Fudging the Nudge: Information Disclosure and Restaurant Grading

Article excerpt


A. Design Matters

How do we design a better grading system? We now articulate policy implications of our study that may apply to grading jurisdictions specifically and inspection systems generally.

First, our study underscores the need for transparency about transparency. The availability of rich inspection microdata empowers information intermediaries to rigorously examine how well food safety programs function and to convey that information more persuasively to consumers. (308) As Sam Issacharoff argues, "What is needed is a regulatory regime that would promote a market for intermediaries." (309) The Obama Administration's emphasis on microdata disclosure potentially facilitates such intermediation. (310) Indeed, the brunt of this Article can be considered a form of information intermediation that sheds light on restaurant grades. New York--one of only several major metropolitan areas that makes microdata readily available (see Table 1)--is a model jurisdiction in that sense. All jurisdictions should follow New York's lead and release full health-inspection data in machine-readable form. The disclosure should be comprehensive, including inspector identification codes, specific violations and point scores, types of violations, and data from restaurants that no longer exist. Even New York falls short of this goal, making it much more difficult to comprehensively assess its grading system.

The benefits of wholesale disclosure extend beyond policy evaluation. Wholesale disclosures empower intermediaries to deliver information to consumers in more direct and effective ways. Inspection microdata, for example, would enable Yelp, a website that aggregates information about ratings of local businesses reaching roughly 66 million unique visitors per month, (311) to include health inspection data in its restaurant characteristics. Similarly, the website Scorecard compiles data from over four hundred government and scientific websites to provide environmental information about localities. (312) Disclosure of real property records by state and local government agencies empowers intermediaries like Zillow, a website that uses fine-grained information on 100 million homes, (313) to deliver simplified, useful information, such as local home-value trends that are based on housing-price models, directly to home buyers. Smart phones permit dissemination to the immediate time and place of decisionmaking.

Second, inspection criteria should be simplified to reduce variability across inspectors. The same behavioral insight of simplifying information for consumption should also apply to information generation. New York, for example, could adopt a scoring worksheet closer to San Diego's, which would likely increase consistency across inspections. Ideally, agencies would conduct experiments to choose violation items and to determine the optimal level of inspection worksheet complexity. (314) A complementary approach would be to conduct more frequent, but shorter, inspections of a random subset of violations (weighted by risk). Such an approach might enable more objective measurement because inspectors could focus on a smaller set of more easily measurable violations (e.g., food temperature of three randomly chosen items) and restaurateurs would have little time to clean up during the inspection. Removing inspector discretion by design (i.e., by random selection of objectively measurable indicators) may greatly improve the accuracy of inspection scores. Modern survey measurement relies on the same principle: random sampling of respondents removes surveyors' discretion to choose respondents. (315)

Overly complex criteria appear to undermine inspections in other regulatory fields. As John and Valerie Braithwaite convincingly demonstrate, the complexity and specificity of criteria plague the consistency of nursing home inspections. (316) Similarly, inspections by the Mine Safety and Health Administration (MSHA) and the Nuclear Regulatory Commission (NRC), which have no formalized score sheets (317) despite a large number of possible violations, (318) are subject to sharp criticisms of inconsistency. …