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The Influence of Consumer Demographic Characteristics on Nutritional Label

Usage

Article  in  Journal of Food Products Marketing · January 1999

DOI: 10.1300/J038v05n04_04

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 New Jersey Agricultural Experiment Station
P-02137-1-99
January, 1999

Evaluating Consumer Usage of

Nutritional Labeling: The Influence
of Socio-Economic Characteristics

Ramu Govindasamy
John Italia

THE STATE UNIVERSITY OF NEW JERSEY

RUTGERS
Department of Agricultural, Food and Resource Economics
Rutgers Cooperative Extension
New Jersey Agricultural Experiment Station
Cook College
Rutgers, The State University of New Jersey
New Brunswick, New Jersey 08901
 Evaluating Consumer Usage of
Nutritional Labeling: The Influence
of Socio-Economic Characteristics

Ramu Govindasamy
John Italia

THE STATE UNIVERSITY OF NEW JERSEY

RUTGERS
Ramu Govindasamy is an Extension Specialist in Marketing,
John Italia is a Program Associate,
Department of Agricultural, Food and Resource Economics

Correspondence Address:
Ramu Govindasamy, Marketing Specialist and Assistant Professor
Department of Agricultural, Food and Resource Economics,
Cook College
Rutgers, The State University of New Jersey, 55 Dudley Road
New Brunswick, New Jersey 08901-8520
Phone: (732) 932-9171 ext. 25
Table of Contents

Executive Summary ........................................ iii

I. Introduction ......................................... 1

II. Methods ............................................ 4

III. Data Description ...................................... 8

IV. Empirical Results . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11

V. Conclusions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16

VI. References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19

List of Tables

Table 1: Descriptive Statistics for Explanatory Variables ........... 9

Table 2: Maximum Likelihood Estimates of the Logit Model . . . . . . . . . 12

Table 3: Prediction Success for the Logit Model . . . . . . . . . . . . . . . . . . 12

ii
Executive Summary
The majority of consumers report making frequent use of nutritional labeling when
purchasing food products. However, certain segments appear to place a greater
emphasis on food product labels than others. This study empirically evaluates which
demographic characteristics encourage consumers to be more likely to take nutritional
labels into account when purchasing grocery products. The results indicate that
females, older individuals, and those living in suburban and rural areas are the most
likely to make use of nutritional labeling. The results also indicate that larger
households were less likely to use nutritional labeling.

iii
Introduction
Nutritional labeling has been commonly provided on food products for nearly three

decades. For much of this century, nutritional labeling was largely voluntary and only

loosely regulated to prevent fallacious and misleading representation. The Nutrition

Labeling and Education Act (NLEA), passed in 1990, was intended to ensure the

consistency and validity of the information presented in food labeling. Conceptually,

improvements in label design and data were anticipated to increase the healthfulness

of eating habits and improve consumer diets. However, any modifications in consumer

behavior arising from new label policies are intrinsically limited by the existing use of

nutritional labels. Examination of food label use is now required to determine the

effectiveness of the NLEA and what, if any, changes have occurred that are directly

attributable to the NLEA. One necessary step is to ascertain which consumers are

most likely to make use of nutritional labeling in actual purchase practice. In addition to

aggregate measures of label usage, specific consumer demographic characteristics

can be tested for their marginal contributions to label usage. Interest in consumer use

of nutritional labeling is held by both health and dietary professionals as well as the

food marketing and food processing sectors. In general, the implications of label usage

research provide an array of advantages to a wide scope of commercial and health

care industries.

Measuring food labeling usage should also be beneficial in selectively targeting

segments of the consumer population that would react more favorably toward health-

1
conscious products. As Jacoby et al. (1977) posited, the act of including or improving

nutritional labeling should not be thought of as communicating with the consumer

because it presupposes the population will use this information as it was intended.

However, those who report using nutritional labels do in fact exhibit a concern about

their diet and health. Assumptions can be made about the perceptions and motivations

of label users because the act of using and comparing nutritional labels between

products requires an investment of time and effort. This investment represents a cost

which under assumptions of rational behavior illustrates that healthy eating has a

positive value to the consumer. Therefore, those found to regularly consult food

labeling may be typically expected to have an above average concern for their health

and the well being of those in their care. These individuals may include persons with

restrictive diets, those who may be more likely to purchase organically grown produce,

and those willing to purchase prepared meals designed for health-conscious

consumers.

Since the late 1960’s, the United States has undergone a series of dramatic

demographic changes which present the challenge of developing and distributing new

food products to a dynamic population. Among the major demographic shifts are the

changing age distribution, the slowing population growth, changes in the structure of

the median family, and the gender make-up of the work force (Senauer, 1991; U.S.

Department of Commerce, 1988). In order to successfully market new food products,

demographic shifts and differences must be well understood and the needs of specific

consumer segments must be considered. Changes in public awareness of food safety

2
issues and growing interest in healthy eating habits have also affected the demand for

food products. Processed foods which are both healthy and which require only minimal

preparation have quickly found favor in dual income households. In such cases,

because fewer of the primary ingredients are selected by the end use consumer, close

attention is often paid to nutritional labeling information. In short, promotion of the

current trend of prepared foods, which are both healthful in nature and provide time

utility through minimal preparation requirements, may benefit from the identification of

consumer characteristics common among users of nutritional labeling. Label usage

research may help to identify targetable areas based on socio-economic characteristics

where certain food products have the greatest probability of success.

Policy makers may also benefit from the evaluation of current nutritional label usage.

To boost the impact of policy tools such as NLEA, educational programs to foster label

usage may be necessary. As label usage is not homogeneous across population

segments, a program which selectively targets specific groups would maximize the net

benefits of an educational campaign.

While numerous studies have established the significance of socio-demographic

characteristics (e.g. Nayga, 1996; Klopp and McDonald, 1981; etc.), there is ample

justification to warrant further label usage research. In contrast to the majority of

relevant studies which have employed national data sets, the data source used in this

analysis represents a sample of New Jersey consumers. A localized sample better

exemplifies a specific region of the country and may help avoid incongruencies which

3
are found in the results of existing studies. For instance, Nayga documented statistical

differences suggesting label usage differs among national regions. Virtually no label

usage research has centered solely on any part of the northeast region, one of the

most important consumer markets in the nation. Because of its high population density,

its working consumers are among the highest paid in the nation, and for its high

number of food manufacturers, New Jersey was an ideal focus for this analysis.

Moreover, many existing studies have used old data which may not accurately

represent the current behavioral and attitudinal characteristics of the population or

public response to the NLEA.

The purpose of this study was to empirically evaluate which socio-economic

characteristics encourage consumers to use nutritional labels when making grocery

purchases. A logistic framework is used to quantify the effects of several demographic

factors on label usage.

Methods
There are no widely accepted theoretical or empirical guidelines for evaluating the

impact of socio-demographic factors in the likelihood of nutritional label usage (Nayga,

1996). However, Guthrie et al. (1995) and Nayga (1996) approached the information

provided by nutritional labels as a commodity which consumers will continue to make

use of as long as the benefits surpass the costs of label usage. This methodology,

initially proposed by Stigler (1961), specifically models the consumer’s search for

information which itself has been shown to be influenced by individual characteristics

4
(Katona and Mueller, 1955). Clearly, nutritional information acquisition can be

influenced by factors which affect diversified consumer segments and households in

different fashions. These factors include time constraints, the perceived role of dietary

intake in maintaining individual health, literacy in English, a rudimentary understanding

of nutrition, and the perceived benefits of nutritional information. These factors also

vary among distinct demographic segments supporting the use of consumer

characteristics in evaluating nutritional label usage.

The logit model was selected for the regression in this analysis because its asymptotic

characteristic constrains the predicted probabilities to a range of zero to one. The logit

model is also favored for its mathematical simplicity and is often used in a setting

where the dependent variable is binary. As the survey utilized in this analysis provided

individual rather than aggregate observations, the estimation method of choice was the

maximum likelihood estimation (Gujarati, 1992). Among the beneficial characteristics

of MLE are that the parameter estimates are consistent and asymptotically efficient

(Pindyck and Rubinfeld, 1991).

The model assumes that the probability of being a frequent user of nutrition labels, Pi,

is dependent on a vector of independent variables (Xij) associated with consumer i and

variable j, and a vector of unknown parameters β. The likelihood of observing the

dependent variable was tested as a function of variables which included socio-

demographic and consumption characteristics.

Pi = F(Zi) = α + β Xi)
F(α = 1 / [ 1 + exp (-Zi)]

5
Where:

F(Zi) = represents the value of the standard normal density function

associated with each possible value of the underlying index Zi.

Pi = the probability that an individual is a frequent user of nutritional

labeling given knowledge of the independent variables Xis

e = the base of natural logarithms approximately equal to 2.7182

Zi = the underlying index number or βXi

α = the intercept

And βXi is a linear combination of independent variables so that:

Zi = log [Pi /(1- Pi)] = β 0 + β 1X1 +β

β 2X2 + . . . +β
β nXn + ε

Where:

i = 1,2,. . . ,n are observations

Zi = the unobserved index level or the log odds of choice for the ith
observation

Xn = the nth explanatory variable for the ith observation

β = the parameters to be estimated

ε = the error or disturbance term

The dependent variable Zi in the above equation is the logarithm of the probability that

a particular choice will be made. The parameter estimates do not directly represent the

effect of the independent variables. To obtain the estimators for continuous

explanatory variables in the logit model, the changes in probability that Yi = 1(Pi)

brought about by a change in the independent variable, Xij is given by:

∂ Pi / ∂ Xij) = [β
(∂ β j exp (-β
β Xij)] / [1+ exp (-β
β Xij)] 2

6
For qualitative discrete variables, such as the explanatory variables used in this study,

∂ Pi/∂
∂ Xij does not exist. Probability changes are then determined by:

∂ Pi / ∂ Xij) = Pi(Yi : Xij = 1) - Pi(Yi : Xij = 0)

(∂

The following model was developed to predict the likelihood of making frequent use of

nutritional labeling (i.e. those who usually or always consult nutritional labeling on the

food products they purchase). The model was tested under the specification:

Prob = β0 + β1 Male + β2 Age1 + β3 Age2 + β4 Age3 + β5 Suburban

+ β6 Rural + β7 Household_Size + β8 2Children + β9 Prime + β10 Organic
+ β11 Media + β12 Education + β13 Hi_Income

Where:

Prob = 1 if the participant usually or always checked nutritional

labeling when purchasing foods and 0 otherwise

Male = 1 if the individual is male and 0 otherwise

Age1 = 1 if the individual is older than 65 years of age and 0

otherwise

Age2 = 1 if the individual is 51 to 65 years of age and 0 otherwise

Age3 = 1 if the individual is 36 to 50 years of age and 0 otherwise

Suburban = 1 if the individual resides in a suburban neighborhood and 0

otherwise

Rural = 1 if the individual resides in a rural neighborhood and 0

otherwise

Household_Size = 1 if the number of individuals living in the household were 4

or more and 0 otherwise

2Children = 1 if 2 or more individuals under the age of 17 resided in the

household and 0 otherwise

7
 Prime = 1 if the individual was the primary household shopper and 0
otherwise

Organic = 1 if the individual frequently purchases organic produce and

0 otherwise

Media = 1 if the individual made frequent use of food advertisements

and coupons in newspapers and 0 otherwise

Education = 1 if the individual had not completed at least a bachelors

degree and 0 otherwise

Hi_Income = 1 if the household income was at least $70,000 and 0

otherwise

For estimation purposes, one classification was eliminated from each group of

variables to prevent perfect collinearity. The base group of individuals and omitted

variables are given in Table 1. Based on previous literature, females (Nayga; Bender

and Derby, 1992; Guthrie et al.) and households with children (Feick, Harrmann, and

Warland, 1986; Guthrie et al.) were initially hypothesized to be most likely to be label

users. Older individuals were expected to be less likely to be nutritional label users

(Bender and Derby).

Data Description
The data for this analysis was collected from a survey conducted by Rutgers

Cooperative Extension. The survey was administered at five grocery retailers

8
Table 1: Descriptive Statistics for Explanatory Variables

Variable N Percentage Std. Dev.

Gender
(Male) Male 100 0.344 0.4757
Female* 191 0.656 0.4757
Age
(Age4) Less than 36 years of age* 68 0.234 0.4239
(Age3) 36 - 50 years of age 103 0.354 0.4790
(Age2) 51 - 65 years of age 69 0.237 0.4260
(Age1) Over 65 years of age 51 0.175 0.3808
Regional Characteristics
(Suburban) Suburban region 229 0.787 0.4102
(Rural) Rural region 39 0.134 0.3412
(Urban) Urban region* 23 0.079 0.2702
Household Size
(Houshold_Size) Four or more individuals 67 0.770 0.4217
Less than four individuals* 224 0.230 0.4217
Are there two or more children residing in the household?
(2Children) Yes 53 0.182 0.3866
No* 238 0.818 0.3866
Are you the primary grocery purchaser of the household?
(Prime) Yes 244 0.838 0.3686
No* 47 0.162 0.3686
Do you usually purchase organic produce?
(Organic) Yes 99 0.340 0.4746
No* 192 0.660 0.4746
Do you regularly make use of food advertisements?
(Media1) Yes 64 0.220 0.4149
No* 227 0.780 0.4149
Education
(Education) Less than 4 year college degree 98 0.337 0.4734
(Education2) At least 4 year college degree* 193 0.663 0.4734

Annual Household Income

(Lo_Income) Less than $70,000 164 0.564 0.4968
(Hi_Income) $70,000 or more* 127 0.436 0.4968

* Refers to omitted category in the logit analysis

9
throughout New Jersey and was completed in 1997. The retail locations included three

corporate supermarkets of various sizes, one independent supermarket, and a privately

owned direct market establishment. The survey was conducted during both weekend

and weekday periods throughout the morning and afternoon hours. Respondents were

approached at random while entering the retail establishment. Before distribution, the

survey was pre-tested by a group of randomly selected individuals. The pre-tested

surveys were not included in the final data set. The survey data was input into a flat

text file which was subsequently read by SAS running on a UNIX platform for

descriptive and econometric analysis.

The survey contained questions which dealt with the several issues important to food

purchasing behavior, food risk perceptions, and the socio-demographic characteristics

of the respondents. Overall, 408 surveys were physically distributed to New Jersey

shoppers yielding a sample of 291 responses with a response rate of 71 percent.

In the case of the dependent variable, 210 respondents (72%) indicated that nutritional

labeling was usually or always used when making decisions about which food products

to purchase and 81 (28%) respondents reported that labeling was not often important.

These findings were highly consistent with Bender and Derby who reported that 74

percent of consumers were label users and also Guthrie et al. who reported that 72

percent made use of food labels.

10
Table 1 provides a descriptive tabulation of the explanatory variables used in this

analysis. Approximately 66 percent of respondents were female and 83 percent had

completed at least some college. About 58 percent of the participants were 49 years of

age or below, while approximately 37 percent of the respondents had annual

household incomes of less than $39,999. Approximately 33 percent purchased

groceries for children who lived in their household. About 13 percent lived in rural

areas while 8 percent lived in urban areas and 79 percent lived in suburban areas.

Empirical Results
The maximum likelihood estimates for frequent label usage are displayed in Table 2. A

number of previous studies have attempted to identify the household characteristics

that increase nutritional label usage among American households. Relatively few

demographic variables were found to be significant in more than one study. Males

have been reported to be less likely than females to make frequent use of nutritional

labeling (Guthrie et al.; Bender and Derby; Nayga). Consistent with these studies,

females were found to be 10 percent more likely to make use of food labeling when

making grocery-purchasing decisions than males. As the primary function of nutritional

labeling is to provide basis for making health and diet-related decisions, comparisons

can also be made with gender response to other food health issues. For instance, the

analysis results are also consistent with other studies which have demonstrated that

females are more concerned about and more knowledgeable of food issues than

males. Females have been found to be more risk averse to pesticide residues (Dunlap

11
Table 2: Maximum Likelihood Estimates of the Logit Model

Variable Estimate Standard Change in

Error Probability

Intercept -0.6511 0.5856 -0.1252

Male* -0.5174 0.2993 -0.0995
Age1 0.3912 0.4382 0.0752
Age2*** 0.9951 0.4236 0.1914
Age3* 0.6106 0.3632 0.1174
Suburb*** 1.1973 0.4766 0.2302
Rural* 0.9918 0.5811 0.1908
Household_Size** -0.9059 0.4609 -0.1742
2Children* 0.9396 0.5132 0.1807
Prime 0.1524 0.3736 0.0293
Organic* 0.5646 0.3084 0.1086
Media -0.1577 0.3474 -0.0303
Education -0.0036 0.3291 -0.0007
Hi_Income 0.0764 0.3205 0.0147

Ratio of nonzero observations to the total number of observations: 0.28

*: significant at the .10 level

**: significant at the .05 level
***: significant at the .01 level

Table 3: Prediction Success for the Logit Model

Predicted

Predicted
0 1

0 9 72
Actual
1 11 199

Number of correct predictions: 208

Percentage of correct predictions: 72

12
and Beus, 1992), and exhibit a higher willingness-to-pay for food safety risk reduction

(Huang, 1993). Although women have more fully entered the work force, they remain

more active in deciding and preparing what American families eat. In the majority of

U.S. households, women remain the primary grocery shopper and women do

approximately 90% of the cooking (Senaur). Female-headed single parent households

also grew by 36 percent between 1980 and 1990 (Waldrop and Exeter, 1990).

Conceptually, this fundamental gender difference is consistent with the estimated

differential in label usage. Because they are more likely to be frequent food shoppers

and because they are more likely to purchase larger quantities of food per supermarket

visit, females are generally more frequent users of nutritional labels than males.

Conversely, males are more likely to purchase food only for themselves and more likely

to purchase only a few items at a time rather than do large weekly shopping.

Guthrie et al., and Feick, Herrmann, and Warland, found that households with more

than one inhabitant were more likely to make use of nutritional labeling. Similarly,

households with young children were more likely to be label users. Arguments have

been made to suggest that those who are responsible for preparing meals for others

may be more concerned about food safety issues. This hypothesis is consistent with

the findings of previous studies. However, other researchers have proposed that larger

household size should lead to diminished availability of time and therefore should be

negatively correlated with label usage.

13
In the present study, households with two or more children were 18 percent more likely

to make use of food labeling when making purchase decisions. As with the greater

responsibility borne by females in selecting the food which others eat, parents too,

have a responsibility and intrinsic interest in providing safe and wholesome meals for

their children. This protectionistic motivation may explain why households with several

children are more attentive to nutritional labeling.

Household size was found to significantly decrease the importance of nutritional labels.

Those with households of 4 or more members were 17 percent less likely to frequently

use nutritional labeling. These findings are inconsistent with those of Feick, Herrmann,

and Warland and Guthrie et al. A possible reason that large households make less

use of nutritional labeling than smaller households may be attributable to the value of

scarce time of those responsible for preparing meals for many other people. Intuitively,

the estimates for household size also appear to conflict with the finding that households

with two or more children are more likely to use nutritional labeling. However, this

disparity suggests that the effect of household size is related to the age of household

members. In effect, larger households may be less attentive to nutritional labeling if

they are primarily made up of adults. In such households, individuals are more likely to

purchase food items for themselves rather than for the entire family. Yet large

households which also include several individuals under the age of 17, where parents

are responsible for selecting food items for children, may in fact be frequent label

users.

14
In previous studies, variables measuring the effects of income and age have generally

been less significant in predicting label usage than in other food marketing studies.

The results of one study (Bender and Derby) suggest that younger rather than older

individuals are more likely to be label users.

In agreement with Bender and Derby, the age variables were estimated with the

expected sign and two of the three explanatory age variables were found to be

significant. Younger individuals rather than older individuals were more likely to use

nutritional labels. Those 51-65 years of age were 19 percent more likely to use

nutritional labels than those under the age of 36. Similarly, those 36-50 years of age

were 12 percent more likely to make use of nutritional labels than those under 36 years

of age. This finding may be a result of older individuals having more restricted diets

due to medical advice or health problems whereas younger individuals have less

incentive to search for more healthful alternatives.

Of all the included explanatory variables, those who lived in suburban areas had the

greatest effect on nutritional label usage. When compared to urban residents,

suburban residents were 23 percent more likely to be label users and rural area

residents were 20 percent more likely to be label users. Consumers who frequently

purchase organic produce were also found to be 11 percent more likely to make use of

nutritional labels. This finding is consistent with previous studies which suggest that

organic purchasers are more risk averse toward food safety issues than non organic

purchasers.

15
Education was also found to significantly enhance label usage in a number of related

studies. Those with higher levels of education were found to be more likely to use

nutritional labeling information (Guthrie et al.; Bender and Derby; Feick, Herrmann, and

Warland; Klopp and MacDonald; Nayga). Although the variable for education was

estimated with a sign consistent to many previous studies, it was statistically

insignificant. Other insignificant variables included a dummy variable which denoted

the primary household shopper, income, and a variable which captured the effect of

households which made frequent usage of food advertisements and coupons for food

products.

The logit model chi-square statistic was significant at the 0.003 level clearly rejecting

the null hypothesis that the set of explanatory variables were together insignificant in

predicting variation in the dependant variable. The tabulation of prediction success is

shown in the classification table (Table 3). With a 50-50 classification scheme,

approximately 72 percent of the individuals in the sample were correctly classified as

those who place a high degree of importance on nutritional labeling when selecting

grocery products.

Conclusion
Qualitative choice models are ideal for analysis of many types of consumer behavior.

This study illustrates the potential of a logistic framework in decomposing the effects of

individual demographic characteristics in decision making. Other applications include

16
the use of logit models to elicit willingness-to-pay or willingness-to-purchase various

products.

From the perspective of food marketing agents, the characteristics of nutritional label

users should aid in developing a profile of those willing to purchase food products

which appeal to health conscious individuals. As the overwhelming majority of newly

introduced food products fail within their year of introduction, as much market

segmentation as possible is necessary to increase the chances of product success.

New healthful food products can be specifically targeted for nutritional label users such

as frequent consumers of organic produce, females, those with children, etc.

Marketers can choose to target characteristics such as gender and age through

advertisement. Alternatively, other characteristics can be targeted through distribution

such as rural and suburban households, household size and households with children

by selectively introducing products in regional areas where these characteristics are

highly prevalent. The results also show that frequent purchasers of organic produce

are more likely to use nutritional labeling suggesting that other healthy foods may have

greater likelihood of succeeding if distributed in places where organic produce is sold.

Policy makers can also benefit from gaining insight into nutritional labeling usage. To

increase the success of policies such as the NLEA, policy makers might foster

increased label usage by males, older individuals and urban households.

17
Ideally, alterations in nutritional labeling requirements brought about by NLEA would

translate into changes in consumer eating habits. Ultimately, the impact of policy

regulation on dietary practice is limited by the current usage of nutritional labeling by

consumers.

This study attempted to identify the effect of consumer characteristics on the likelihood

of being a frequent nutritional label user. While the findings did bring to light several

significant variables, some limitations should be noted. Specifically, the small sample

size and highly concentrated regional makeup of the participants warrant some caution

when extending the outcome of this study to other geographic areas. Furthermore the

socio-economic characteristics of sample area indicate the region to be more densely

populated than most regions of the country and that local consumers tend to be more

highly educated and higher earning than those in most other regions. The results of

this study may be useful for health care educators as well as professionals in food

marketing and food product development. Research in nutritional labeling usage also

facilitates meeting the consumption needs of different demographic segments of the

population.

18
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