“Smart Choices” Moral Hazard
Sat, Oct 24, 2009
Author: Joshua Levin (33 Articles)
Joshua Levin is a consultant to non-profits and their corporate partners in sustainable agriculture business development and sustainable food markets. Joshua holds an MBA from the NYU Stern School of Business, where he was a Catherine B. Reynolds Fellow in Social Entrepreneurship, and a BA from Harvard University. He lives with his wife in Brooklyn, NY.
I wrote back in October 2008, almost exactly one year ago, about the development of the Smart Choices program by the food industry. Now, the tsunami of controversy has finally arrived as “smart choices” products appear on the shelves – led by vanguards such as Fruit Loops, Apple Jacks, Cocoa Crispies, and more of your favorites. Even to those like me that support industry-led change, actions speak louder than words when it comes to exposing a failure of the private sector, the easy co-opting of nutritionists, and the need for government regulation and consumer education.
The creators of Smart Choices argue that it denotes products which are “smarter” than what they determine to be the norm. “You’re rushing around, you’re trying to think about healthy eating for your kids and you have a choice between a doughnut and a cereal,” says the lead nutritionist on the team. “So Froot Loops is a better choice”
Then why don’t they call it “Smarter Choices”?
Meanwhile critics point out that foods like Fruit Loops are 41% sugar by weight (obviously not a smart choice), that the program essentially allows any processed food to add vitamin and mineral supplements and become a “Smart Choice”, and that it tricks consumers into thinking they can eat these foods instead of fruits and vegetables.Here is a list of the cereal products that are now “Smart Choices” for America. The NYTimes also picks up the critique well in For Your Health, Fruit Loops.
Food Democracy Now is running a campaign and petition against the program.
I went to the official Smart Choices website, and in the section “For Consumers”, they tell us: “You feel confident that the product is a smarter choice when you see the green check mark icon”.
This is a country with an obesity epidemic. A country with the highest per capita health care costs in the world, three-quarters of which are tied to chronic diseases such as diabetes and other nutrition-related ailments.
A “moral hazard” is an economic inefficiency caused when an actor is insulated from the downside risk of his own actions and thus behaves in an irresponsible way. Just like the Savings and Loan Debacle, or the latest financial crises, the federal government will pick up the health care costs of turning poorly educated consumers into sugar and fat dumpsters, while the private sector will reap the temporary benefits of the upside. Moral hazard creates bubbles, then busts. Taxpayers and stockholders pay the price of firms who fail to create long-term value for their stakeholders.
Are these companies unconsciously desperate to be regulated? No matter what our food system looks like in 20-years, these firms will be selling the product. Yet in the meantime, they seem to seek to repeatedly co-opt and divert the healthy-eating movement, averting short-term costs, while beckoning regulators to come in and set up the frameworks for their own future.
And honestly, how do both the product managers, brand strategists and the nutritionists who came up with “Smart Choices” actually get out of bed and go to work every day? Must be all those vitamins in the Fruit Loops.
Tags: Joshua Levin

Thank you for this informative and provocative article.
I found your site through “The Food Lab” article on cooking hard-boiled eggs. Maybe you’ve noticed an increase in traffic since its publication?
I look forward to perusing some of your older articles and ones still to come.
Cheers!
Thanks Egg-sactly! Clearly you’re into eggs, so I appreciate you checking out this other content as well.
Other variant is possible also
What’s the “other variant”?
Great article Josh! Very well analyzed and it really hit home with me as well. The reason I left my last job before B-School was exactly because I had trouble getting up in the morning knowing that the drinkable yogurt I was marketing to adolescents gave you “good energy”, even though it was loaded with sugar. Also, had to tout the amazing fact that one serving provided an adolescent’s nutrient-hungry body with a whopping 17% of their daily calcium needs. Day 1 on the job I asked my boss, “why don’t they just drink a glass of milk and get 100% of their daily calcium needs?” That boss ended up hating me.
I strictly recommend not to hold back until you earn enough amount of money to order all you need! You should just take the business loans or college loan and feel free