Jin, Ginger Zhe and Phillip Leslie. 2003. “ The Effect of Information on Product Quality: Evidence from Restaurant Hygiene Grade Cards.” Quarterly Journal of Economics, 118(2): 409-51.

The Health Effects of Posting Restaurant Hygiene Grades (RHG): Interpreting the estimates of Jin and Leslie (2003)

ByDavid E. Harrington

andJaret Treber

6 slides, not including the title slide

Jin and Leslie (2003) find that the mandatory posting of hygiene grades from health inspections of restaurants in Los Angeles County, beginning in 1998, decreased food-related hospitalizations by roughly 20 percent.

The number of hospital admissions of food-related and non-food-related digestive diseases in CA zip codes over the years from 1995 to 1999.

The fraction of restaurants within each zip code that were subject to mandatory posting of hygiene grades in the months from the beginning of 1996 to the end of 1998.

Data:

Dec 16, 1997—LA County Board of Supervisors passed the HRG law, a month after a local TV report “Behind the Kitchen Door.”

Jan. 16 1998—Law goes into effect: optional for incorporated cities phased-in for unincorporated cities

1994 1995 1996 1997 1998 1999 2000

634601

405

309Los Angeles

County

Rest of California

Figure . Hospitalizations for Food-Related Digestive Disorders, 1995-1999Ad

mis

sion

s (#

per

yea

r)

• In Los Angeles, hospitalizations for digestive disorders decreased by 27.1 percent in the year after restaurant report cards were first issued compared to the year before they were issued.

• In the rest of California, hospitalizations for digestive disorders decreased by 5.3 percent over the same period.

• Therefore, restaurant hygiene report cards decreased hospitalizations for digestive disorders by approximately 22 percent.

“The finding that grade cards reduce illnesses is fairly striking in itself. Providing people with better information causes people to change their purchase decisions and causes firms to modify their behavior, leading to improved health for people. Moreover, the effect is large in magnitude, possibly a 20 percent decrease in food-related hospitalizations” (Jin and Leslie, 2003).

“Behind the Kitchen Door,” aka The Market for Lemons

Jin and Leslie’s (2003) empirical model:

Simplify--ignore voluntary posting of restaurant grades and fixed effects…

ln (𝑎𝑖𝑗𝑡 )=𝛼+𝛽𝑚𝑖𝑡+𝛾 𝑓𝑜𝑜𝑑𝑖𝑗𝑡 ∙𝑚𝑖𝑡+𝜖 𝑖𝑗𝑡

where { 𝑎𝑖𝑗𝑡

𝑚𝑖𝑡  𝑓𝑜𝑜𝑑𝑖𝑗𝑡

Number of admissions for digestive diseases in zip code i

Fraction of the zip code subject to hygiene report cards

binary variable for food-related digestive diseases

( ln (𝑎𝑖𝑗𝑡 )|𝑚=0 , 𝑓𝑜𝑜𝑑=1 )=𝛼looking only @ food-related digestive disorders & before R-H Grades

looking only @ food-related digestive disorders & after R-H Grades in LA County zips

( ln (𝑎𝑖𝑗𝑡 )|𝑚=1 , 𝑓𝑜𝑜𝑑=1 )=𝛼+𝛽+𝛾

Hence, the effect of the R-H Grades is

( ln (𝑎𝑖𝑗𝑡 )|𝑚=1 , 𝑓𝑜𝑜𝑑=1 )− ( ln (𝑎𝑖𝑗𝑡 )|𝑚=0 , 𝑓𝑜𝑜𝑑=1)=𝛼+𝛽+𝛾−𝛼=𝛽+𝛾

0.197From Table VI of Jin and Leslie (2003)

Jin and Leslie (2003) has 110 citations. I read the abstracts of 10

• Subsequent studies disagree on whether restaurant hygiene grades reduce food-related digestive diseases: Ho (2002) finds they don’t and Jin and Leslie (2009) find that they do.

• Grade inflation (Ho, 2002) • Regulations increase quality but may reduce variety of options (Hotz

and Xiao (2011) Might some dirty but cheap restaurants be okay?

• More information regulations and their effects: mandatory calorie posting (Bollinger, Leslie, and Sorensen, 2011)

• Effectiveness of Reputational incentives as an alternative to restaurant hygiene grades (Jin and Leslie, 2009)

• Puzzle—if favorable grades increased revenue why didn’t restaurants post the results before they were required to? Gabaix and Laibson (2006) argue that “informational shrouding” is prevalent in competitive markets. It is possible that posting report cards will just drive everyone to eat at home, harming even the restaurants with high grades.