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The Effect of Information Salience on Product Quality: Louisville Restaurant Hygiene and Yelp.com

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  • Makofske, Matthew

Abstract

In late June 2013, the city of Louisville, Kentucky, announced plans to provide restaurant health inspection data to Yelp.com for publication on their popular online consumer-review forum. These data were already publicly available on the city's website. I utilize this partnership to test whether an increase in the salience of disclosed quality information on a particular product attribute, induces sellers to improve product quality along that dimension. Consumers use Yelp to gather information on many characteristics of a restaurant's product. Consumers depend less on Yelp to learn about chain-affiliated restaurants, because much of this information is conveyed through the chain's reputation. Using data from over 11,000 Louisville restaurant health inspections, I compare health inspection performance for independent and chain-affiliated restaurants, before and after the announcement of the partnership. Controlling for a variety of factors, I estimate that this increased salience caused substantial improvement in independent restaurant hygiene. The average treatment effect is estimated to be a 12-14% decrease in health score point deductions, and a 29-37% decrease in critical violations (those deemed to be the greatest public health risk), per inspection. The effect of the Louisville-Yelp partnership on health score point deductions is entirely evident in restaurants' first inspections following its announcement, where the estimated effect is a 14-16% relative decrease.

Suggested Citation

  • Makofske, Matthew, 2017. "The Effect of Information Salience on Product Quality: Louisville Restaurant Hygiene and Yelp.com," MPRA Paper 79690, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:79690
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    References listed on IDEAS

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    1. Raj Chetty & Adam Looney & Kory Kroft, 2009. "Salience and Taxation: Theory and Evidence," American Economic Review, American Economic Association, vol. 99(4), pages 1145-1177, September.
    2. Ginger Zhe Jin & Jungmin Lee, 2014. "Inspection technology, detection, and compliance: evidence from Florida restaurant inspections," RAND Journal of Economics, RAND Corporation, vol. 45(4), pages 885-917, December.
    3. Ginger Zhe Jin & Phillip Leslie, 2003. "The Effect of Information on Product Quality: Evidence from Restaurant Hygiene Grade Cards," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 118(2), pages 409-451.
    4. Raj Chetty, 2009. "The Simple Economics of Salience and Taxation," NBER Working Papers 15246, National Bureau of Economic Research, Inc.
    5. Bryan Bollinger & Phillip Leslie & Alan Sorensen, 2011. "Calorie Posting in Chain Restaurants," American Economic Journal: Economic Policy, American Economic Association, vol. 3(1), pages 91-128, February.
    6. Ginger Zhe Jin & Jungmin Lee, 2018. "A Tale of Repetition: Lessons from Florida Restaurant Inspections," Journal of Law and Economics, University of Chicago Press, vol. 61(1), pages 159-188.
    7. Michael Luca & Jonathan Smith, 2013. "Salience in Quality Disclosure: Evidence from the U.S. News College Rankings," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 22(1), pages 58-77, March.
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    Citations

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    Cited by:

    1. Kovács, Balázs & Lehman, David W. & Carroll, Glenn R., 2020. "Grade inflation in restaurant hygiene inspections: Repeated interactions between inspectors and restaurateurs," Food Policy, Elsevier, vol. 97(C).
    2. Matthew P. Makofske, 2024. "Disclosure policy design and regulatory agent behavior," American Journal of Agricultural Economics, John Wiley & Sons, vol. 106(1), pages 118-144, January.
    3. Makofske, Matthew Philip, 2020. "Mandatory disclosure, letter-grade systems, and corruption: The case of Los Angeles County restaurant inspections," Journal of Economic Behavior & Organization, Elsevier, vol. 172(C), pages 292-313.
    4. Yim, Hyejin & Katare, Bhagyashree & Cuffey, Joel, 2022. "Does Increasing Minimum Wage Impact Service Quality? Evidence from Restaurant Food Safety Inspections," 2022 Annual Meeting, July 31-August 2, Anaheim, California 322411, Agricultural and Applied Economics Association.
    5. Makofske, Matthew Philip, 2025. "Anticipated monitoring, inhibited detection, and diminished deterrence," Journal of Economic Behavior & Organization, Elsevier, vol. 236(C).
    6. repec:ags:aaea22:343681 is not listed on IDEAS
    7. Makofske, Matthew Philip, 2021. "Spoiled food and spoiled surprises: Inspection anticipation and regulatory compliance," Journal of Economic Behavior & Organization, Elsevier, vol. 190(C), pages 348-365.
    8. Makofske, Matthew P., 2024. "Anticipated Inspection, Inhibited Detection, and Diminished Deterrence," 2024 Annual Meeting, July 28-30, New Orleans, LA 343681, Agricultural and Applied Economics Association.
    9. Makofske, Matthew, 2025. "Making the Violation Fit the Punishment? Mandatory Disclosure, Discontinuous Penalties, and Inspector Behavior," MPRA Paper 126440, University Library of Munich, Germany.
    10. Yoshimoto, Hisayuki & Zapechelnyuk, Andriy, 2024. "Are there “Ratatouille” restaurants? On anticorrelation of food quality and hygiene," The Quarterly Review of Economics and Finance, Elsevier, vol. 98(C).

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    JEL classification:

    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health
    • K32 - Law and Economics - - Other Substantive Areas of Law - - - Energy, Environmental, Health, and Safety Law
    • L15 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Information and Product Quality

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