Friday, May 1, 2020

Yelping about restaurant health violations, by Dai and Luca

Online reviews, like Yelp, can play an effective role in disseminating information about restaurant hygiene scores...

Digitizing Disclosure: The Case of Restaurant Hygiene Scores
By Weijia Dai and Michael Luca*
American Economic Journal: Microeconomics 2020, 12(2): 41–59

Abstract: Collaborating with Yelp and the City of San Francisco, we revisit a canonical example of quality disclosure by evaluating and helping to redesign the posting of restaurant hygiene scores on We implement a two-stage intervention that separately identifies consumer response to information disclosure and a disclosure design with improved salience—a consumer alert. We find score posting is effective, but improving salience further increases consumer response.

They write:

"The rise of online platforms raises the opportunity to revisit disclosure initiatives and to use a design economics lens to improve decisions about where and how disclosure is delivered.
"Our intervention proceeds in two stages. In the first stage, which begins in early 2013, Yelp starts posting hygiene scores on San Francisco restaurants. We analyze the impact of the score posting using a difference-in-differences strategy, comparing differential changes in restaurant demand after the score posting between restaurants with low hygiene scores that are more likely to be affected by the score posting (as predefined by the city) and those with higher scores.2  To shed light on demand,
we drew on purchase intention measures, such as a user calling or seeking directions to a restaurant or clicking on the restaurant’s own website link. We find that hygiene score posting on Yelp leads to a 13 percent decrease in purchase intentions for restaurants with low hygiene scores.
"Following the initial hygiene score posting intervention, in the second stage, we worked with Yelp in 2015 to develop a “hygiene alert”—a salient message that appears only on the Yelp pages of restaurants with low hygiene scores. Such low-score restaurants are identified by the city as having “poor” operating conditions with “high-risk” hygiene violations.

"We find a further 7 percent decrease in purchase intentions for restaurants with low scores due to hygiene alerts, and an 11 percent decrease in the number of reviews, nearly doubling the effect of the score posting for these businesses. On the restaurant side, although there is no evidence showing an improvement of restaurant hygiene scores across restaurants, we find suggested evidence of a decrease in the probability that the low-score restaurants will receive low scores again after the alert."

No comments: