1 / 21

Differentiation in Food Safety

Differentiation in Food Safety. Ginger Z. Jin University of Maryland (based on joint work with Phillip Leslie at Stanford). What Do I Mean by Food Safety?. Food Safety = the impact of food intake on health risk Short run – throw-up, food poisoning  hygiene

Download Presentation

Differentiation in Food Safety

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript


  1. Differentiation inFood Safety Ginger Z. Jin University of Maryland (based on joint work with Phillip Leslie at Stanford)

  2. What Do I Mean by Food Safety? Food Safety = the impact of food intake on health risk • Short run – throw-up, food poisoning  hygiene • Long run – obesity, heart attack, diabetes  nutrition contents production methods

  3. Two Meanings of Differentiation Actual difference in food safety

  4. A Case Study of Los Angeles Restaurants • Nov. 16-18, 1997 CBS 2 News “Behind the Kitchen Door” • January 16, 1998, LA county inspectors start issuing hygiene grade cards • A grade if score of 90 to 100 • B grade if score of 80 to 89 • C grade if score of 70 to 79 • score below 70 actual score shown • Grade cards are prominently displayed in restaurant windows • Score not shown on grade cards

  5. Actual Differentiation

  6. First Cut • Major impacts after grade cards (GC) • dramatic increase in hygiene quality • decrease in the dispersion of hygiene quality • revenue more responsive to hygiene grade • food-borne illnesses drop 20% • More information  less differentiation

  7. Why Differentiate After GC? • Information is equal • Different cost to maintain good hygiene • Burger, Chinese cuisine, Sushi Bar • Different benefit from good hygiene • consumer willingness to pay for good hygiene • local competition

  8. Why Differentiate Before GC? • Consumers know nothing • no restaurant bothers to maintain good hygiene • pure noise • Consumers know everything • restaurants choose to “be dirty” or “be clean” • no response to GC • Consumers have lousy information • equally lousy everywhere • dispersion in the amount of information noise

  9. How Could Information Differ Before GC? Depends on the extent of consumer learning • chain affiliation • => possible free-riding for franchisees • degree of repeat customers in local region • => regional clustering in hygiene quality

  10. Basic evidence - chain affiliation

  11. Variation Across Chains

  12. Statistically ... • chains have better hygiene than independent restaurants • company-owned chain units have better hygiene than franchised units • better hygiene if a chain has a greater number of units in LA county • better hygiene if a chain has a greater % of units in LA county

  13. Repeat Customers-- Santa Monica before GC Upper 1/3 Lower 1/3

  14. Statistically ... • better hygiene in heavy retail districts • better hygiene in hotel districts • worse hygiene in recreational districts • no difference in white-collar employment districts • no difference as to whether competes with at least one chain in the same census tract

  15. Region clustering before GC

  16. Regional clustering after GC

  17. Statistically ... • Significant regional clustering in information structure • Different information structures lead to different reputation incentives, thus different hygiene quality

  18. Summary - Information Matters! • Large impact of GC suggests low degree of consumer learning for most restaurants before GC • No voluntary revelation before GC, although the inspection records are public • Zagat restaurants only slightly better in hygiene • Chain affiliation is an effective source of information • A small degree of franchisee free-riding • Regional differences in the degree of consumer learning impact hygiene quality for independent restaurants • Bottom line: only 25% “A” restaurants before GC, now is over 80%

  19. 1.Why is National Restaurant Association against GC?2. Why don’t other counties adopt the same GC policy? Two Remaining Questions

  20. Lessons From Other Markets • Voluntary disclosure of HMO quality is incomplete and provides extra tools for HMOs to differentiate (Jin RAND) • Grade card regulation may lead to patient selection (Dranove et al. JPE) or inspector bias (Jin and Leslie in progress) • Private certifiers have strong incentives to differentiate in grading precision and grading criteria (Jin, Kato and List 2004)

More Related