Spoiled Food and Spoiled Surprises: Inspection Anticipation and Regulatory Compliance

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.