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Abstract
We use a market-level natural experiment to evaluate how the voluntary Facts Up Front style
Front-of-Package (FOP) nutritional labeling system would affect consumer choices, and whether
it can promote the consumption of healthier food products. The new FOP system provides a
quick summary of the calories, sugar, saturated fat, and selected positive nutrients, and is listed
on the front of food packages. Using data of household-level Ready-to-Eat cereal (RTEC)
purchases and difference-in-differences (DD) approaches, we find that the new FOP labels
induce consumers to buy less RTEC, consume fewer calories, and less sodium, but only in
households purchasing two RTEC packages per month or fewer. For RTEC products containing
new FOP labels, consumers are observed to substitute more vigorously from products with poor
nutritional quality to healthier RTEC products. We also find that household heads with education
levels of a high school degree or less show the greatest improvement in their food choices,
suggesting that the FOP labels change consumer behavior primarily through reduced information
costs.