In the present study, we use an experimental setting to explore the effects of sugar-free labels on the willingness to pay for food products. In our experiment, participants placed bids for sugar-containing and analogous sugar-free products in a Becker-deGroot-Marschak auction to determine the willingness to pay. Additionally, they rated each product on the level of perceived healthiness, sweetness, tastiness and familiarity with the product. We then used structural equation modelling to estimate the direct, indirect and total effect of the label on the willingness to pay. The results suggest that sugar-free labels significantly increase the willingness to pay due to the perception of sugar-free products as healthier than sugar-containing ones. However, this positive effect is overridden by a significant decrease in perceived sweetness (and hence, tastiness) of products labelled as sugar-free compared to sugar-containing products. As in our sample, healthiness and tastiness are positively related, while healthiness and sweetness are related negatively, these results suggest that it is health-sweetness rather than health-tastiness tradeoff that decreases the efficiency of the sugar-free labelling in nudging consumers towards healthier options.
