Revealed Consumer Preferences and SPF Labeling on Sunscreens

Healthy People 2020, an initiative by the U.S. Department of Health and Human Services, aims to increase the percent of adults who follow protective measures that may reduce the risk of skin cancer by 73.7 percent by 2020. One recommended protective measure is to use a sunscreen with a sun protection factor (SPF) of 15 or above. SPF is a measure of the fraction of ultraviolet-B radiation that reaches the skin under recommended use of the sunscreen. However, increasing the SPF of sunscreen over SPF 50 may not significantly increase the degree of sun protection. In the European Union and Australia, the maximum allowable SPF on sunscreen labels is “SPF 50+”. Though the U.S. Food and Drug Administration (FDA) proposed the same maximum SPF labeling in 2011, the standard has not yet been adopted in the United States.

Consumers may be confused about the SPF value and the recommendations about sunscreen use. In randomized experiments in Europe (Autier et al., 1999 and Autier et al., 2000), the European Organization for Research and Treatment of Cancer found that sunbathers increased the length of their sun exposure when using sunscreen with a higher SPF. Additionally, in survey about sunscreen terminology, Yong et al. (2015) found that though 72 percent of participants knew that sunscreens with higher SPF provide greater protection against skin cancer, only 43 percent of participants understood the definition of SPF. These studies suggest that consumer preferences for sun protection may not align with medical recommendations. In this paper, we use revealed-preference methods to examine willingness-to-pay for sunscreens with higher SPFs and compare these estimates to medical recommendations and the willingness-to-pay to avoid skin cancer.

In this study, we first estimate IRI scanner data to estimate the price-premiums for sunscreens with higher SPFs in the mass sunscreen market. Preliminary results suggest that increasing the SPF by 1 increases the price of sunscreen by 0.44 percent. Then, using a hedonic pricing model, we combine the scanner data with time-variant supply-side data from the FDA’s drug registration and listing database, Dun and Bradstreet, and IMS to estimate the revealed willingness-to-pay for increased SPF. We also estimate the shape of the willingness-to-pay curve to determine whether consumers’ preferences align with recommendations about sunscreen use. Finally, we use stated-preference estimates from the skin cancer literature to calculate the willingness-to-pay to avoid skin cancer and compare these estimates with the willingness-to-pay for sun protection in the form of increased SPF.