Abstract
For products with risky characteristics, there are many debates about the best way to
inform consumers. Traffic-lights have been already implemented in the UK on food products to
guide consumers in making healthier food choices. In response to the recent financial crisis, a
discussion about the compulsory usage of traffic-light labels on financial products has started by
politicians and media in the UK and Germany. Similarly to foods, a green label on financial
products would highlight a positive product attribute level (such as an above average rate of
return); yellow that special attention is needed, whereas red would identify an adverse attribute
level. This paper presents results of a choice experiment conducted in Germany to evaluate the
impact of traffic-light labelling on food purchases in comparison to financial product purchases.
Special attention is given to consumers’ involvement level in food and financial product
purchases. In general, results indicate that traffic-lights affect consumers’ purchases of both
product groups. While the low-fat attribute has no significant impact on food choices without
traffic-lights, it has a positive impact on choices once signalled with a traffic-light label. We find
that traffic-lights on financial products result in a halo-effect for the variance of returns: without
traffic-lights, a product with a high variance of returns is chosen less often but more often if the
product is labelled with a traffic-light.