approved a new breed of apple genetically modified to resist browning, yet another proposal to require the labeling of genetically modified foods (GMOs) hit Congress. Federal regulators chose to follow scientific evidence, which demonstrates that genetically modified organisms are generally safe to eat. Yet, congressmen are still pandering to irrational fears of GMOs, following similar labeling requirements already adopted in several states. That pandering can actually leave consumers worse off -- leading them to make less healthy decisions for themselves and their families.

This ultimately comes down to whether government should require companies to disclose information demanded by some consumers, even if it's driven entirely by irrational and unsubstantiated fears. A recent Pew poll found that only 37% of adults believe that GMOs are safe, compared with 88% of scientists — the largest gap between public and scientific opinions of any scientific issue measured in the survey.

GMO-labeling advocates frame the issue as a simple matter of information disclosure, claiming consumers have the right to know what's in their food. The logic relies on an assumption that information disclosure is always beneficial — the more consumers know, the better choices they will make. Turns out, the assumption doesn't always hold up.

Numerous studies by behavioral scientists research cognitive biases and find that providing people with more information leads them to make less accurateevaluations or less beneficial choices. Some studies reveal that giving people additional irrelevant information not only decreases their ability to accurately process information but also increases their confidence in the accuracy of their choices.

These biases impact policy. For example, an eye-opening study by the Federal Trade Commission examined the impact of disclosing mortgage brokers' compensation on consumers' ability to compare and choose mortgages. The disclosure would be included in the Good Faith Estimate form where lenders must provide the most crucial information about the mortgage. The purpose of this federally mandated form was to let home buyers easily compare mortgages.

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In the FTC study, consumers could easily compare the mortgages to choose the cheaper one, but only when the form didn't disclose the broker's compensation. When the form did show the broker's compensation, a quarter of home buyers opted for the mortgage with the lowest fee — even if it meant choosing the more expensive mortgage. Instead of focusing on total mortgage cost, consumers focused on the ultimately irrelevant broker compensation.

Another study examining the impact of sugar-related health claims in the United Kingdom finds that consumers view foods claiming "no sugar added" as less likely to contain sugar than foods claiming "reduced sugar" — even though foods with no added sugar could still be packed with naturally occurring sugars. Consumers also assumed that reduction in sugar would translate into similar reduction in calories, even though many food manufacturers compensate for lower sugar content by increasing fat content.

Similarly, studies find that many consumers interpret "low-fat" snack claims as "healthy" and permissible to eat in larger quantities. As a result, they end up consuming more calories with "low-fat" snacks than they would have with regular snacks.

These examples show that giving consumers more information can actually backfire, doing more harm than good. The FTC study's authors cautioned regulators against a simplistic view of information disclosures as necessarily good. Instead, they recommended that regulators test their disclosures to ensure the impact is beneficial.

That brings us back to GMOs. Labeling proponents argue that, even if there's no evidence of GMOs posing any health risk, there's no harm in disclosing this information. Yet, as the research shows, disclosures can, in fact, confuse consumers and lead them to make less beneficial choices when they trigger consumer biases. Given that so many consumers believe that GMOs are harmful, their food choices may be driven by irrational fears, and they may opt for more expensive GMO-free foods. Consequently, the disclosure would actually lead consumers to pay more for food while not making them any safer.

Before considering GMO labeling, legislators should weigh the benefits and costs of the proposed measure. The costs would be real and substantial, including the industry costs of complying with the new requirement and the higher food costs for mislead consumers who believe that GMO-free foods would be healthier. In contrast, the benefits are still to be found.

Sherzod Abdukadirov is a research fellow in the Regulatory Studies Program at the Mercatus Center at George Mason University.

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