What you do know can also hurt you
We live in the information age, which is called that for the same reason the ice age got its name: an overwhelming proliferation of the stuff. We automatically assume that more information is better than less. But as the dinosaurs learned about ice, even something useful can be dangerous in excess.
The lesson is, so far, lost on most lawmakers and regulators. In July, President Barack Obama signed a bill requiring foods containing genetically modified organisms to be labeled as such. It’s an outwardly innocuous requirement that is supposed to leave consumers better informed but will actually cause many to be misled.
The implication of the mandate is that there is some important difference between foods that contain GMOs and foods that don’t. But there isn’t. A recent report from the National Academy of Sciences confirmed that genetically engineered food is safe for humans, animals and the environment.
This scientific reality is at odds with public opinion. A June poll by ABC News showed that only one-third of Americans think genetically modified foods are safe to eat. Federally required labels will encourage them to persist in that delusion.
What’s the harm in telling people a simple fact? “A government-mandated label operates as a de facto warning to consumers,” writes Case Western Reserve University law professor Jonathan H. Adler in the fall issue of Regulation magazine. “A mandatory label for organic produce that says ‘Produced with animal feces’ could be literally true, but would also stigmatize the products at issue.”
The government says tomato sauce may contain trace amounts of maggots. But it would not make sense to make companies publicize that ingredient, because the disclosure would raise false fears.
There are other ways in which labeling requirements can be harmful. Starting next year, the Food and Drug Administration will require chain restaurants to publish the calorie count of each beer on their menus.
But there’s scant evidence this sort of information makes much difference. Julie Downs, a scholar at Carnegie Mellon University, says that “putting calorie labels on menus really has little or no effect on people’s ordering behaviors at all.”
This rule, however, may have an unintended effect on ordering behaviors — by taking some beers off the table. The tests needed to provide accurate information entail costs that are trivial to mass-market manufacturers, which can spread across huge volumes, but not to small breweries, which can’t.
The expense is even greater, notes Berry College economist E. Frank Stephenson, for breweries “that rotate beers frequently, produce seasonal specialties or occasionally tweak their recipes.” Not surprisingly, the big beer-makers are in favor of the rule. The Brewers Association, a trade group for smaller ones, is not so keen on it.
The added cost imposed by the new rule is not likely to yield commensurate benefits. Drinkers who prefer low-calorie beers already know what to order, while craft beer aficionados generally put a priority on flavor over everything else. The consumers who get the least benefit will bear the costs of the mandate, in higher prices or fewer options. (Full disclosure: My stepson works for a craft brewery.)
Beer and food are not the only realms where more data works to the detriment of consumers. Most states issue report cards for hospitals. This may sound like a foolproof way of protecting patients from incompetent providers. The truth is more complicated.
University of Chicago law professor Omri Ben-Shahar tells me that “healthier and wealthier people are disproportionately likely to use the report card.” Hospitals that get high marks will attract more of these patients — and they have an incentive to cater to them, because treating healthier patients leads to higher scores.
But the higher-rated hospitals don’t have unlimited capacity. So less educated and sicker patients, who are less likely to pay attention to the report cards, will find them less accessible, diverting them to hospitals that get worse scores. “The most vulnerable patients, including a large, disproportionate share of African-American patients, are the ones most likely to suffer,” Ben-Shahar says.
A lot of disclosures are merely useless, because they go unread – like the “terms and conditions” for iTunes, which run to 6,700 words. But politicians and bureaucrats feel no compunction about generating more and more data that will go unheeded at best and prove harmful at worst.
Mae West said, “Too much of a good thing can be wonderful.” If she had lived to read the iTunes user agreement, she might have changed her mind.