A couple of weeks ago, the Food and Drug Administration passed sweeping new calorie-labeling rules for restaurants (which I covered in detail here). Tucked into the agency’s analysis is an estimate of “lost pleasure” by consumers who might change what they eat as a result of the calorie labels, Reuters reported Monday.
This cost is to the tune of just over $5 billion over 20 years, and it dramatically lowers the total benefit consumers get from the regulation. (This estimate derives from work by an economist at Yale, though the calculation was done by internal FDA staff.)
Here’s the basic insight:
Imagine I currently enjoy a diet consisting primarily of Doritos and Big Macs. I have presumably chosen that diet over, say, one of steamed broccoli and chicken breasts because I prefer the way it tastes. When calorie labels are introduced, I may switch to broccoli and chicken since the calorie labels make me realize the health costs of eating Big Macs.
On the whole, I’m made better off — this must be true, since I would still be free to choose the Doritos and Big Macs. But I’m not as happy as I would be if Doritos and Big Macs actually had the same calorie counts as the broccoli and chicken.
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