To assess the impact of a Chilean law requiring warning labels on unhealthy food products, Nano Barahona, ’21 PhD, and his co-researchers from Stanford and UC Berkeley sent a team of enumerators into Walmart stores in Chile to scan nutritional information using a custom smart-phone app.
Beginning in 2016, the Chilean Food Act mandated labels for foods exceeding certain thresholds for sugar, calories, sodium, or saturated fat. With financial support from the Stanford King Center on Global Development’s graduate student research funding program, Barahona’s team studied the law’s impact by scanning 6,000 products at Walmart stores and surveying 1,500 customers about their beliefs regarding nutritional content. After analyzing the data, the team was able to show the food labeling law—the first in the world to be implemented on a national basis—was effective: Sugar and caloric intake decreased by 9 percent and 7 percent, respectively, after labeling was required, especially among products people had previously—and mistakenly—believed were healthy.
“The labels provided useful information for consumers to make better choices, substituting from labeled to unlabeled products,” Barahona explains. “And due to the labeling, firms reformulated their products in ways that reduced calories and sugar. By doing that, products became healthier and, that, of course, is beneficial.”
Chile’s food labeling law was a perfect subject for Barahona, whose research interests are in the fields of public economics, development economics, and industrial organization with a special focus on assessing government interventions. In addition to his research in Chile, he has studied driving restrictions designed to reduce air pollution, public-private wage differentials in Brazil, and affirmative action policies in college admissions.
His efforts are making an impact. The research in Chile has received extensive media coverage; it also earned him a spot on the 2020-2021 Review of Economic Studies Restud Tour, which invites promising graduating doctoral students in economics and finance to present their research to audiences in Europe. When Barahona presented the draft paper via Zoom for Pontificia Universidad Católica de Chile, where he earned his undergraduate and master’s degrees, more than 600 people attended, including policy makers from countries that are considering similar food labeling laws.
“We’ve gotten emails from policymakers about the paper,” he says. “I hope it’s going to be helpful for governments.”
Barahona studied electrical engineering in college but became interested in economics in 2011 when protests over student debt roiled Chile, including on his campus.
“I wanted to participate in the debates, but I didn’t know much about the social issues,” he says. “That’s when I decided to do a master’s in economics, and I loved it.”
While earning his PhD at Stanford, Barahona continued work he began in Chile, including research examining the impact of bans or limits on the use of high-emissions vehicles. The resulting paper, “Vintage-Specific Driving Restrictions,” published by the Review of Economic Studies in 2019, found that such restrictions can be more effective than general driving bans or government subsidies at persuading consumers to purchase cleaner cars.
When Chile’s food labeling law was passed, Barahona and his roommate Sebastián Otero, ’22 PhD,—also a recipient of graduate student research funding from the King Center—knew they wanted to study the issue.
“We read about the law in the newspaper and said, ‘Someone is going to try to understand what’s happening here—let’s do it ourselves,’” he recalls.
The researchers approached several food retailers in Chile before Walmart agreed to help them with their study by sharing its data securely.
“Walmart took their social responsibility very seriously,” Barahona says. “I think they made an amazing contribution to policy and to science.”
The study confirmed that the national policy impacted both food supply and demand. Looking closely at the cereal market, the team found that, on the demand side, consumer purchases of labeled products dropped 26 percent compared to purchases of unlabeled products. The biggest drop—40 percent—was among cereal products consumers had previously believed to be healthy, suggesting that labels are most effective when they provide people with new information.
On the supply side, food manufacturers changed the formulation of their products to avoid having to label them: sugar and calorie concentrations were reduced by 12 percent and 3 percent, respectively. Although those changes made the products more costly—sugar alternatives raise production costs—Barahona and his team found that customers were on average willing to pay 11 percent more to have a healthier cereal, assuming taste remained the same.
Compared to taxes on sugary products, Barahona and his co-authors argue food labeling is equally effective and less likely to have a disproportionate impact on low-income people who may buy more of such products.
“Food labels don’t require transfers from consumers to the government,” Barahona says. “Instead, we nudge them to change their behavior.”
Barahona says support from the King Center has been “crucial” for his research. He’s also benefitted from connections he’s made on campus. In addition to Otero and a PhD candidate at UC Berkeley, Joshua Kim, ’20 PhD, ’17 MA, is a co-author on the food labeling policy paper. Barahona is also working on projects with Cauê Dobbin, ’22 PhD, and King Center Faculty Director Pascaline Dupas has served as an advisor.
“I appreciate her knowledge and the advice she gave me throughout my PhD,” he says. “She was very open to providing help.”
In July, Barahona will start a position as a post-doctoral research fellow at UC Berkeley. In 2022, he will become an assistant professor there.
Barahona says he likes the “structured-thinking” framework economics provides for studying “complicated and hard questions.”
“I find that approach appealing, interesting, and informative,” he says.