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How GMO labels affect customer decision making with food purchases

This research reveals that GM labels add an important product feature for consumers to evaluate. The labels draw attention away from factors such as price, allowing firms to charge a premium for non-GM products.

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Photo by Markus Spiske from Unsplash.com

Researchers from Neoma Business School, Concordia University, and University of Wisconsin-Madison published a new paper in the Journal of Marketing that examines how the GMO labeling that policymakers implement affects consumer choice.

The study, forthcoming in the Journal of Marketing, is titled “GMO Labeling Policy and Consumer Choice” and is authored by Youngju Kim, SunAh Kim, and Neeraj Arora.

Genetically modified (GM) foods are widespread worldwide, but they are also controversial and subject to regulatory oversight. For example, in the United States, all GM foods will be required to display a “Bioengineered” label by 2022, a policy decision that is heavily debated. Most scientists claim that genetically modified organisms (GMOs) in foods are safe for human consumption and offer societal benefits such as better nutritional content. In contrast, many consumers have an overall negative attitude toward GMOs. These conflicting views create a fundamental tension for policymakers in how GM-foods should be labeled.

To reconcile the diverging views that scientists and consumers have on GMOs, policymakers all over the world adopt either a voluntary or a mandatory GMO labeling policy. In a voluntary labeling regime, food producers who make non-GM products disclose such information through a “non-GMO” label. Conversely, in a mandatory labeling regime, food manufacturers are required to include labels such as “contains GMO” when their foods are genetically modified.

To understand how GMO labeling policies impact consumer choice, this research team conducted four studies.

Study 1 examines whether consumer choice depends on the GMO labeling regime. The results show that each labeling regime greatly affects consumers’ demand for GM foods. Labels such as “non-GMO” (absence labeling) and “contains GMO” (presence labeling) serve as negative signals for GM foods and tend to shrink their market share. The market share shrinkage effect is stronger under the mandatory policy (presence labeling) than under voluntary policy (absence labeling).
 
Study 2 examines the impact of GMO labeling (absence vs. presence) on consumers’ sensitivity to the GMO attribute, price, and category purchase. The results show that presence-focused labeling (“contains GMO”) makes consumers more sensitive toward the GMO attribute, less sensitive toward price information, and more reluctant to make a purchase in a category. Why? Presence-focused labeling enhances consumers’ concerns about GMOs, encourages them to pay greater attention to GMO information, and makes their choice more difficult. 
 
Study 3 finds that the increased preference for non-GM products is amplified when both “non-GMO” and “contains GMO” labels are displayed on the products.
 
Study 4 shows that the signal policymakers decide to send via the GM label (e.g., a green logo may be viewed as an endorsement and a yellow logo as a cautionary signal) significantly affects consumer choice. To be more specific, participants exposed to positive GMO labels tend to be less negative toward GMOs than those exposed to neutral GMO labels. A GMO label format has a greater impact on consumers who have no strong opinions about GMOs, suggesting that preference for GM foods is highly pliable for a large segment of consumers. 
 
Consumers’ willingness to pay (WTP) for non-GM products critically depends on the policy regimes and the label policymakers adopt. Consumers have higher WTP for non-GM products in the mandatory (vs. voluntary) regime and when the adopted GMO label signals a less positive image. Across studies, both the voluntary and mandatory labeling regimes create incentives for firms to add premium-priced, non-GM products to their portfolio of offerings. These incentives are substantially greater in the mandatory labeling regime than in the voluntary regime. 
 
The research teams says that “Our findings provide a clear understanding of how the GMO labeling that policymakers implement affects consumer choice. Any form of GMO labeling has significant externalities.” GMO labeling reduces the demand for GM foods. The signal contained in the GMO label also affects consumer choice. Even a neutral GMO label may lead consumers to focus on the negative aspects of GMOs, pay less attention to price information, and become more reluctant to make a purchase in the product category. Unlike the positive “Bioengineered” logo that the Unites States adopted, the label in Brazil is a yellow triangle resembling a caution sign. Therefore, the externalities of GMO labeling noted in this study will be larger in Brazil.
 
What are the takeaways for marketers? This research reveals that GM labels add an important product feature for consumers to evaluate. The labels draw attention away from factors such as price, allowing firms to charge a premium for non-GM products. GM manufacturers inevitably lose market share when presence-focused labeling is enforced. They face both reduced brand share and reduced category demand. Because mandatory presence-focused labeling makes consumers less price-sensitive, GM food manufacturers may attempt to compensate for their sales loss by considering promotions other than price cuts.

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Reminder to marketing people: Missing information can misinform

You don’t need bad actors for people to get the wrong idea. Incomplete information can be enough.

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To get people to pay attention, you have to make it engaging. But what makes content engaging often comes at the cost of detail – shaping what people learn and what they think they’ve learned. The result: People can come away with the wrong idea, even when what they read isn’t factually wrong.

That tension sits at the core of research from Marta Serra-Garcia, a behavioral economist at the University of California San Diego’s Rady School of Management. The study, published in the American Economic Review, examines how incentives in the online attention economy shape the way scientific information is communicated – and what readers ultimately take away from it.

A trade-off in the attention economy

You don’t need bad actors for people to get the wrong idea. Incomplete information can be enough.

Crucially, the research finds that attention-grabbing summaries are not more likely to be factually inaccurate. Instead, they tend to include less information – especially key details about how studies were conducted.

“This is not a simple story that clickbait is bad,” said Serra-Garcia, associate professor of economics and strategy and Phyllis and Daniel Epstein Chancellor’s Endowed Faculty Fellow at UC San Diego’s Rady School. “You need to get people’s attention in order for them to learn something, and it’s good to encourage curiosity. Yet there’s a trade-off: Material designed to engage can also unintentionally contribute to the kinds of misunderstandings that can fuel misinformation.”

The finding comes from a large, multi-stage experimental study in which freelance writers produced nearly 600 summaries of actual scientific research, and more than 3,700 participants were then tested on what they learned from them.

Why “in mice” matters

In one study used in the experiment, a compound in broccoli reduced cancer cell growth – in mice. Leave out those last two words, and the finding can sound far more directly relevant to human health than it actually is.

“Why can’t we say ‘in mice’?” Serra-Garcia said. “It’s not very hard to add. It’s two words. But once you say ‘in mice,’ maybe fewer people will click.”

Study results were consistent. Summaries written to attract attention were shorter, easier to read and more engaging – but included less detailed information, especially about sample sizes and methods.

Given the option to seek out more information, most readers did not. That mirrors real-world behavior: Studies of social media use suggest most content is shared without users ever clicking through to read more.

Among those who relied on summaries alone in Serra-Garcia’s study, knowledge dropped by about 6-7 percentage points. Readers were also more likely to draw incorrect conclusions – such as assuming findings applied to humans or reflected firm medical guidance.

Inside the experiments

To isolate these effects, Serra-Garcia conducted a multi-stage experimental study. In the first stage, 149 freelance writers produced nearly 600 summaries of the same set of studies – covering topics such as cancer, sleep, vaccines and climate – under different instructions: to inform readers accurately, or to attract attention by encouraging clicks or shares. 

In the second stage, more than 3,700 participants read those summaries under different conditions, including whether they could click through for more information.

The results held across experiments: Attention-driven summaries increased engagement and prompted some readers to learn more – but left many others with less complete understanding.

AI and the attention economy

The same pattern emerged when a human wasn’t doing the writing. In additional tests, when a large language model was prompted to attract attention, it also produced less detailed summaries – suggesting the effect is driven less by who creates the content than by the objective it’s optimized for.

For Serra-Garcia, the findings point to an ongoing challenge for researchers, journalists and institutions alike.

“How do you make science engaging and important to readers,” she said, “without missing the essentials that convey the full picture?” 

The research was funded in part by National Science Foundation grant no. 2343858. 

Read the full study: “The Attention – Information Trade-off.” 

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Office owners or managers, take note: Increased risk of bullying in open-plan offices

In traditional open-plan offices it is easier to notice colleagues’ shortcomings and become irritated by them. If someone gets frustrated and takes it upon themselves to “do something about” a colleague’s behaviour, and there are no clear guidelines for handling such situations, there is a risk that it may escalate into bullying. Those who are subjected to bullying lack access to a private space for retreat. 

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Open-plan offices entail a clearly increased risk of workplace bullying compared with employees having their own office or sharing with just a few colleagues. This is shown in research from Linköping University, Sweden. 

“Increased bullying is a tangible negative consequence of how you choose to organise the workplace. It’s important to highlight this, as it hasn’t previously been examined,” says Michael Rosander, professor at the Division of Psychology at Linköping University.

Open-plan offices, where many employees share the same space, have become increasingly common. Employers often justify this development as a way to use premises more efficiently and to encourage creative interactions between employees. However, research has shown that open-plan offices do not promote health, job satisfaction or productivity.  

Until now, it has been unclear whether open-plan offices also affect the risk of bullying and employees’ motivation to look for another job. Through surveys of more than 3,300 randomly selected individuals in employment in Sweden, Michael Rosander has now provided an answer. The results are published in the journal Occupational Health Science. 

Thirty per cent of those with some form of office-based work reported that they worked in a traditional open-plan office with no access to private space. Thirteen per cent worked in so-called activity-based offices, where employees spend part of their time in an open-plan environment but also have access to designated rooms for tasks requiring peace and quiet. The remainder had their own office or shared one with only a few colleagues.

For traditional open-plan offices, the survey responses showed a clearly increased risk of bullying compared with those who had their own office or shared an office with only a few colleagues. The difference remained regardless of factors such as personality traits and the extent of remote working. This suggests that the problems are indeed caused by the work environment in the office.  

The researchers’ explanation is that in traditional open-plan offices it is easier to notice colleagues’ shortcomings and become irritated by them. If someone gets frustrated and takes it upon themselves to “do something about” a colleague’s behaviour, and there are no clear guidelines for handling such situations, there is a risk that it may escalate into bullying. Those who are subjected to bullying lack access to a private space for retreat. 

Activity-based open-plan offices, by contrast, showed no increased risk of bullying, likely due to the availability of private spaces. However, in both types of open-plan office, employees were more likely to consider changing jobs. One possible explanation is that activity-based offices also involve more distractions, according to Michael Rosander.

For employers who have introduced, or are planning to introduce, open-plan offices, there are some lessons to be learned. One is to be prepared to deal with irritation and conflicts before they escalate. Another is the importance of providing rooms where employees can work undisturbed. Placing individuals with similar needs and tasks near one another may also reduce the risk of disruption.

“Traditional open-plan offices are in themselves negative for the individual, for productivity, and make people more likely to leave their job. Social interaction also suffers. So it’s worth considering how to handle it,” says Michael Rosander.

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Long-serving CEOs may weaken innovation, study finds

Companies led by long-serving chief executives may become less innovative over time unless challenged by strong independent boards.

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A new study from the University of East London has found that companies led by long-serving chief executives may become less innovative over time unless challenged by strong independent boards.

The research examined 215 FTSE 350 companies over an 11-year period between 2010 and 2021. It explored how CEO tenure and independent directors influence a company’s “R&D knowledge stock”, which is the research, expertise and technological capability built through investment in innovation.

The study published in the journal Corporate Governance found that CEOs who remain in office for many years often become more cautious and less willing to back risky research and development projects. These companies were more likely to reduce investment in innovation and long-term technological growth.

Firms with higher numbers of independent directors were more likely to continue building innovation capacity with experienced CEOs and independent directors forming an effective partnership, to combine deep company knowledge with outside challenge.

However, both experienced CEOs and independent directors become more cautious and less willing to back risky research and development projects when the company fails to meet performance aspirations, suggesting that independent directors do not have stable risk preferences.

The findings suggest that innovation is shaped not only by technology and finance, but also by leadership culture and corporate governance structures.

Author Dr Igbekele Sunday Osinubi, of the Royal Docks School of Business and Law, said: “Long-serving CEOs can bring valuable experience and stability, but there is also a risk that leaders become too cautious or too attached to existing ways of thinking. Our findings show that independent directors play an important role in encouraging companies to continue investing in innovation, especially during difficult periods when firms may otherwise retreat from long-term research and development.”

He added: “This matters beyond individual companies. Innovation drives productivity, competitiveness and economic growth. The study highlights how governance structures can influence whether firms continue building the knowledge and technologies that shape future industries.”

The paper argues that regulators and policymakers should consider governance reforms and incentives that encourage long-term innovation strategies, particularly in firms led by long-serving executives. The findings may also influence how boards think about CEO succession planning, oversight and the balance between short-term financial pressures and long-term investment.

Osinubi’s research, “Long CEO tenure, independent directors and R&D knowledge stock: the moderating effect of performance shortfalls”, was published in the Corporate Governance: The International Journal of Business in Society

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