A simple experiment is used to examine the effect of grocery store nutrition labels on the sales of microwave popcorn in the East Bay area of California. Using an incomplete demand system we estimate the impact of the nutrition labels on sales of healthy (products that merit a nutrition label) and unhealthy (products that do not merit a nutrition label) microwave popcorn. Contrary to expectations, we find that nutrition labels decrease sales of healthy popcorn and increase sales of unhealthy popcorn across all stores. We speculate that nutrition labels on popcorn may signal unwanted product characteristics such as undesirable taste. Our findings highlight unintended effects created by nutrition labels. In terms of public welfare, it is important to consider not just the content of private industry nutrition labels but the effect they have on consumer behavior.


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