Spoiled Food and Spoiled Surprises: Inspection Anticipation and Regulatory Compliance

Makofske, Matthew (2020): Spoiled Food and Spoiled Surprises: Inspection Anticipation and Regulatory Compliance.

Abstract

Periodic inspections, in which firms are punished for detected violations, are a popular means of enforcing environmental, health, and safety regulations. The effectiveness of these programs typically hinges on the timing of inspections being unannounced and difficult to anticipate, lest firms comply only when they believe inspections are likely. In Las Vegas, Nevada, many facilities—e.g., casinos, hotels, and shopping malls—house multiple food-service establishments, several of which are often inspected during the same inspector visit. Within such visits, all but the first establishment inspected likely anticipate their next inspection to a meaningful extent. Using data which record inspection starting times and span more than six years, I find that establishments in such facilities perform significantly and substantially worse when they receive the first inspection of a visit. Relative to their own performances on days when inspected later than first, establishments are assessed 21% more demerits and cited for 31% more critical violations in these surprise inspections.

• Item Type: MPRA Paper
• Language: English
• Keywords: inspection, compliance, regulation, enforcement, restaurant hygiene
• Subjects: K - Law and Economics > K3 - Other Substantive Areas of Law > K32 - Environmental, Health, and Safety Law; Q - Agricultural and Natural Resource Economics ; Environmental and Ecological Economics > Q1 - Agriculture > Q18 - Agricultural Policy ; Food Policy

References

Blundell, W. (2020). When threats become credible: A natural experiment of environmental enforcement from Florida. Journal of Environmental Economics and Management 101, 102288.

Blundell, W., G. Gowrisankaran, and A. Langer. 2020. "Escalation of scrutiny: The gains from dynamic enforcement of environmental regulations." American Economic Review, 110(8): 2558-85.

Dai, W. and M. Luca (2020). Digitizing disclosure: The case of restaurant hygiene scores. American Economic Journal: Microeconomics 12(2), 41-59.

Duflo, E., M. Greenstone, R. Pande, and N. Ryan (2018). The value of regulatory discretion: Estimates from environmental inspections in India. Econometrica 86(6), 2123-2160.

Eckert, H. (2004). Inspections, warnings, and compliance: The case of petroleum storage regulation. Journal of Environmental Economics and Management 47(2), 232-259.

Eckert, H. and A. Eckert (2010). The geographic distribution of environmental inspections. Journal of Regulatory Economics 37 (1), 1-22.

Gray, W. and M. E. Deily (1996). Compliance and enforcement: Air pollution regulation in the U.S. steel industry. Journal of Environmental Economics and Management 31(1), 96-111.

Gray, W. B. and J. P. Shimshack (2011). The Effectiveness of Environmental Monitoring and Enforcement: A Review of the Empirical Evidence. Review of Environmental Economics and Policy 5(1), 3-24.

Helland, E. (1998). The enforcement of pollution control laws: Inspections, violations, and self-reporting. Review of Economics and Statistics 80(1), 141-153.

Hoffmann, S., B. Maculloch, and M. Batz (2015). Economic burden of major foodborne illnesses acquired in the United States. Economic information bulletin number 140, United States Department of Agriculture Economic Research Service.

Ibanez, M. and M. W. Toffel (2020). How scheduling can bias quality assessment: Evidence from food safety inspections. Management Science. 66(6), 2396-2416.

Jin, G. Z. and J. Lee (2018). A tale of repetition: Lessons from Florida restaurant inspections. Journal of Law and Economics 61(1), 159-188.

Jin, G. Z. and P. Leslie (2003). The effect of information on product quality: Evidence from restaurant hygiene grade cards. The Quarterly Journal of Economics 118(2), 409-451.

Laplante, B. and P. Rilstone (1996). Environmental inspections and emissions of the pulp and paper industry in Quebec. Journal of Environmental Economics and Management 31(1), 19-36.

Makofske, M. P. (2019). Inspection regimes and regulatory compliance: How important is the element of surprise? Economics Letters 177(C), 30-34.

Makofske, M. P. (2020). Disclosure policies in inspection programs: The role of specif�c deterrence. Economics Letters 196.

Makofske, M. P. (2020). The effect of information salience on product quality: Louisville restaurant hygiene and Yelp.com. The Journal of Industrial Economics 68(1), 52-92.

Muehlenbachs, L., S. Staubli, and M. Cohen (2016). The impact of team inspections on enforcement and deterrence. Journal of the Association of Environmental and Resource Economists 3(1), 159-204.

Southern Nevada Health District (2020). Entire restaurant/food establishment database. Retrieved from https://www.southernnevadahealthdistrict.org/permits-and-regulations/restaurant-inspections/developers/.

Telle, K. (2009). The threat of regulatory environmental inspection: Impact on plant performance. Journal of Regulatory Economics 35(2), 154-178.