Incidence of an Emotional Tax: The Case of Calorie Menu Labeling

Abstract

Traditionally, information has been assumed to never harm consumers, a notion recently challenged. Salience nudges have been argued to evoke negative emotions, therefore acting as “emotional taxes.” We analyze the emotional and short-term consumer welfare impact of a calorie salience nudge (calorie menu labeling) – a policy implemented nationwide in the U.S. in 2018. To do so, we design a hypothetical restaurant meal experiment. We find a calorie salience nudge may act as an emotional tax, but only for some – there is considerable heterogeneity in the emotional response to the nudge. In particular, we find the nudge emotionally taxes people with low eating self-control, while it emotionally subsidizes those with higher levels of eating self-control. We also find people with lower level of self-control may experience less of benefits from the nudge – the nudge causes them to adjust their high calorie meal consumption by less than do those with higher self-control. Unsurprising, we therefore find that consumers with lower self-control attach a lower (negative) short-term value to the calorie salience nudge. Overall, we find the calorie salience nudge positively impacts consumer welfare, although heterogeneity over consumers is substantial – the consumer value ranges from positive to negative. We find no distributional effects over income from the calorie salience nudge.

Keywords: salience nudge, emotional tax, calorie information, menu labeling, self-control, economic experiment

JEL Classification: D03, D12, D83