Federal intervention in food labeling is often proposed with the aim of achieving a
social goal such as improving human health and safety, mitigating environmental
hazards, averting international trade disputes, or supporting domestic agricultural
and food manufacturing industries. Economic theory suggests, however, that
mandatory food-labeling requirements are best suited to alleviating problems of
asymmetric information and are rarely effective in redressing environmental or
other spillovers associated with food production and consumption. Theory also
suggests that the appropriate role for government in labeling depends on the type
of information involved and the level and distribution of the costs and benefits of
providing that information. This report traces the economic theory behind food
labeling and presents three case studies in which the government has intervened in
labeling and two examples in which government intervention has been proposed.
Keywords: labeling, information policy, Nutrition Labeling and Education Act,
dolphin-safe tuna, national organic standards, country-of-origin labels, biotech
food labeling