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Unformatted text preview: Calorie Posting in Chain Restaurants * Bryan Bollinger Phillip Leslie Stanford University Stanford University & NBER Alan Sorensen Stanford University & NBER Abstract We study the impact of mandatory calorie posting on consumers’ purchase decisions, using detailed data from Starbucks. We find that average calories per transaction falls by 6%. The effect is almost entirely related to changes in consumers’ food choices—there is almost no change in purchases of beverage calories. There is no impact on Starbucks profit on average, and for the subset of stores located close to their competitor Dunkin Donuts, the effect of calorie posting is actually to increase Starbucks revenue. Survey evidence and analysis of commuters suggest the mechanism for the effect is a combination of learning and salience. January, 2010 * We thank Barbara McCarthy and Ryan Patton for research assistance. We are very grateful to Starbucks for providing us with the data used in this study. We have no consulting relationship with Starbucks—the findings in this study are completely independent of Starbucks’ interests. Thanks also to Michael Anderson, Kyle Bagwell, Dan Kessler, Eddie Lazear, David Matsa, Paul Oyer, Kathryn Shaw, Andy Skrzypacz and Mike Toffel for valuable feedback. 1 Introduction Between 1995 and 2008 the fraction of Americans who were obese rose from 15.9% to 26.6%, and according to the OECD the United States is the most obese nation in the world. 1 Researchers have debated the causes of the dramatic rise in obesity, often referred to as an epidemic, and economists have debated whether it is a public or private concern. 2 Regardless, there is rising interest in potential policy interventions, including prohibitions on vending machines in schools, taxation of certain foods, and regulation of fast-food restaurants. 3 One policy has recently emerged with great momentum: mandatory posting of calories on menus in chain restaurants. The law was first implemented in New York City (NYC) in mid-2008. Numerous other states have subsequently enacted similar laws and federal legislation is before Congress. 4 In this study we measure the effect of the NYC law on consumers’ caloric purchases, and analyze the mechanism underlying the effect. On the one hand it may seem obvious that increasing the provision of nutrition information to consumers would help them to purchase healthier food. Indeed, the common presumption is that consumers will be surprised to learn how many calories are in the beverage and food items offered at chain restaurants. On the other hand, consumers at chain restaurants (especially fast food chains) may care mostly about convenience, price, and taste, with calories being relatively unimportant. Consumers who do care about calories may already be well-informed, since calorie information is already widely available on in-store posters and brochures, on placemats and packaging, and on company web sites. Even for consumers who are not well-informed, the direction of the policy’s effect dependssites....
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This note was uploaded on 12/26/2011 for the course ECON 245a taught by Professor Staff during the Fall '08 term at UCSB.
- Fall '08