The Role of Consumer Information in Public Policy - Article Example

The Role of Consumer Information in Public Policy A few years ago, there was a wide scale outrange after it emerged that a restaurant and catering chain that was supplying meat across Europe was actually selling horse meat packed as beef to American and English consumers. The main concern from the aggrieved parties it turned out later had not as much to do with food safety but lack of sufficient consumer information which resulted in many eating horse meat against their will. This occasioned several ramifications and the company involved was embroiled in several laws suite across Europe and America and ended up losing a great deal of business because of the negative publicity. This incident can be used to underline the importance of the clear policies on product information; in many ways it was actually, a mild case granted that the difference in the labelling had more of a social cultural impact rather than a safety one. It is critical that manufacturers disclose as every detail of their products to their consumers especially in the era of globalization where one commodity can be retailed in hundreds of countries. However, the lack of information is not the only problem facing consumer information in some cases the information needs to be controlled in order to protect consumer from advertisements and product information deliberately tailored to mislead or manipulate them. Without clear-cut and comprehensive policies, customers may end up purchasing products that are either culturally unacceptable to them or worse a health hazard. In the food industry for example if the customers do not know exactly what constitutes their purchases they may consume substances to which there are allergic resulting in a severe reaction or even death. Therefore, it is in the best interest of the public, state and the manufactures for there to exist an unambiguous and uniform policy on customer information (Alan and Louis 1979). Nevertheless, despite the obvious importance of the clarity in product information in recent times consumer protection regulations have increasing been attacked form several sectors ranging from the courts business communities and legislative houses. A lot of emphasis has been particularly placed on the techniques which are applied in the endeavour to ensure that that consumer globally have sufficient information regarding to the product they are buying. Ideally, the goal that the stakeholders in consumer protection strive to uphold is that of ensuring that consumers have sufficient information such that they do not unknowingly purchase and consume products that are harmful to their health and welfare. Nonetheless, irrespective of the consensus in respect to this goal, there has been little unanimity in determination of how best to efficiently render the information to perspective consumers. From a traditional point of view, information was viewed as something consumers either had or did not have, and when one did have it they should be provided with it. Deception or misinformation of consumers is unethical and effort should be taken to eliminate it, nonetheless the simplicity of this understanding belies the complexities underpinning the concepts. Among the difficulties involved in analysing consume information can be further illustrated by fact that the EU has been forced to come up with an organ specifically to deal with misinformation; the Directive on Unfair Commercial Practices which was constituted to prevent misinformation business so business and business to customer advertising. At a minimum, a definition of deceptive adverting is an advert that makes a false claim about any products or materials; nevertheless, such a definition is too narrow and can be skirted by advertisers who want to mislead buyers (Robert, 1977). This is because an advert may be literally true but could cause consumers to draw the wrong conclusion and this would be the same as if false inferences had ben explicitly stated. Consider the following example of a literally true advert but which is also ambiguous and potentially misleading, a seller claims that product X kills all the bacteria that causes baldness. Essentially, if this is taken at face value, consumers will believe that the product can cure baldness, nonetheless they will not have accounted for those who are bald by virtue of genetics as opposed to bacteria. Therefore, the advert is open to misreading and it could make consumers purchase the product even if they do not need it, however should they decide to take legal action, they will be pit at a disadvantage since they firm can claim it was not explicit in its description. This is just one of the possible scenarios, which justify the need for the involvement of state organs in ensuring consumers are protected from such situations. In some cases, consumers will require information for its own sake; however, in most cases, desire for information is driven by the demand of the product, ergo customer will require information with the intention of improving the likelihood of satisfaction derived from the commodity (Phillip, 1970). To this end, customer might produce pre purchase information they have acquired from informational source such as journals and online sources, alternatively, another source of information is experience, which is at times applied to the definition of conditions of contingency payments after the availing of more information through warranties or trial periods. In some cases, information can be limited through legislation or policy however, the underlying assumption is that because of lack of supplementary information, consumers’ outlook on brands is that all are alike, is a logical view in spite of the brands difference. In such instances sellers of above average and below average brands appear to be at par thus to discern between brands it is an economic incentive for above-average brand providers to disclose the status of said brands. In view of the revelations, it is thought that consumers are likely to make out that the brand of non-disclosing sellers is of lower value. This consumer perception leads to above-average sellers remaining having not disclosed, creating a new incentive where they have to disclose their selling points. A continuous process develops where the number of non-disclosing sellers reduces as more sellers disclose their advantage. Seemingly, it might be argued that general competitiveness and prosperity of information markets entails lack of efficiency to command the generation or separation of presently undisclosed information. All the same, efficient quantity and quality of product information being provided may be hindered by market failures, even with deficiency of artificial impediments’ to competition in the information market. In information provision such market failures are almost inborn. This though is not to say that every deviation from ideal information should be corrected. Information is costly to produce and to disseminate, and sometimes the provision of additional information is not socially a priority. First off, we discuss possible failures arising from information sale and production, followed by a discussion of the possible product market failures and marketplace in-situations owing to informational imperfections. Demand for information comes from demand for products, thus failures in a specific market feedback on the other in a circular manner. In most cases, the incentive for consumers to gather product information is relatively strong; at the end of the day the increase in efficient purchase; decisions are directly proportional to the increases in relative income considering the diversity of choices. In majority of markets, the price dispersion often serves a significant role in the identification of similar products; sellers on the other hand have a substantial economic incentive for dissemination of information to consumers. Owing to the many challenges that are encountered in dealing with product information, governments are often obliged to take remedial action so as to respond to the problems pertain consume information. In addition to countermeasures, the most lasting solution has been found to be the setting of regulations to correct the failure and contradictions in the production process and the information policies. Other attempts to correct the flaws in production aside form controlling the customer information include banning untested drugs vehicle or fuel standards, ultimately these can be seen as attempts to correct the problems that may be caused or increased by deficiencies in buyer information (Klein, 2008). The best way to deal with the information problem, at least in the collective eyes of sellers is the removal of private and government restriction on the free flow of information, which are often seen as being inhibitive in competition. For example in many countries, professional are not allowed to advertise on the media, in the US for example lawyer may not use the media to promote their services in majority of states. As a result, many of the firms with an advantage over others are not able to publicize this since they have no means by which to convey their “edge” to their potential customers and thus curtailing competition a great deal. Another possible remedy is prohibiting of misleading claims, this way produces do not get a chance to manipulate consumers covertly through subtle ambiguous messages. Nevertheless, given that this sort of restriction reduces the amount of information supplied to consumers this particular method should be applied with care considering that the determination of what is misleading or not is quite expansive. Before such solution implemented, there should be careful consideration of the distinction between and advertisers “claim” and what the customer believes based on the same. Another of the means through which governments can try to remedy the information situation is through carrying out test, which can determine the probability of the claim made by the advertiser being true. If the possibility of the claim being true is found not be sufficiently high to constitute a reasonable basis it is prohibited. The most commonly applied remedy is however the increase of information about competing products, it is often the most effective remedy for claims that manipulate consumers into making incorrect assumptions about the products. In some situations, increased information can be generated through the removal of the restraints on the flow of product information, traditionally; compelling producer to disclose standardize information about the product to consumers does this. For example, tobacco and alcohol producers are expected by law to inform users that consumption of their products could potentially be hazarders to their health. A rarely considered method of manipulating and covertly misleading customers can be found in the opposite of providing insufficient or incomplete information in that some firms tend to provide too much and end up bombarding and confusing the client. This is because when a consumer is faced with huge chunks of product information, they may end up selecting data in owing to time-pressure in such a way they only single out unimportant bits such as price and brand. This bombardment with information makes the process of choosing the most suitable quality product subjective since the information overload will tend to decrease their objectivity and they are lulled into a false sense of security believing the product to be safe owing to the highly detail and sometimes oblique information (Haupt, 2003). In addition, there two other methods of increasing customer information, one is the establishment of a standardized system for evaluating product attributes and the other consumer education efforts the two can be used together or separately depending on the prevailing circumstances. References Alan, S and Louis, L. W, 1979. Intervening in Markets on the Basis of Imperfect Information: A Legal and Economic Analysis, 127 U. Pa. Law. Review. 630 Klein, D, B. 2008. “Consumer Protection". In David R. Henderson (ed.). Concise Encyclopedia of Economics (2nd ed.). Indianapolis: Library of Economics and Liberty. Phillip, N. Information and Consumer Behavior, 78. Journal of Political. Econ. 311 (1970). Robert P, 1977. Beyond Nader: Consumer Protection and the Regulation of Advertising, 90 Harvard. Law. Review. 661. Haupt, S. 2003  An Economic Analysis of Consumer Protection Law, German Law Journal Vol. 4 : 11. 1137-1164. Read More