by Jeff Sovern
I just read a terrific article by Richard Craswell of Stanford, Static Versus Dynamic Disclosures, and How Not to Judge Their Success or Failure, 88 Washington Law Review 333 (2013). Here's the abstract:
Disclosure laws can serve many different purposes. This Article is the first to distinguish two of those purposes, which I call static and dynamic disclosures. In brief, static disclosures aim to improve consumers’ choice from among the set of products that are already available on the market. By contrast, dynamic disclosures aim to improve the range of products from which consumers must choose, by sharpening sellers’ incentives to improve the quality of their products.
The Article also discusses the various ways in which the effects of static and dynamic disclosures might be measured and evaluated. In doing so, it examines and mildly criticizes the position recently advanced by Professors Omri Ben-Shahar and Carl Schneider, who argue (approximately) that disclosure almost never works, and that it should not even be considered as a policy option. While I agree with much else that Professors Ben-Shahar and Schneider say, their claim that disclosures almost never work is far too broad.
Craswell uses as an example of dynamic disclosures something that should be familiar to readers of this blog; namely, the health department grades for restaurants that in Los Angeles were found to reduce hospitalizations caused by food-borne diseases (but not in New York, apparently). The disclosures are designed to change seller behavior by causing restaurateurs to clean up their restaurants.