(MIT Press, 2003-05) Jin, Ginger Zhe; Leslie, Philip
This study examines the effect of an increase in product quality information to consumers on firms’
choices of product quality. In 1998, Los Angeles County introduced hygiene quality grade cards to be
displayed in restaurant windows. We show that the grade cards cause (i) restaurant health inspection
scores to increase, (ii) consumer demand to become sensitive to changes in restaurants’ hygiene quality,
and (iii) the number of foodborne illness hospitalizations to decrease. We also provide evidence that
this improvement in health outcomes is not fully explained by consumers substituting from poor hygiene
restaurants to good hygiene restaurants. These results imply the grade cards cause restaurants to make
hygiene quality improvements.
