You will recall that I’ve posted in the past about “junk disclosure” – that is, legal requirements to disclose information (either in reports or in the form of disclaimers on communications) that do not give the public useful information. A recent article in the University of Pennsylvania Law Review provocatively suggests that disclosure mandates overall fail to provide the targeted beneficiaries with useful information, and whatever benefits do accrue are swamped by costs in money and time, as well as bad unintended consequences.
In this article, titled “The Failure of Mandated Disclosure” professors Omri Ben-Shahar and Carl E. Schneider look at a wide variety of disclosure mandates. Disclosure requirements are pervasive – they appear in areas of finance, insurance, telecommunications, sales of goods and services, leases, contracts, criminal procedure, education, transportation – and campaign finance of course. Yet, “[t]he great paradox of the Disclosure Empire is that even as it grows, so also grows the evidence that mandated disclosure repeatedly fails to accomplish its ends.” Take nutrition labeling – an area where the informal view is pretty positive. This article discusses the empirical evidence that consumers , if they read the labels at all, can’t understand them, have other sources of information that are more useful, and in any case do not improve their eating habits.