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Friend or PHO? On the marginal valuation of reducing the content of trans fat in processed foods

Advances in Management & Applied Economics. March 17, 2017

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Abstract

Ahead of the January 1, 2006 deadline for mandatory labeling of trans fat, Nabisco, a leading brand in the market for crackers (a $1 billion processed food) category and ranked amongst the top sources of trans fat “reformulated a subset” of their existing products and voluntarily labeled them as trans fat-free. New products were also introduced in the market and labeled as trans fat-free as well. The purpose of this study was to determine the implicit price of products (voluntarily labeled as trans-fat-free. Using a national level weekly scanner data set) and controlling for the other observable product attributes, such as non-PHO fat labels, whole grain labels, sodium labels, variety, and package size, in addition to market conditions, the implicit price of the voluntary trans fat-free label was estimated to be $0.53 per pound, or a premium over the base case of 17.64 percent.

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