Social and Behavioral Sciences Commons^™

What Are The Financial Implications Of Public Quality Disclosure? Evidence From New York City’S Restaurant Food Safety Grading Policy, Rachel Meltzer, Michah W. Rothbart, Amy Ellen Schwartz, Thad Calabrese, Diana Silver, Tod Mijanovich, Meryle Weinstein

Center for Policy Research

Grading schemes are an increasingly common method of quality disclosure for public services. Restaurant grading makes information about food safety practices more readily available and may reduce the prevalence of foodborne illnesses. However, it may also have meaningful financial repercussions. Using fine-grained administrative data that tracks food safety compliance and sales activity for the universe of graded restaurants in New York City and its bordering counties, we assess the aggregate financial effects from restaurant grading. Results indicate that the grading policy, after an initial period of adjustment, improves restaurants’ food safety compliance and reduces fines. While the average effect on …