Mandatory Food Recalls
Food recalls are important for two reasons. One is that they mitigate harm when product failures occur. Another is that they augment incentives to invest in safety. When recalls are justified for their mitigation value, it makes sense that regulatory bodies be granted more control of the recall process in order to improve the manner in which recalls are conducted. Such is the stated intent of most proposals for changing the food recall system. However, we show that recalls can be justified by their incentive effect alone. In fact, recalls can be beneficial even when the social value of the harm they mitigate is so small as to be less than the costs of carrying them out. In these cases, it is important that proposals designed to improve the recall process avoid unintended side effects. First, proposals should avoid redirecting regulatory resources towards recall oversight and away from other, more pressing, food safety priorities. Second, it is important to avoid creating an environment in which agencies face a greater need to justify their recall requests. When the mitigation value of recalls is small, this may inadvertently prevent the initiation of recalls that could otherwise play a positive role in aligning incentives for safety.
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