The NYT has a story on the Pennsylvania Department of Agriculture's impending ban on labeling milk and dairy products to say they come from cows that haven’t been treated with artificial bovine growth hormone. The theory is that the "no rBGH" label scares and confuses consumers about the safety and healthfulness of unlabeled milk. The NYT is skeptical, as am I, that there are a lot of unjustifiably terrified consumers out there (here's another critic of attempts to ban voluntary labeling) -- but, if one accepts that milk from treated cows is indistinguishable in its effects on the human body from milk from untreated cows, I do think matters get complicated. There are lots of other good reasons to reject rBGH-treated milk, but immediate health/safety consequences are not part of those reasons.
So, it's possible to argue that labels induce consumers to spend more than they'd prefer because they mistakenly believe that buying "hormone-free" milk is better for their children. Here's that argument, though I can't help wondering what hand Monsanto had in convincing the speaker of this.
In my forthcoming article about dividing true from false in the context of commercial speech doctrine, I make the following argument:
Consumers with concerns over the increased industrialization of the food supply, the vulnerability of monocultures, and the environmental effects of GMO foods, among other things, might benefit from “non-GMO” labels even if GMO foods are just as safe for human consumption as non-GMO foods. But it is important to acknowledge that even if this criticism is correct, labeling could mislead consumers, albeit differently. Establishing that some consumers wish to avoid GMO foods on non-safety grounds does nothing to refute either of the FDA’s major premises: GMO foods are safe, and labeling will mislead some significant number of consumers about safety.For good articles on this general subject, see Douglas Kysar's Preferences for Processes and Dan Burk's The Milk Free Zone: Federal and Local Interests in Regulating Recombinant bST, 22 Columbia J. Env. L. 227 (1997).
The reason that there is no neutral regulatory position is that even voluntary labeling has preference-shaping effects. As the NYT story points out: "Using [Pa. secretary of agriculture] Wolff’s reasoning, you could argue that organic labels on milk are unfair because they suggest that non-organic food is inferior. The same goes for labels for “natural,” “from grass-fed cows” and “locally produced.”