Surcharges Plus Unhealthy Labels Reduce Demand for Unhealthy Menu Items

Three laboratory experiments and a field experiment in a restaurant demonstrate that neither a price surcharge nor an unhealthy label is enough on its own to curtail the demand for unhealthy food. However, when the two are combined as an unhealthy label surcharge, they reduce demand for unhealthy food. The authors also show that the unhealthy label is as effective for women as the unhealthy label surcharge, whereas it backfires for men, who order more unhealthy food when there is an unhealthy label alone. The authors demonstrate that an unhealthy surcharge, which highlights both the financial disincentive and potential health costs, can significantly drive healthier consumption choices. From a policy and government perspective, if the goal is to reduce demand for unhealthy food, increasing the transparency of the health rationale for any financial disincentive is necessary to effectively lower unhealthy food consumption.