Economist finds more pluses than minuses in restaurant letter grades.

Letter grading of restaurants following inspection has substantial short-term benefits—as well as some drawbacks—according to Stanford University economist Pbillip Leslie, Mr, Leslie, who is assistant professor of strategic management at Stanford, has been studying the impact of Los Angeles County's report card-style letter grading, which went into effect in 1998, "The lesson for counties is that it's always better to provide more information," Leslie told Food Protection Report (FPR), His interest was in the effect that letter grades, prominently displayed on L,A, County restaurant windows, would have on consumers and the market in general, "For an economist, this was an ideal case study There was a sudden , dramatic change in the amount of information provided to the consumer, and we could then compare the before-and-after effects," Leslie obtained county data on every restaurant inspection two years before and one year after the start of letter grading. He also reviewed restaurants' revenues during each quarter over the same period by analyzing sales tax data. Finally, working with colleague Ginger Zhe Jin, assistant professor of economics at the University of Maryland, he analyzed hospitalization data from the California Office of Statewide Health Planning and Development to compare the number of food-related hospitalizations in Los Angeles County with those in the rest of California, as well as with the number of non-food-related hospitalizations in Los Angeles County Leslie found that letter grading resulted in a dramatic improvement in restaurant inspection scores, "We found that scores went up. About 25 percent of restaurants would have earned an A rating prior to 1998, Within a year after the new county law went into effect , well over 50 percent of restaurants scored an A," he said. In addition, he discovered that consumers tended to choose restaurants with good grades. Specifically, Leslie found that establishments earning an A obtained an average of 5,7 percent higher revenue than before the grade cards were required, B-grade restaurants experienced an 0,7 percent increase. For C-grade restaurants, revenue decreased by 1 percent, "After the grade cards came in, revenue was very sensitive to what grade a restaurant got," Leslie said. He could not calculate profits, however, since profits equal revenue minus cost, and he had no data on the costs restaurants had to incur to get an A rating. More dramatically, the research revealed that grade cards caused a 20 percent decrease in the number of food-related hospitalizations in …