Rotman Management — Spring 2017

124 / Rotman Management Spring 2017

Avni Shah is an Assistant Professor of Marketing at the University of

Toronto, Scarborough’s Department of Management and a Research Fel-

low of Behavioural Economics in Action at Rotman (BEAR). Her paper,

“Surcharges Plus Unhealthy Labels Reduce Demand for Unhealthy

Menu Items”, written with James Bettman, Peter Ubel, Punam Anand

Keller, Julie A. Edell, was published in the Journal of Marketing Research.

Rotman faculty research is ranked #3 globally by the Financial

Times.

In closing

Marketers and managers alike stand to benefit from under-

standing how financial disincentives and unhealthy labels

influence consumer behaviour. Another promising finding

is that despite making the inclusion of a price hike due to

a meal being unhealthy more salient to consumers, diners’

ratings of meal enjoyment and likelihood to return remained

unaffected, across conditions.

Our results provide guidelines for policymakers consid-

ering the use of behavioural economics and social market-

ing to enhance individual and collective well-being. If the

goal is to reduce demand for unhealthy products, the most

effective method across our studies was an unhealthy sur-

charge approach, which entails both a financial disincentive

and an unhealthy food label.

It is important to remember that governments are likely

to face resistance from businesses that may lose profits from

lower demand for higher-priced unhealthy menu items.

However, our results indicate that these losses may be com-

pensated by increased loyalty to the restaurant, due to a

sense of its greater concern for customers.

Going forward, one way to meet both profit and health

goals might be to encourage customers to select at least one

healthy item in order to get a price break. Another option

might be to implement our unhealthy surcharge for a short

period (e.g., three months) to help consumers break their

unhealthy habits.

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