A New City OS by Stephen Goldsmith

Author:Stephen Goldsmith
Language: eng
Format: epub
Publisher: Brookings Institution Press

Reputational Ratings: Distributed Enforcement

Newer approaches to protecting health and safety do not rely so much on traditional credentialing but, instead, add or substitute reputational ratings. These approaches augment traditional city approaches or even replace them. In any of these scenarios, the distributed system heavily involves the role of consumers. We look at these options not so much in terms of whether government should legislate or whether plumbers should self-regulate but more as a blend that can be varied, determined by risk.

Because these new modes of regulation involve more social action and less hierarchical command-and-control action they allow a business to enter the market more quickly. This distributed system facilitates more variety in the regulatory programs and reduces the barriers to entry for small businesses and new businesses with innovative products.

One reason these tools work in certain shared economy situations such as with Uber, Lyft, and Airbnb is because the consequences of the risks are low and the amount of socially available information is great. In these situations, government should still propose standards, but ease the barriers to entry and speed the results with lighter touches. Officials can use these new tools to produce sufficient safety in a distributed system, reducing costs of doing business in a city while concurrently gathering more information that will make the marketplace safer and more efficient.

Distributed “Inspecting”

In 2013 the City of San Francisco tried something new; it worked with Yelp to display health inspector ratings on restaurant pages alongside visitor ratings and comments. For years, professional public health departments resisted this integration, fearing that the judgment of their inspectors would lose value if presented alongside less formal responses from diners. Unlike an inspector’s professional search for material infractions, foodborne illness may or may not be directly subject to a diner’s observation. But there are thousands more diners than inspectors, and the warning signs to future customers from these customers might, indeed, be helpful.

Harvard Business School professor Michael Luca has researched Yelp restaurant comments and San Francisco health department ratings.16 He found that customers make, if not good inspectors, at least good predictors of future events. With coauthor Yejin Choi, Luca used Yelp text and ratings and found that the Yelp reviews correctly classified more than 80 percent of restaurants; that is, the Yelp data identified the same bad actors as the inspectors who observe that their inspections are qualitatively different than those of a diner.

The Luca results demonstrate that the social information provides an invaluable additional source of information. Incorporating that “amateur” report does present challenges in terms of what should be reported and in what manner. Yet, as Luca notes, “restaurants whose low hygiene ratings are posted on Yelp tend to respond by cleaning up and performing better on their next inspections.”17 Luca’s work underscores the critical point that transparently available information drives conduct. Most owners respond positively to restaurant grades; for example, cleaning up the shop to achieve a higher rating. This model could be used across all interventions. It would also alleviate

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