Revealed Preference and GMO’s

Steve Holt has an article at Take Part on public opinion and GMO labeling. Long and short, unsurprisingly, when asked nearly everyone says that they are in favor of labeling. But what does that really tell us?

Economists have a pair of concepts: stated preference and revealed preference that say a lot about this issue:

Revealed preference theory, pioneered by American economist Paul Samuelson, is a method for comparing the influence of policies on consumer behavior. These models assume that the preferences of consumers can be revealed by their purchasing habits.

It’s very easy to tell a pollster that you want something and another to put a little effort into it. The stated preference is that people want labeling. The revealed preference; judging from the shelves at Whole Foods and Trader Joe’s, two chains whose customers are ostensibly the most passionate about the issue and whose supply chain is in the best position to be responsive to these demands; shows that people apparently don’t really care that much about labels. Enough to say yes to a pollster or sign a petition, but not enough to change their shopping habits. Markets aren’t perfect, but one thing they do really well is match consumer goods to consumer preference. Clearly producers in the natural and health segment of the market don’t see a enough demand to respond to the most motivated anti-GMO consumers or it wouldn’t take Whole Foods until 2018 to shift their product mix over.

I’m not shy about calling for regulation, but I want as little as possible and I don’t see why this is problem the market wouldn’t solve if people were really motivated. When US consumers wanted to cut fat out of their diets in the 80’s an 90’s the market was more than happy to give them what they wanted. If enough people really cared about GMO labeling, the suppliers who cater to that market segment would be bending over backwards to respond.