REGULATING PRODUCT RISKS THROUGH CONSUMER INFORMATION

Information provision, the favored means of consumer protection in the United States at least since 1906, is an attractive public policy for two primary reasons: (a) information provision allows more choice in the marketplace than does direct regulation, and (b) it is less costly both for the regulators and the regulated. Unfortunately, information policies have unconsidered side effects. First, their effectiveness rests on assumptions that people will read labels, understand them, and act on them. These assumptions are called into question by a wide range of experimental and field data. Second, information policies are generally regressive in impact. Consumers with fewer monetary resources typically also have fewer of the kinds of resources needed to understand and use information. Short‐term solutions include applying results of research to label design, especially using symbols along with words to aid nonreaders of English. Longer term solutions include widespread consumer education concerning labels and product risks as well as decreasing the inequalities among U.S. citizens that contribute to their different abilities to utilize product information. 1991 The Society for the Psychological Study of Social Issues