Consumer’s thoughts about and willingness to pay for traffic-light labeled food and financial products

Recently, the stakeholders in the financial industry picked up the idea used in the food sector to label products with traffic-lights. Traffic-lights are not undisputable in either sector. The goal of this paper is to analyze consumer thoughts about this labeling type. Moreover, using the results of a split sample choice experiment the impact of traffic-light labeling on food and financial product purchases is evaluated. It shows that while consumers believe that traffic-lights are helpful in evaluating the risks and benefits associated with (food and financial) products, support for traffic-lights is higher in the food sample. On financial products, consumers’ associate simplicity with traffic-lights, but doubt that they increase the credibility of products. Results of a mixed-logit estimation indicate that traffic-lights affect consumers’ purchases of both product groups. The low-fat attribute has no significant impact on food choices without traffic-lights, but has a positive impact on choices once signalled with a traffic-light label. Consumer evaluate products carrying an organic product label positively, but if the product is additionally labeled with a traffic-light, evaluation becomes negative hinting towards a substitution effect between the organic and the TL label. Considering financial products, traffic-lights lead to a halo-effect for the variance of returns. When no traffic-lights are on the product, consumer chose a product with a high variance of returns less often but more often if the product is labelled with a traffic-light.

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Paper removed at the request of the primary author, October 2013. Please contact them for further information.

 Record created 2017-04-01, last modified 2019-08-30

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