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Buckle Up or Slow Down? New Estimates of Offsetting Behavior and Their Implications for Automobile Safety Regulation
Abstract
This study provides a detailed examination of the determinants of motor vehicle fatalities and offers a new assessment of the effects of automobile safety regulation. An empirical analysis is difficult because drivers are unlikely to remain passive in the face of changes in their safety environment. This offsetting behavior hypothesis is cast in a broad framework that brings together elements from the economics and cognition literatures. This approach allows us to highlight key maintained assumptions in previous analyses and to consider how econometric evidence can inform discussions about highway safety policy. The econometric estimates reveal that, while imprecisely estimated, offsetting behavior is quantitatively important and attenuates the effects of safety regulation on total motor vehicle fatalities. Cognitive elements, the relative costs of repairs, and the functional form of the estimating equation are shown to play prominent roles in the analysis of safety regulation. Our estimates imply that current highway policy initiatives-mandating restraint systems and relaxing restrictions on the maximum speed limit-are likely to have only a modest net effect on reducing motor vehicle fatalities.
... ), but the evidence on the impact of higher speed limits on U.S. traffic fatality rates is mixed. Several studies have shown that the adoption of the 55-mph speed limit in 1974 reduced the number of traffic fatalities (Meier and Morgan 1981; Kamerud 1988; Chirinko and Harper 1993), but the results have been less clear for speed limit increases in the 1990s. Aggregate national analyses of the increase to a 65-mph limit have alternatively shown a significant increase in fatalities on interstates (Baum, Lund and Wells 1989; Baum, Wells, and Lund 1990, 1991), a one-year temporary increase after implementation (Chang, Chen, and Carter 1993), and a decline in the overall state fatality rate due to a diversion of traffic (and corresponding fatalities) from other roads to rural interstates with higher speed limits (Lave and Elias 1994; Houston 1999). ...
... The relationship between driving under the influence of alcohol and traffic safety has been well established, and one way to measure this effect is to use a variable for alcohol consumption. Direct measures of alcohol gallons consumed per capita have been positively associated with fatality rates in American states (Chirinko and Harper 1993; Legge and Park 1994; Houston, Richardson and Neeley 1996), and we use a proxy measure of this for the percent of household consumption devoted to alcohol products. This measure could be seen as a control variable, but it also reflects a variety of policy programs designed to reduce consumption and drinking under the influence. ...
... In addition, because we are measuring impacts at the aggregate level, countries with higher income may be able to devote more tax resources to road safety features, and higher income taxpayers may demand more safety features. Studies of American states show that those states with higher average income experience lower fatality rates (Chirinko and Harper 1993; Legge and Park 1994; Houston et al 1996). We use GDP per capita to measure average income, and we expect it to be negatively related with the traffic fatality rate. ...
Abstract This preliminary research examines,traffic safety variables that are influencing the behavior of interest groups in the European Union. Utilizing a fixed effects estimation model, this research identifies variables that are influencing traffic deaths in the 15 member states that made up the European Union prior to May 1, 2004. Time series data analyzing the impact of vehicle concentration in member states, unemployment, length of roadways, legal driving blood alcohol levels, speed on roadways, gross domestic product per capita, and alcohol consumption per capita are examined,across time in these countries. Further research on this question will investigate how interest groups are altering the relationship between these variables and the dependent variable, traffic fatalities. In turn, future research will investigate the lobbying efforts of interest groups as they attempt to influence traffic safety policy in the European Union. 3
... In particular, prospect theory literature has challenged assumptions that probabilities are objective and their size does not matter and that the utility of a specific outcome is independent of how it is framed (Kahneman and Tversky, 1979;Tversky and Kahneman, 1986;Machina, 1987). Chirinko and Harper (1993) have applied prospect theory to risk compensation. We use Viscusi's (1989Viscusi's ( , 1990Viscusi's ( , 1992) "prospective reference model" to extend that analysis. ...
... A study by Chirinko and Harper (1993) claimed that offsetting behavior was important. They updated the Peltzman study to 1986, examined the 55 mile per hour speed limit, examined accident rates as well as fatality rates, and paid close attention to specification issues. ...
Risk compensation denotes offsetting behavioral responses to safety improvements. Theoretical arguments suggest that, when drivers are required to drive safer cars or drive in a safer manner, they will tend to increase their driving speed or drive in some other risky manner.
The purpose of this paper is to review critically the theory and evidence on risk compensation. Our general conclusion is that the application of risk compensation theory, especially to some types of regulations, is questionable, and the empirical support for significant offsetting behavior is weak. Specifically?(1) the role of limitations in processing information is not appreciated, especially regarding risk perceptions and the learning component associated with new regulations; (2) the types of regulations and types of driving behavior are not adequately distinguished; and (3) the empirical studies haves mixed results and are subject to important limitations.
... A number of subsequent studies have confirmed that maximum speed limit laws helped reduce the number of traffic fatalities, though the magnitude of the impact has varied significantly (see, for example, Baum, Lund, & Wells, 1989;Farmer et al., 1999;Garber & Graham, 1990). These include not only studies examining the impact of the 1974 decrease (see, for example, Chirinko & Harper, 1993), but also those examining the consequences of raising limits after 1995 (see Farmer et al., 1999). One final body of work has demonstrated empirically that higher limits correlate with more roadway fatalities, but these studies assume a slightly different causal mechanism. ...
... However, the degree to which empirical models are actually guided by the theory varies dramatically. For example, some work has simply used the general idea of deterrence to motivate the study, assuming that lower speed limits themselves "deter" drivers from speeding, thus reducing accidents and fatalities, or speculating that enforcement may change driver behavior in a way that does so (see, for example, Chirinko & Harper, 1993;Levy & Asch, 1989). ...
Despite the ubiquitous nature of these policies, there is disagreement in the literature regarding the direction and size of the impact that speed limits have on traffic-related fatalities. We argue in this paper that the mixed results in previous work may arise because these studies have missed an important component of the implementation of speed limit laws. More explicitly, they have failed to adequately control for the deterrent effect of enforcement and sanctions. We develop the argument that the observed impacts of speed limits will be overly large when the certainty and severity of punishment are not accounted for. We test this assertion in a cross-sectional time series analysis of state-level traffic fatalities from the years 1990–2006 and find that lower speeds do save a significant number of lives. Interestingly, we find that the impact is significantly overestimated for 65-mph limits and significantly underestimated for 70-mph limits when enforcement, penalties, and the interaction of the two are excluded. The results also suggest that fines have a rather modest impact on fatalities unless states employ a sufficient number of troopers to enforce posted limits. In addition to clarifying previous findings related to speed limit policy, therefore, the findings contribute to the general application of deterrence theory by empirically confirming that the importance of sanction severity is dependent on the perceived certainty of punishment.
... For example, a heated debate evolved around the effectiveness of seat belt laws [e.g., [23][24][25]. Some studies showed that the severity of injuries did indeed decline with the use of seat belts but the frequency of accidents increased [26], suggesting that regulatory measures, such as mandating seat belt use, have a limited effect in reducing fatalities [27,28]. Another study found that seat belt laws led to an increase in the number of deaths of both those in the car and those not in the car at the time of the accident, such as pedestrians, cyclists, and motorcyclists [29]. ...
Over the past decade, the popularity of installing advanced driver-assistance systems (ADAS) in cars has increased markedly. However, the effectiveness of ADAS is subject to debate, primarily because these systems intervene in drivers’ perceptions and actions and could lead to adaptive behavior. Using complete national data for the installation of three leading safety systems and speeding tickets issued over the course of an entire year, allowed us to pinpoint the impact of these safety systems at a national level. Employing zero-inflated negative binomial regression models, we found that the installation of the three safety systems was associated with higher number of speeding tickets. These findings are in line with the literature that indicates adaptive behavior in the context of risk. However, when we accounted for the proneness to commit other traffic violations, the effect of the safety systems on the prevalence of speeding tickets was evident only for those prone to violations. Further research should be conducted to identify which drivers will be more likely to be affected and under what circumstances and safety system types.
... In addition, empirical evidence on the linkage between crashes and mandated safety measures is inconclusive. For example, using time-series data for the entire U.S., Chirinko and Harper (1993) found the crash rate to have a positive but statistically insignificant association with an index of motor vehicle occupant safety standards. The coefficients of temperature and precipitation are expected to be similar to the predicted effects in Model 1: crash rates are expected to be higher in states with higher average temperatures or lower annual precipitation. ...
Purpose
This paper analyzes the impact of obesity on the probability of a motor vehicle fatality (highway death rate) and on its component probabilities: the probability of a fatality, given a crash (vulnerability rate) and the probability of a crash (crash rate).
Design/methodology/approach
Using state-level data for 1995–2015, the paper estimates models explaining all three rates. Explanatory factors include obesity and a representative set of potential determinants.
Findings
Results indicate that obesity has a statistically significant positive relationship with the highway death rate and the crash rate. Also having a statistically significant positive association with at least one of the three rates are the proportions of young and old drivers, alcohol consumption, the ratio of rural to urban vehicle miles and temperature. Factors with a statistically significant negative relationship with at least one of the rates include primary seat belt laws and precipitation. In 2016, a total of 928 traffic fatalities could have been avoided if obesity rates decreased by one percentage point.
Practical implications
Seat belts and crash dummies should be better designed to fit and represent those with higher BMIs, and education efforts to increase seat belt use should be supplemented with information about the adverse impact of obesity on highway safety.
Originality/value
This paper uses 21 years of state-level information, including socio-economic and regulation data, and contributes to the existing research on the relationship between obesity and highway safety.
... However, these studies typically rely on highly aggregated data and hence potentially suffer from omitted variable bias. Chirinko and Harper Jr. (1993), for example, investigated the effect of improved car safety (measured through an index of safety regulations in relation to improved car safety for occupants since 1966) and of the introduction of the speed limit of 55 mph in the US. Their econometric estimates revealed that the offsetting behavior is quantitatively important and attenuates the effects of safety regulations on occupant fatalities. ...
My dissertation aims at understanding the environmental and behavioral determinants of road traffic accidents in a developing country, India. To do so, a panel database on Indian states over a period going from 1996 to 2006 hasbeen built. A household survey among drivers and passengers of motorbikes has been also implemented in Delhiin 2011, this to overcome the absence of individual data on road habits.Chapter 1 is a macroeconomic study on the Indian subcontinent. The results found suggest that India shouldinvest more particularly in road infrastructures, in the strict implementation of road rules and in education programson road related risks. Given that 70% of motorized vehicles are two-wheelers in India, I decided to focusthe rest of my analysis on this subgroup. Chapter 2 provides a presentation of the survey. I study in Chapter 3 theadequate measurement of risk aversion in the context of a developing country. I explore the impact of questionsand interviewers on the elicited individuals’ preferences towards risk. In Chapter 4, a theoretical model on theinfluence of risk aversion on prevention activities is first adapted to the road safety context. When looking at thedata, we found thatmore risk averse drivers aremore likely to wear a helmet while there is no significant effect onchoice of speed. As for passengers, they seem to adapt their helmet use to their environment and in particular totheir driver’s skills. In Chapter 5, I show that previous experiences of road crash and police stop impact subjectiveexpectations. Fear of injuries lead to a greater use of helmet on long distance journeys, while police threat ratherdetermines the helmet use on short trips.
... This offsetting effect is also especially relevant for non-occupants of the respective vehicle. This is because of an additional risk exposure if they or their vehicles are equipped with limited or only minor safety features (Chirinko et al. 1993). The risk that other travellers such as pedestrians or cyclists rely on a certain expected behaviour of the automated vehicle (e.g. ...
Road traffic accidents are largely driven by human error; therefore, the development of connected automated vehicles (CAV) is expected to significantly reduce accident risk. However, these changes are by no means proven and linear as different levels of automation show risk-related idiosyncrasies. A lack of empirical data aggravates the transparent evaluation of risk arising from CAVs with higher levels of automation capability. Nevertheless, it is likely that the risks associated with CAV will profoundly reshape the risk profile of the global motor insurance industry. This paper conducts a deep qualitative analysis of the impact of progressive vehicle automation and interconnectedness on the risks covered under motor third-party and comprehensive insurance policies. This analysis is enhanced by an assessment of potential emerging risks such as the risk of cyber-attacks. We find that, in particular, primary insurers focusing on private retail motor insurance face significant strategic risks to their business model. The results of this analysis are not only relevant for insurance but also from a regulatory perspective as we find a symbiotic relationship between an insurance-related assessment and a comprehensive evaluation of CAV’s inherent societal costs.
... However, our risk score comparisons (Table 4) showed a significant interaction whereby only for controls did the mean risk score align with self-reported safer behaviour. Returned prisoners randomized to NOR perceived greater safety than their RPSQ answers demonstrated, which suggests some risk compensation about which Strang et al. [22] forewarned; see also other prevention policies, from seat-belt legislation to safety helmets [23][24][25], where a degree of risk compensation detracted in a small way from the policy's overall benefit. N-ALIVE participants' main suggestion was that naloxone should be made available more widely to all those at risk. ...
BACKGROUND AND AIMS: Naloxone is an opioid antagonist used for emergency resuscitation following opioid overdose. Prisoners with a history of heroin injection have a high risk of drug-related death soon after release from prison. The NALoxone InVEstigation (N-ALIVE) pilot trial (ISRCTN34044390) tested feasibility measures for randomized provision of naloxone-on-release (NOR) to eligible prisoners in England. DESIGN: Parallel-group randomized controlled pilot trial. SETTING: English prisons. PARTICIPANTS: A total of 1685 adult heroin injectors, incarcerated for at least 7 days pre-randomization, release due within 3 months and more than 6 months since previous N-ALIVE release. INTERVENTION: Using 1 : 1 minimization, prisoners were randomized to receive on release a pack containing either a single ‘rescue’ injection of naloxone or a control pack with no syringe. MEASUREMENTS: Key feasibility outcomes were tested against prior expectations: on participation (14 English prisons; 2800 prisoners), consent (75% for randomization), returned prisoner self-questionnaires (RPSQs: 207), NOR-carriage (75% in first 4 weeks) and overdose presence (80%). FINDINGS: Prisons (16) and prisoners (1685) were willing to participate [consent rate, 95% confidence interval (CI) = 70–74%]; 218 RPSQs were received; NOR-carriage (95% CI = 63–79%) and overdose presence (95% CI = 75–84%) were as expected. We randomized 842 to NOR and 843 to control during 30 months but stopped early, because only one-third of NOR administrations were to the ex-prisoner. Nine deaths within 12 weeks of release were registered for 1557 randomized participants released before 9 December 2014. CONCLUSIONS: Large randomized trials are feasible with prison populations. Provision of take-home emergency naloxone prior to prison release may be a life-saving interim measure to prevent heroin overdose deaths among ex-prisoners and the wider population.
... However, our risk score comparisons (Table 4) showed a significant interaction whereby only for controls did the mean risk score align with self-reported safer behaviour. Returned prisoners randomized to NOR perceived greater safety than their RPSQ answers demonstrated, which suggests some risk compensation about which Strang et al. [22] forewarned; see also other prevention policies, from seat-belt legislation to safety helmets [23][24][25], where a degree of risk compensation detracted in a small way from the policy's overall benefit. N-ALIVE participants' main suggestion was that naloxone should be made available more widely to all those at risk. ...
Background and aims:
Naloxone is an opioid antagonist used for emergency resuscitation following opioid overdose. Prisoners with a history of heroin injection have a high risk of drug-related death soon after release from prison. The N-ALIVE pilot trial (ISRCTN34044390) tested feasibility measures for randomized provision of naloxone-on-release (NOR) to eligible prisoners in England.
Design:
Parallel group randomized controlled pilot trial.
Setting:
English prisons.
Participants:
A total of 1685 adult heroin injectors, incarcerated for at least 7 days pre-randomization, release due within 3 months and more than 6 months since previous N-ALIVE release.
Intervention:
Using 1:1 minimization, prisoners were randomized to receive on-release a pack containing either a single 'rescue' injection of naloxone or a control pack with no syringe.
Measurements:
Key feasibility outcomes were tested against prior expectations: on participation (14 English prisons; 2800 prisoners), consent (75% for randomization), returned prisoner self-questionnaires (RPSQs: 207), NOR-carriage (75% in first 4-weeks) and overdose-presence (80%).
Findings:
Prisons (16) and prisoners (1685) were willing to participate (consent-rate, 95% CI: 70% to 74%); 218 RPSQs were received; NOR-carriage (95% CI: 63% to 79%) and overdose-presence (95% CI: 75% to 84%) were as expected. We randomized 842 to NOR, 843 to control during 30 months but stopped early because only one third of NOR administrations was to the ex-prisoner. Nine deaths within 12 weeks of release were registered for 1557 randomized participants released before 9 December 2014.
Conclusion:
Large randomized trials are feasible with prison populations. Provision of take-home emergency naloxone prior to prison release may be a life-saving interim measures to prevent heroin overdose deaths among ex-prisoners and the wider population.
... We would likely conclude that choosing a larger, heavier vehicle with greater crash protection increases safety. However, this reflects a narrow perspective and can result in decisions that reduce overall safety (Chirinko and Harper 1993). The greater protection to occupants offered by larger, heavier vehicles with features such as airbags tends to be offset by 25 © Copyright Environments: a journal of interdisciplinary studies/revue d'études interdisciplinaires. ...
This article describes how smart growth policies and mobility management programs can help create healthier and safer communities by reducing per capita automobile travel and increasing use of alternative modes, particularly walking and cycling. Transportation and land use planning decisions affect the amount and type of travel activity in a community and thus affect human health in several ways, including traffic risk, pollution emissions and by affecting physical activity and fitness. These impacts are each significant in magnitude, affecting large numbers of deaths and physical disabilities. Conventional planning tends to overlook and undervalue these impacts, consequently overlooking the benefits of smart growth policies and mobility management programs. Better evaluation of safety and health impacts tends to reduce emphasis on roadway capacity expansion and increase emphasis on smart growth and mobility management strategies. Integrating health objectives into transportation planning can be one of the most cost-effective ways to improve public safety and health and improved public health can be among the greatest benefits of smart growth and mobility management. Cet article porte sur la manière dont les politiques en matière de croissance urbaine intelligente et les programmes de gestion des déplacements péuvent con-tribuer å créer des collectivités davantage en santé et en sécurité, en réduisant les déplacements automobiles par habitant et en augmentant Ľutilisation ďautres modes transports, plus particuliè rement la marche et le vélo. Les décisions en matière de transport et ďaménagement territorial ont une incidence sur le volume et le type de déplacements dans une collectivité, ce qui a également une incidence sur la santé de ses habitants, notamment en ce qui a trait aux risques liés à la circulation automobile, à la pollution et à Ľactivité physique. Chacune de ces conséquences est importante en soi, cartoutes entraînent un grand nombre de décès et ďincapacités physiques. La planification conventionnelle a tendance à en faire abstraction et à les sous-estimer, et, par conséquent à ne pas tenir compte des bienfaits des politiques de croissance intelligente et des programmes de gestion des déplace-ments. Une meilleure évaluation des conséquences en matière de sécurité et de santé permet généralement de mettre moins ďemphase sur Ľaugmentation de la capacité des routes et davantage sur des stratégies de croissance intelligente et de gestion des déplacements. Ľintégration des objectifs de santé à la planification des transports peut se révéler Ľune des manières les plus rentables ďaméliorer la santé et la sécurité publiques, et une meilleure santé publique peut, ce son côté, compter parmi les avantages les plus importants de la croissance intelligente et de la gestion des déplacements.
... They consider, for instance, the change in road traffic accident fatality rates at the regional level following the introduction of a new regulation or a technological innovation. Chirinko and Harper Jr. (1993), for example, investigated the effect of improved car safety (measured through 3 I.e. given the weight of a helmet, the use of a helmet increases the risk of neck injuries. ...
In many domains risky health behavior is still only poorly understood. Analysis is often plagued by incomplete data and a general lack of information. In this study; we try to understand the determinants of helmet use among motorcyclists in Delhi; a context in which road safety is very low. We use a very detailed data set collected especially for the purpose of the study. To guide our empirical analysis; we rely on a simple model in which drivers decide on their speed and helmet use. The empirical findings suggest that risk averse individuals are more likely to wear a helmet. We do not find any systematic effect of risk aversion on speed. Both findings are coherent with our theoretical model. Helmet use also increases with education. Drivers who show a higher awareness of road risks; because for instance; they are better informed about Delhi's actual road traffc accident fatality and injury rates; are both more likely to wear a helmet and to speed less. In turn; those drivers who show a high level of unawareness take the highest risks. Controlling for risk awareness; we observe that drivers tend to compensate between speed and helmet use. The most obvious solution to India's road safety problem and the related high social costs that result from it is to enforce the helmet law and speed limits. An alternative strategy; and probably more feasible in the current context; is to design interventions which raise awareness of road risks. Improvements to the road infrastructure are also a possible solution but these measures bear the risk that drivers will react to the improved road safety by either increasing speed or lowering helmet use.
... Several studies of automobile operator behaviour have supported Peltzman's reasoning. Cohen and Einav (2003), Chirinko and Harper (1993), Risa (1994) and Peterson et al. (1995) analysed automobile operator behaviour after the introduction of safety equipment innovations, the implementation of speed limit laws and road construction improvements. Our research is unique to studies of offsetting behaviour because we are analysing how agents respond to a ban on technology, rather than an improvement in technology. ...
This study examines how PGA Tour golfers' playing strategies offset a ban on technologically superior golf club grooves and how the strategy changes translated into performance changes. The ban, which was implemented at the beginning of the 2010 season, effectively decreased golfers' abilities to spin the golf ball from all on-course environments and offers a unique opportunity to examine offsetting behaviour in the light of a ban on the type of technology. We compare 2009 and 2010 PGA Tour results in a manner consistent with previous studies of offsetting behaviour and golf club groove construction. Our results suggest that offsetting behaviour mitigated the effects of the technological regulations on golf clubs in an economically and statistically significant way, as golfers' performances improved following the technological ban.
... Compensatory behavioral responses to risk reduction are now well established in a number of risk domains (see reviews in MacCoun, 1998b;Stratton et al., 2001, Chapter 2). For example, people drive faster and more recklessly in cars with seat belts and air bags (Chirinko & Harper, 1993;Stetzer & Hofman, 1996). Similarly, smokers compensate for filters and low-tar tobacco by smoking more cigarettes, inhaling more deeply, or blocking the filter vents (Hughes, 1995;Stratton et al., 2001). ...
Immunotherapy or depot medication (henceforth, "I/DM") programs that would prevent addiction or relapse to drugs like tobacco or cocaine are largely unprecedented. These interventions differ in important respects from other pharmacological treatments for drug addiction, and, for that matter, from vaccines used to prevent viral diseases. I/DM's may significantly alter the complex system of relationships among users, sellers, treatment providers, and social control agents. These actors are likely to change their behavior in both desirable and unintended ways. Given the novelty of such interventions and uncertainty about how they might be implemented, it is not possible to forecast either the likelihood or the magnitude of unintended behavioral responses. Nevertheless, it is desirable to design I/DM interventions that might minimize such risks. In this essay, I identify plausible mechanisms by which I/DM's might produce unintended consequences, and I review available evidence on the effects of these mechanisms in the research and clinical literatures on drug use and on other risky behaviors. I define "plausible" as something more than simply possible, but not necessarily "more likely than not." Judgments about whether and how to implement I/DM programs should not necessarily be based solely on worst-case scenarios. Economists and risk analysts have long noted the opportunity costs in foregone benefits that can result from extreme risk aversion (e.g., Viscusi, 1992; cf. Shrader-Frechette, 1991).1 But the literature on
... Some papers criticized or supported Peltzman's study; others oVered new analyses. [4][5][6][7][8][9][10][11][12][13][14][15][16][17][18][19] The debate centered on Peltzman's statistical analyses. Issues included the variable used to measure FMVSS eVects, the time period analyzed, the regression equation's functional form, what other factors should be included in the model as controls and how they are best measured, and how to account for motorcycles, trucks, and other vehicles not regulated in the same way as passenger vehicles. ...
Editors comment: We are proud to be able to bring to our readers this full text version of the Haddon Memorial Lecture delivered at the recent Fifth World Conference on Injury Prevention and Control in New Delhi, India. James Hedlund offers a brilliant review of one of the most important areas of debate in the entire field of injury control. This is the most complete, most perceptive, and well balanced appraisals of this complex issue I have ever read. Take the time to digest it completely. Our thanks to the Insurance Institute for Highway Safety for agreeing to permit us to publish it.
Government regulations and industry practices constrain our behavior in many ways in an attempt to reduce injuries. Safety features are designed into products we use: cars now have airbags; medicine bottles have “childproof” caps. Laws require us to act in a safe manner: we must wear seat belts while driving and hard hats in construction areas. But do these measures influence our behavior in other ways? Risk compensation theory hypothesizes that they do, that we “use up” the additional safety though more risky actions.
This paper surveys risk compensation by reviewing its history, discussing its theoretical foundations, outlining evidence for and against its claims, and providing the author's own views. It concludes by discussing the relevance of risk compensation for injury prevention workers who seek to reduce unintentional injuries.
Injury prevention as a discipline began when injuries were understood to be both predictable and preventable. Most injuries are the unintended consequences of individual actions in a risky environment; they are not due to fate or to problem behavior. This understanding led to three fundamental injury prevention strategies, as described in the comprehensive report Injury in America 1:
... Per-mile crash rates declined substantially, but per capita crash rates declined little despite significant traffic safety efforts. and airbags, encourage more intensive (less cautious) driving, which reduces net safety gains (16). The conventional safety paradigm assumes that because most crashes result from special Traffic fatalities per 100,000 population Vehicle travel and traffic fatality rates in OECD countries (64). ...
This article investigates various ways that transportation policy and planning decisions affect public health and better ways to incorporate public health objectives into transport planning. Conventional planning tends to consider some public health impacts, such as crash risk and pollution emissions measured per vehicle-kilometer, but generally ignores health problems resulting from less active transport (reduced walking and cycling activity) and the additional crashes and pollution caused by increased vehicle mileage. As a result, transport agencies tend to undervalue strategies that increase transport system diversity and reduce vehicle travel. This article identifies various win-win strategies that can help improve public health and other planning objectives. Expected final online publication date for the Annual Review of Public Health Volume 34 is March 17, 2013. Please see http://www.annualreviews.org/catalog/pubdates.aspx for revised estimates.
... Furthermore, cyclist behavior could adapt to the presence of helmets in ways that undermine cyclist safety. This hypothesis-Peltzman's compensating behavior hypothesis-has received empirical support for drivers' behavior (Chirinko and Harper, 1993;Peltzman, 1975;Peterson, Hoffer, and Millner, 1995;Yun, 2002), and could also apply to cyclists' behavior. If bicyclists adapt to helmets by increasing the riskiness of their cycling in ways that encourage injury but not death, the simple projection used above will overstate the reduction in injuries resulting from helmet legislation. ...
A number of states passed legislation in the 1990s requiring youths to wear helmets when riding bicycles. The effect of this legislation on bicycling fatalities is examined by subjecting data from the Fatality Analysis Reporting System to a panel analysis, using a control-group methodology. A helmet law reduces fatalities by about 15 percent in the long run, less in the short run. There is no evidence of spillover effects (to adults) or substitution effects (youths choosing other methods of transportation) associated with implementation of a helmet law. Through 2000, existing helmet laws have saved 130 lives. If all states had adopted helmet laws in 1975, more than 1500 lives would have been saved. © 2004 by the Association for Public Policy Analysis and Management.
... A study by Chirinko and Harper (1993) partially supports the conclusions of Peltzman. The paper finds that drivers partially off-set the intended effects of safety regulation. ...
Using a unique dataset, this paper empirically tests the Peltzman effect by investigating the behavior of Formula One racecar drivers. Estimates suggest that drivers become more reckless as their cars become safer, ceteris paribus . From 1963-1973, safety changes, on average, are estimated to leave the number of driver casualties unchanged. Furthermore, this is the first attempt to estimate specifically how drivers respond to changes in the conditional probability of fatality given an accident. Results provide evidence that the behavioral response of drivers is larger when the analysis is confined to changes in the conditional probability of a fatality given an accident.
In this paper, we examine vehicle owners’ adoption of five different types of partially automated features (PAFs); lane keeping system, backup camera (BUC), adaptive cruise control (ACC), automatic braking system (ABS), and blind spot monitoring; as well as PAF effects on vehicle miles of travel (VMT). The joint modeling of PAF adoption and VMT is achieved using both individual demographic characteristics as well as psycho-social characteristics. A Generalized Heterogeneous Data Model (GHDM) is estimated, which controls for possible self-selection effects in PAF adoption based on VMT, and thus is able to provide “true” PAF effects on VMT. Our analysis specifically indicates that ignoring this self-selection can lead to a significant underestimation of the VMT increase due to PAF adoption. The results also indicate that women and older individuals (65 years or older) appear to be more inclined to invest in assistive PAFs, because of a perception that these assistive features still leave the human driver in control. However, women are less likely than men to invest in the more active ABS PAF because of heightened safety concerns with technology. In terms of PAF effects on VMT, PAFs focusing on lateral movement assistance appear to have a smaller VMT effect than those that serve longitudinal movement assistance. The highest estimated VMT change of 2,462 miles (13.8% change) is for the case when the package of BUC, ACC, and ABS is installed for middle-aged men. The highest percentage VMT change (40%), though, is for the same package of BUC, ACC, and ABS for older women. Overall, there are considerable variations in VMT impact across demographic groupings, suggesting that a single aggregate percentage improvement in safety benefits may suffer from the well-known ecological fallacy.
In 1988, in an effort to reduce risks at auto races, the National Association for Stock Car Auto Racing (NASCAR) implemented a provision requiring the installation of carburetor restrictor plates at its higher speed events. Restrictor plates make a car's engine less effective, thereby slowing the field. Many NASCAR drivers and fans alike question whether the reduction in speed has led to increased safety. This article investigates the empirical determinants of racetrack safety, paying particular attention to the results of restrictor‐plate racing on driver safety. We conclude that whereas restrictor‐plate races are characterized by more cars being wrecked, there is no systematic evidence that they have led to more driver injuries.
Over 60 million registered motor vehicles in 20 states are subject to mandatory periodic safety inspection. The effect of safety inspection on roadway casualties has been estimated by several studies, with mixed results. We present a unique test of inspection effectiveness by analyzing the policy's impact on old cars in use and on repair industry revenue. Our results indicate that inspection has no significant impact on old cars or repair industry revenue, which implies that inspection does not improve the mechanical condition of vehicles. Unlike studies that examine casualties, our tests allow us to distinguish between policy ineffectiveness and Peltzman‐type offsetting behavior as sources of inspection failure.
When safety regulation makes automobiles safer, drivers may drive more recklessly, partially or completely offsetting effects on the overall level of safety. Evidence of these offsetting effects has been hard to find, however, primarily because of the aggregate nature of accident data. In this paper we explore how changes in the safety of automobiles used in the National Association for Stock Car Auto Racing (NASCAR) has altered the incentive of drivers to drive recklessly. This unique data set allows more accurate and objective measurement of the necessary variables to test for these effects at a microlevel. Our results strongly support the presence of these offsetting behavioral effects.
The COVID‐19 pandemic has become an unprecedented health, economic, and social crisis. The present study has built a theoretical model and used it to develop an empirical strategy, analyzing the drivers of policy‐response agility during the outbreak. Our empirical results show that national policy responses were delayed, both by government expectations of the healthcare system capacity, and also by expectations that any hard measures used to manage the crisis would entail severe economic costs. With decision‐making based on incomplete information, the agility of national policy responses increased as knowledge increased and uncertainty decreased in relation to the epidemic's evolution and the policy responses of other countries.
Retail investors tend to make poor investment decisions and consequently under-perform. A plausible approach to improving this situation is to restrict the least knowledgeable or experienced investors, a concept implemented for Singapore investors via a Customer Knowledge Assessment (CKA). I study the empirical relationship between retail investors’ investment portfolio outcomes, and their CKA results. Although those satisfying the assessment criteria made fewer mistakes, as benchmarked by a selection of normative models, the CKA only weakly identifies less skilled investors. The high misclassification rate, under an analysis favorable to the scheme, highlights the challenges of investor screening.
The aim of this research was to examine how fringe benefit tax (FBT) policies affect the provision of company cars and employee parking in New Zealand, and the resulting impacts on transport policy objectives.
This article provides a comprehensive overview of how policy makers, practitioners, and scholars can fruitfully use behavioral science to tackle public administration, management, and policy issues. The article systematically reviews 109 articles in the public administration discipline that are inspired by the behavioral sciences to identify emerging research trajectories, significant gaps, and promising applied research directions. In an attempt to systematize and take stock of the nascent behavioral public administration scholarship, the authors trace it back to the seminal works of three Nobel Laureates—Herbert Simon, Daniel Kahneman, and Richard Thaler—and their work on bounded rationality, cognitive biases, and nudging, respectively. The cognitive biases investigated by the studies reviewed fall into the categories of accessibility, loss aversion, and overconfidence, and optimism. Nudging and choice architecture are discussed as viable strategies for leveraging these cognitive traps in an attempt to alter behavior for the better, among both citizens and public servants.
Road traffic accident fatalities lead to important private and social costs in the metropolitan areas of most low and middle income countries. An important share of these fatalities is due to injuries to the head and the neck. Helmets can provide efficient protection, but many drivers do not use them. We focus on helmet use behavior among motorbike users in Delhi. We use a detailed data set collected for the purpose of the study. To guide our empirical analysis, we rely on a model in which drivers decide on self-protection and self-insurance. The empirical findings suggest that risk-averse drivers are more likely to wear a helmet and that this has no systematic effect on speed. Helmet use also increases with education. Drivers who show a higher awareness of road risks seem to be both more likely to wear a helmet and to speed less. Controlling for risk awareness, we observe that drivers tend to compensate between speed and helmet use. The results can provide a basis for awareness-raising policies. They also show that improvements to the road infrastructure risk leading to risk-compensating behavior.
This article discusses 3 different strategies for dealing with the harmful consequences of drug use and other risky behaviors: We can discourage people from engaging in the behavior (prevalence reduction), we can encourage people to reduce the frequency or extent of the behavior (quantity reduction), or we can try to reduce the harmful consequences of the behavior when it occurs (harm reduction). These strategies are not mutually exclusive; this article offers a framework for integrating them. The framework is useful for examining frequent claims that harm reduction "sends the wrong message." Opposition to harm reduction is based in part on a recognition of potential trade-offs among the strategies, but it is also fueled by several more symbolic psychological factors. Strategies for successfully integrating prevalence reduction, quantity reduction, and harm reduction are explored.
Regulation and time: temporal patterns in regulatory development
Given the complex decision-making that goes into policy choices for regulatory regimes, it would seem intuitive that such regimes might develop under distinct national styles. By revisiting several historical models of regulatory development, including Bernstein’s classic life-cycle model, and then by analyzing six case studies from the US and UK, for example, we explore the possibility that regulatory regimes vary more prominently along the temporal dimension rather than along spatial ones. We conclude that regulatory regimes have similar developmental patterns, although the time spent at each stage in the process can vary significantly according to unique domestic factors.
Points for practitioners
Existing theories of regulation would suggest that regulatory activity should either follow identical development trajectories in different countries or it should be entirely idiosyncratic in every jurisdiction in which it is used. Clearly neither is true, as some regulatory regimes display similar qualities and development patterns, while others appear to be unique. A comparison of regulatory activities in the US and UK reveals that regulatory regimes in these countries develop through similar stages along similar pathways, but that the rate of development and the transition through the stages can occur at different speeds. This development is mainly stimulated by periodic crises that force changes in regulation.
Understanding psychoactive drugs and their social impact is, and should be, an interdisciplinary undertaking. But in recent years, psychologists have had relatively little voice in the formation of our nation’s drug policy. In saying this, we do not mean to dismiss the important contributions that psychologists have made to our understanding of the social and cognitive aspects of intoxication, the etiology of addiction, and, most notably, the theoretical underpinnings and empirical evaluation of methods of drug treatment and prevention, as documented in other chapters in this volume. But psychologists are conspicuous by their absence from what a decade’s worth of federal and state drug budgets reveal to be the main arena of contemporary drug policy: drug law enforcement.
Given the complex decision-making that goes into policy choices for regulatory regimes, it would seem intuitive that such regimes might develop under distinct national styles. By revisiting several historical models of regulatory development, including Bernstein's classic life-cycle model, and then by analyzing six case studies from the US and UK, for example, we explore the possibility that regulatory regimes vary more prominently along the temporal dimension rather than along spatial ones. We conclude that regulatory regimes have similar developmental patterns, although the time spent at each stage in the process can vary significantly according to unique domestic factors.
Points for practitioners
Existing theories of regulation would suggest that regulatory activity should either follow identical development trajectories in different countries or it should be entirely idiosyncratic in every jurisdiction in which it is used. Clearly neither is true, as some regulatory regimes display similar qualities and development patterns, while others appear to be unique. A comparison of regulatory activities in the US and UK reveals that regulatory regimes in these countries develop through similar stages along similar pathways, but that the rate of development and the transition through the stages can occur at different speeds. This development is mainly stimulated by periodic crises that force changes in regulation.
In an earlier volume of this Journal, Kneuper and Yandle (1994) proffer that auto insurers lobbied extensively for the automotive airbag, expecting to trade increased dollar property damage claims for lower bodily injury claims. Using annual data published by the Highway Loss Data Institute, this article finds that, upon airbag adoption, not only do average collision loss payments increase, but so do the relative frequencies of collision claims and injury claims for a vehicle line.
Regulation has been the subject of a significant amount of scholarship, mostly debating the necessity of regulatory action or examining the phenomenon of capture. Less attention has been paid to the early stages of regulatory development, during which the structure of the regime is defined. By revisiting the life-cycle analogy of regulation first proposed by Bernstein in 1955, we offer a new model that explains the development of these early stages in greater depth. This model is then applied to case studies of several sectors in the US and UK to highlight the general pattern of early regulatory regime development.
This study investigated the impact that state traffic safety regulations have on non-motorist fatality rates.
Data obtained from the National Highway Traffic Safety Administration (NHTSA), the Federal Highway Administration (FHWA), and the National Institute on Alcohol Abuse and Alcoholism (NIAAA) were analyzed through a pooled time series cross-sectional model using fixed effects regression for all 50 states from 1999 to 2009. Two dependent variables were used in separate models measuring annual state non-motorist fatalities per million population, and the natural log of state non-motorist fatalities. Independent variables measuring traffic policies included state expenditures for highway law enforcement and safety per capita; driver cell phone use regulations; graduated driver license regulations; driver blood alcohol concentration regulations; bike helmet regulations; and seat belt regulations. Other control variables included percent of all vehicle miles driven that are urban and mean per capita alcohol consumption per year.
Non-motorist traffic safety was positively impacted by state highway law enforcement and safety expenditures per capita, with a decrease in non-motorist fatalities occurring with increased spending. Per capita consumption of alcohol also influenced non-motorist fatalities, with higher non-motorist fatalities occurring with higher per capita consumption of alcohol. Other traffic safety covariates did not appear to have a significant impact on non-motorist fatality rates in the models.
Our research suggests that increased expenditures on state highway and traffic safety and the initiation/expansion of programs targeted at curbing both driver and non-motorist intoxication are a starting point for the implementation of traffic safety policies that reduce risks for non-motorists.
Financial firms engage in a wide range of private conduct. New rules that address financial risk can regulate elements of that conduct but not all conduct or all the factors that affect conduct. There is, therefore, a real concern that new regulation will have unanticipated consequences, particularly in a system as complex as the financial markets. The result may be new risks or a shift in risk taking away from regulated conduct — responses that regulators can anticipate but may not be able to accurately predict or control.This Article cautions against the rush to adopt new financial risk regulation without first assessing its broader impact on risk taking. Attempting to do so with limited information may be difficult. For illustration, it touches on three areas where new regulation may result in new (or greater) risks: bank capital requirements, a financial transaction tax, and disclosure in the credit default swap market. A better approach may be to introduce new regulation in stages — what I refer to as the “Goldilocks approach.” Increasingly, regulators should be authorized to phase in or forego new regulation over time as it becomes clear, through experience, what the likely impact will be. At its heart, the Goldilocks approach relies on real options to develop new rules. Through staging, regulators can acquire additional information on the impact of new rules on conduct and, as necessary, adjust those rules to reflect any unanticipated consequences — perhaps a more effective approach to implementing regulation than efforts to finalize new rules from the outset.
Policymakers around the globe have opted for high levels of regulation of the market for vehicle safety and declared many vehicle safety systems as mandatory for new cars. In this paper we argue that the delivered justifications for these policies are at least questionable. We add a completely new argument to the discussion and show in a simple theoretical model that vehicle safety systems might cause positive externalities. Based on a large dataset of traffic accidents in Germany we show that the these externalities in fact occur. Based on our estimation results we show that for anti-lock-brakes (ABS) and electronic stability programmes (ESP) the average expected externality exceeds the price of these systems. Thus, the obligation to equip any new car with both ABS and ESP is adequate from an allocative point of view although the official justification for the introduction of these regulations are flawed.
Purpose
The purpose of this paper is to empirically investigate the linkage between obesity and motor vehicle deaths.
Design/methodology/approach
The paper specifies a model that explains highway fatalities, which accounts for obesity in its set of potential determinants. State‐level data are utilized in this paper. The values for all variables are for the year 2005. They correspond to 46 of the contiguous states for all measures. The model is estimated by multiple regressions.
Findings
The paper finds that the motor vehicle death rate (fatalities per million vehicle miles) has a statistically significant positive relationship with the percentage of the population that is obese. The death rate also has significant positive associations with the percentage of elderly male drivers, per capita alcohol consumption, and temperature; and it has significant negative relationships with per capita income, the percentage of elderly female drivers, seat belt use, and precipitation.
Practical implications
The estimates of this paper have various policy implications. For example, the findings pertaining to occupant body weight imply that efforts leading to a decline in the prevalence of obesity will also lower the highway death risk. Results suggest that obesity increases this death risk by contributing to more accidents. If so, measures that reduce obesity‐related unsafe driving behaviors (e.g. increased chance of falling asleep while driving) could save lives.
Originality/value
The paper adds to the research on the relationship between highway safety and obesity. The paper's unique contributions include estimating the linkage between obesity and motor vehicle deaths by regression analysis on US state‐level data for 2005 within a model that controls for economic conditions and other considerations such as driver and passenger characteristics, locational factors, government regulations, and weather conditions.
This paper investigates the traffic safety impacts of mobility management (also called transportation demand management or TDM ), which consists of various strategies that affect travel patterns. All else being equal, vehicle mileage reductions reduce crashes, although the safety impacts of a particular mobility management program vary depending on travel changes and travel conditions. The safety impacts of mode shifting depends on the relative risk borne and imposed by each mode. Shifting vehicle travel from congested roads to less- congested conditions tends to reduce crashes but increases crash severity. Strategies that reduce trip distance and traffic speed can provide significant safety benefits. Safety evaluation of mobility management is affected by how crashes are measured: per-mile analysis tends to ignore mileage as a risk factor and the potential traffic safety benefits of mileage reductions, while per capita analysis indicates that mileage reductions provide significant safety benefits. This analysis suggests that mobility management can be a cost effective traffic safety strategy, and increased safety is one of the largest potential benefits of mobility management. More research is needed to better predict the traffic safety impacts of a particular mobility management program.
Recent medical studies have led cardiologists to revise theories regarding the cause of heart attacks. Rather than a gradual clogging of the arteries, eruption of a vulnerable plaque is thought to be the cause of approximately 75% of all heart attacks. As a result, traditional risk factors are no longer sufficient indicators of who is at risk for a heart attack. Therefore, this research investigates the willingness to pay (WTP) for a new, hypothetical detection (screening) and treatment method for vulnerable plaque. For this study, two survey instruments were developed that take advantage of the visual and interactive aspects of the Internet. Individuals report their perception of heart attack risk both prior to and after receiving new information on who cardiologists currently believe to be at risk for a heart attack. In addition, respondents are provided with information about the effectiveness and risks associated with screening and treatment. Using webbased surveys, which follow a contingent valuation format, an iterative bidding process is used to elicit the respondents WTP for either the screening or treatment method. Internet, on-line surveys are often prone to coverage bias; however, the survey valuing screening (a simple blood test) used a Knowledge Networks panel and resulted in a sample of 268 adults that is essentially representative of the general population. The survey valuing treatment (a more invasive heart catheterization procedure) was administered only to individuals with doctor-diagnosed heart problems, who are presumably more familiar with these types of medical decisions, and resulted in a sample of 295 adults. The mean for screening is 5,816. A two-part model is used to identify the factors that influence WTP, as well as the decision to receive the screening/treatment. The data suggests that these factors vary across genders. The data obtained for this study demonstrate construct validity; therefore, the results may provide useful information for policy analysis regarding the screening and treatment of heart attack.
Head injuries due to motorcycle accidents are the main cause of death and disability among motorcycle users in Thailand. It is well known that wearing a helmet is one of the most effective ways to reduce the severity of head injuries due to motorcycle crashes. Although the helmet act for motorcyclists was enacted in Thailand in 1994, the rate of helmet use has not increased, and the rate of head injuries and fatalities due to motorcycle accidents has not been reduced. In this study, a field survey was conducted to observe helmet use in Bangkok and three other major regional provinces. The observation shows that the rate of helmet use is significantly low across the study areas. Age, location, time of day, and seating position significantly affect helmet use, whereas gender and the day of the week do not show any effect. The logit model was also used to evaluate the factors affecting helmet use on the basis of the injury surveillance data of motorcycle accident victims. Results indicate that the victims in the pillion, or passenger, position are less likely to use a helmet and those who ride during the nighttime, regardless of seating position, tend not to wear a helmet. To evaluate the effectiveness of helmet use and other related ways to reduce the severity of head injuries, the ordered logit regression technique was applied to the hospital-based data, using the data on patients suffering from head injuries due to road crashes. It is found that helmet use can reduce the severity of head injuries for motorcycle crash victims. The probability of fatality due to head injuries is reduced by 38% for motorcyclists wearing helmets. For motorcycle riders, helmets are found to be effective in protecting against head injuries, particularly for those riding under the influence of alcohol; the probability of death could be reduced by 43%. Those in the passenger position without helmets are more likely to sustain either serious or fatal head injuries than are riders without helmets. Results also indicate that a 58% reduction in the probability of fatality from head injuries is associated with the use of helmets by motorcycle passengers.
cle, I examine a more indirect manifestation of the rule of law: the indirect effect that criminal law can have on private risk management efforts by individuals and corporations. Formal law can encourage private risk regulation, but it can also distort it. This Article examines the chemical testing of psychoactive drugs. Trained technicians in commercial laboratories routinely employ a common technology—gas chromatography/mass spectrometry (GC/ MS)—to test samples for the presence of illicit psychoactive sub- stances as well as for dangerous or benign adulterants. One of these laboratories, LabCorp, provides occupational testing services for cor- porate clients.2 Another, Drug Detection Laboratories (DDL), con- ducts GC/MS screening of samples provided by DanceSafe, EcstasyData.org, and the Multidisciplinary Association for Psychedelic Studies (MAPS).3 LabCorp's samples are obtained from corporate clients' random or systematic urine testing of their prospec- tive and existing employees. DDL's samples come from anonymous Ecstasy consumers who seek information on the potential presence of adulterants in samples they have purchased illicitly. This Article explores the remarkably different normative and be- havioral consequences that follow from the use of the same basic labo- * Professor of Law, Professor of Public Policy, and Affiliated Professor of Psychology, Uni- versity of California at Berkeley. I am grateful to Susan Dennehy, Janette Catron, and Jennifer Taylor for their assistance and helpful conversations, and to Jon Caulkins and Mark Kleiman for valuable comments.
A meta-analysis of worldwide Needle Exchange Program research was conducted with fourteen studies, looking at the impact of needle exchange programs (NEPs) on the sexual risk behaviors and HIV/disease knowledge of injection drug users. Based on the limited data available to date (a total of 14 studies), two conclusions were drawn. First, HIV/disease knowledge does increase with NEP attendance. Second, risky sexual behaviors do not appear to decrease with NEP attendance, and may in fact increase. Neither of these areas has been investigated nearly as often as risky drug behaviors among NEP attend-ers. Focusing on disease knowledge and reducing risky sexual behaviors of NEP clients are both key areas for AIDS Service Organization staff to consider when developing HIV risk reduction interventions for injection drug users (IDUs).
Water conservation policy is a natural laboratory for addressing general issues of relevance to policy analysis and public administration, particularly the relative effectiveness of policies in changing human behavior. Using multivariate regression analysis of a dataset comprised of more than 200,000 monthly observations of more than 19,000 household accounts over six years, this paper makes three main contributions. First, it contributes to the substantive area of water conservation policy by analyzing what works. Second, it contributes to our understanding of generic policy instruments. Third, it raises an important issue regarding standard assumptions about selection bias. The results support earlier work warning that offsetting behavior can negate engineering solutions to policy problems, but further indicate that adding communication to engineering solutions can create cooperation that overcomes offsetting behavior. They also provide evidence that appropriate regulation can be effective, and that pricing can be effective even when price elasticities of demand are low.
This paper demonstrates that skin cancer incidence and National Cancer Institute spending display a Laffer Curve relationship. In spite of increased government spending on prevention efforts and improvements in protection, detection, and treatment technologies, the rate of incidence of skin cancer has risen dramatically in the past thirty years. This paper makes three major contributions: (1) demonstrating, both theoretically and empirically, the Laffer Curve relationship of melanoma incidence and National Cancer Institute spending, (2) illuminating this analysis with evidence from the literature on secondary effects and bureaucracy, and (3) using these findings to analyze current policy and make recommendations for improvement.
Extant models of public utility regulation assume that regulated firms make the same rate adjustment requests regardless of the political environment they will face during the rate case. Focusing on information asymmetries, the repeated interaction between the firm and the regulatory commission, and behavioral assumptions about the goals of regulators, a new model is proposed that assumes firms strategically and rationally plan their requests to respond to political and agency, as well as standard economic factors. An implication of the new model is that the effect of political factors, such as grassroots advocacy and regulator election, should be observed in request equations rather than in award equations where they are traditionally sought. This new model is tested using data from 54 telephone rate cases. The results indicate that firms do respond strategically to political factors (especially to regulator elections), and also to agency factors (such as workload), by increasing their requests. This partially explains a puzzling result in the literature and has implications for regulatory policy, interest group behavior, democratic institutions, and public management.
Rule evasion and avoidance can have a significant impact on policy outcomes, and therefore on the design, implementation, and enforcement of policies. The purposes of this paper is to assess the causes and consequences of evasion and avoidance in general settings, including their implications for policy reform. Evasion of rules often serves a socially useful role, and can promote efficient policies. Small-scale evasion typically provokes one of three responses: it is either effectively ignored, enforcement is increased, or the rule is revised. Large-scale evasion, alternatively, tends to meet with major policy shifts. Avoidance and evasion frequently temper the anticipated impacts of policy reforms, but are unlikely to render reform futile. Indeed, ongoing processes of reform might be required to maintain effective policies.
Information revealed by averting behavior is compared to information required for policy evaluation. Protective actions substitute for missing contingent claims markets by supporting transfers of income or health across states of nature. If the set of protective opportunities spans the state-outcome space, welfare effects are independent of preferences at the margin and otherwise are bounded by the savings in defensive expenditure, holding all contingent outcomes of pollution exposure constant. Tests for a spanning set, valuation in its absence, and implementation problems are discussed. Policy evaluations like benefits transfer are shown to require structural estimates of the protective technology.
Risk compensation effects occur when changes in risk-related factors lead to offsetting or reinforcing behaviors. An empirical analysis of recreational boating accidents between 1989 and 1993 suggests that compensating behavior can be offsetting or reinforcing, depending upon the individual safety behavior through which the compensating effect occurs, and can occur through the safety behavior of both the operator and passenger. Cumulative experience and formal training have compensation effects that depend upon the adjustment margin. An implication from this is the need for additional research on identifying adjustment margins through which individuals compensate. This information will assist policy makers whose objectives are to implement regulatory policies that most effectively produce safety enhancing behaviours.
Perhaps the simplest and the most basic qualitative law of probability is the conjunction rule: The probability of a conjunction,
P(A&B), cannot exceed the probabilities of its constituents,
P(A) and
P(B), because the extension (or the possibility set) of the conjunction is included in the extension of its constituents. Judgments under uncertainty, however, are often mediated by intuitive heuristics that are not bound by the conjunction rule. A conjunction can be more representative that one of its constituents, and instances of a specific category can be easier to imagine or to retrieve than instances of a more inclusive category. The representativeness and availability heuristics therefore can make a conjunction appear more probable than one of its constituents. This phenomenon is demonstrated in a variety of contexts, including estimation of word frequency, personality judgment, medical prognosis, decision under risk, suspicion of criminal acts, and political forecasting. Systematic violations of the conjunction rule are observed in judgments of lay people and of experts in both between- and within-Ss comparisons. Alternative interpretations of the conjunction fallacy are discussed, and attempts to combat it are explored. (48 ref) (PsycINFO Database Record (c) 2012 APA, all rights reserved)
No strategy for countermeasure design or future directions of research in the areas of human behavior which leads to traffic accidents or lifestyle-related diseases can be rationally developed without an acceptable working theory of human behavior in these domains. For this purpose, an attempt has been made to conceptually integrate the available evidence with respect to the role of human behavior in the causation of road accidents. From this integrative effort it would seem that the accident rate is ultimately dependent on one factor only, the target level of risk in the population concerned which acts as the reference variable in a homeostatic process relating accident rate to human motivation. Various policy tactics for the purpose of modifying this target level of risk have been pointed out and the theory of risk homeostasis has been speculatively extended to the areas of lifestyle-dependent morbidity and mortality.
The economic approach to understanding human behavior has encountered serious difficulties when attempting to explain the private provision of public goods, such as voting and charitable contributions to large organizations. To gain insights into these important issues, this study takes an interdisciplinary approach. The individual is modeled formally in terms of dual egoistic/altruistic utilities, and the recursive relation between altruism and the existence and production of social capital is developed. The model is analyzed as a non-cooperative game between the egoistic and altruistic selves. The socialized rational actor that results from the combination of social capital, dual utilities, and non-cooperative behavior resolves a number of public goods paradoxes. Comparative statics and the dynamics of social capital formation are explored. Copyright 1990 Blackwell Publishers Ltd..
This paper focuses on the typical individual's value of a small change in the probability of his survival. With a simple life-cycle model, the value is shown to be implied by consumption activity which affects risk. The premium an individual is willing to pay to reduce risk is estimated using probit analysis of automobile seat-belt use. The "value of life" is found to be about $370,000. This estimate is contrasted with the foregone-earnings approach by showing that a surplus value above earnings exists and the elasticity of the value with respect to earnings is less than one.
Ffifteen years ago, the theory of choice under uncertainty could be considered one of the “success stories” of economic analysis: it rested on solid axiomatic foundations, it had seen important breakthroughs in the analytics of risk, risk aversion and their applications to economic issues, and it stood ready to provide the theoretical underpinnings for the newly emerging “information revolution” in economics.1 Today choice under uncertainty is a field in flux: the standard theory is being challenged on several grounds from both within and outside economics. The nature of these challenges, and of our profession’s responses to them, is the topic of this paper.
Conflicting results have emerged from studies of the effects of governmental regulations on motor vehicle related deaths. A number of researchers have found that seat belts-first required by state laws-and designs chosen by manufacturers to meet Federal Motor Vehicle Safety Standards substantially reduced deaths to vehicle occupants in crashes.' However, Sam Peltzman has concluded that the effects of regulation on occupant fatalities are offset by increased nonoccupant deaths.2 He bases his analysis on trends in published fatality data in relation to economic and other variables. He hypothesizes that drivers have a "demand for risk" that is a function of "driving intensity," which is affected by a desire to increase earnings and by anticipated cost of crash involvement. According to Peltzman, drivers respond to increased occupant crash protection by increased "risky driving" to have more time to increase earnings, thus increasing the overall crash rate and injury to pedestrians, motorcyclists, and bicyclists. The assumptions, model, and data set forth by Peltzman will be examined here, and his conclusions will be found unwarranted. Data which he does not consider support the conclusion that motor vehicle safety standards are effective in reducing fatalities and that his theory of driver behavior is not supported empirically.
This article presents the results of an empirical study which estimates the number of reduced fatalities as a result of the imposed 55-mph speed limit. Time series data for the US from 1952 to 1979 is employed in a regression model capturing the relation between fatalities, average speed, variability of speed, and the speed limit. Also discussed are the alternative approaches to valuing human life and the value of time. Provided is a series of benefit-cost ratios based on alternative measures of the benefits and costs from life saving. The paper concludes that the 55-mph speed limit is not cost efficient unless additional time on the highway is valued significantly below levels estimated in the best reasearch on the value of time. 12 references, 1 table.
The results of this study argue that increases in state drinking ages do not save lives. Raising the drinking age raises the age of highest traffic fatality rate but does not produce any net savings of lives, because more lives are lost among older drivers than are saved among younger drivers. This study's conclusions differ from the conclusions of most previous studies of the subject. Some of these differences have been discussed. In the final analysis the question is not how many studies line up on each side, but whether the savings in lives predicted to result from raised drinking ages have in fact resulted. It is clear from even a casual glance at the data from recent years, and abundantly clear from a detailed analysis, that states that have raised their drinking ages have suffered a net increase in fatal crashes most likely to involve drinking among drivers under the age of twenty-one compared to states that did not raise their drinking ages. The increase is too small to be statistically significant, but it is large enough to say with assurance that raised drinking ages do not deter fatal crashes by young drivers. When individual age groups in the various states cited in this study are examined, some conclusions, albeit tentative, can be drawn. Raising the drinking age above eighteen has slight beneficial effects on eighteen-year- old drivers but more substantial negative effects on nineteen-, twenty-, and twenty-one-year-old drivers. Raising the drinking age above nineteen has similar but weaker effects on affected and just-older age groups. Twenty-year-olds appear to suffer sharp increases in fatal crashes when banned from drinking or when twenty is made the first year of legal drinking as a result of MLPA increases, but the data in this case are sparse. Raised drinking ages are associated with slight increases in fatal crashes among drivers under the age of eighteen.
Government agencies face difficult resource-allocation decisions when confronted with projects that will reduce risks of fatality. Evidence from individual behavior helps determine society's values for reducing risks. The most credible evidence is based on individuals' willingness to pay (or willingness to accept compensation) for small changes in risks. Studies of consumer behavior are limited, but more evidence is available relating wages to job risks. Contingent valuation studies reinforce the wage-risk implications, leading to a range of values that can be compared with the costs of proposals to reduce fatal risks.
The national 55 mile-per-hour speed limit was in effect from 1974 to 1987, and over the years many analysts have attempted to measure and compare its costs (enforcement and travel time) and benefits (safety and fuel economy). In 1984 a committee of the National Research Council completed a major study of the speed limit. The following article completes the committee's calculations; summarizes the results in units of money, lives, and travel time; and divides these effects between rural interstates and all other roads. Over a range of plausible dollar values for extra travel time, the cost of saving a life is estimated to be much higher on rural interstates than on other affected roads-and higher than the cost of saving a life by other highway safety measures as well. Hence, proponents of higher speed limits on the rural interstates have a strong case in the debate, which continues in the state legislatures.
Since the mid-1970s numerous states have raised their minimum legal drinking age in an effort to reduce alcohol-related traffic accidents. This study examines determinants of a variety of traffic fatality rates at the state level for 1978, with particular attention to drinking age and drinking experience. The legal drinking age has no perceptible influence on fatalities, but inexperience in drinking is an apparent risk factor independent of age. The findings suggest that the effectiveness of higher drinking ages as a safety policy tool probably has been overstated.
Automobile safety standards adopted because of federal legislation have, according to many researchers, failed to save lives; safer cars, they infer, induce more dangerous driving. Results from the major study suggesting this conclusion are shown, however, to be quite sensitive to reasonable changes in the empirical model. An alternative statistical analysis of death rates supports a very different conclusion: Safety standards have saved tens of thousands of lives during the 1970s. More broadly, the article illustrates some general pitfalls in using statistical results in policy analysis, and how they can be avoided.
The expectation that the government will respond to future circumstances, say bailing out a dictator to avoid a bloodbath, or raising taxes on immovable capital investments, often hinders the establishment of appropriate incentives for efficient behavior. The government's dilemma, simply, is that it may be unable to commit future governments not to be responsive. Contracts and constitutional provisions are mechanisms to limit responsiveness. So too are arrangements that increase the cost of being responsive, or build reputations for adhering to certain patterns of behavior. A promising strategy for being responsive is to base government actions on variables not under the control of individuals, such as unalterable characteristics or aggregate outcomes. These are at best palliative measures: Informed policy making must recognize the tension between providing appropriate incentives and permitting government to be responsive.
Using a new series of data on occupational fatalities compiled by the National Institute for Occupational Safety and Health, the authors reassess value-oflife calculations based on labor market tradeoffs between fatality risks and wages. The new data are less subject to the problems of measurement error that plague previously used measures of risk. They indicate higher risk levels than previously believed and a significantly different composition of risk levels within industries. The more comprehensive risk data yield value-of-life estimates of §5 million or more-at least twice as large as estimates obtained using the Bureau of Labor Statistics risk data employed in previous studies. © 2008 the Association for Public Policy Analysis and Management.
This article provides the first controlled evaluation of how different information materials explaining the risks from radon influenced people's perceptions of these risks. Using a panel study, it was possible to observe how stated risk perceptions responded to information about indoor radon concentrations and brochures explaining the radon readings. The findings indicate that risk communication policies can be effective in modifying risk perceptions. Moreover, they have three specific implications for radon policy: (1) Public officials should not adopt strategies that provide minimal risk information to the public as a means of avoiding undue alarm, for this can have the reverse effect; (2) measures of the effectiveness of risk communication will depend on how education and behavior change are defined; (3) categorical guidelines about risk without quantitative information can lead people to treat the levels as thresholds, creating an artificial discontinuity in their responses to small changes in risk perceptions.
Within the context of driver trip production this paper examines the effects of the 55 m.p.h.speed limit on gasoline consumption in private cars. The focus is on the noticeable short-run reductions in speed and gasoline consumption immediately following the imposition of the national speed limit. Analysis of highway speeds indicates that indeed speeds were substantially lower than otherwise expected after the energy conservation measure took effect. When technical information on the speed-gasoline consumption relationship is considered, however, the effect on gasoline consumption is found to be surprisingly small. This finding is corroborated by direct analysis of gasoline demand.
This article described three heuristics that are employed in making judgements under uncertainty: (i) representativeness,
which is usually employed when people are asked to judge the probability that an object or event A belongs to class or process
B; (ii) availability of instances or scenarios, which is often employed when people are asked to assess the frequency of a
class or the plausibility of a particular development; and (iii) adjustment from an anchor, which is usually employed in numerical
prediction when a relevant value is available. These heuristics are highly economical and usually effective, but they lead
to systematic and predictable errors. A better understanding of these heuristics and of the biases to which they lead could
improve judgements and decisions in situations of uncertainty.
This survey describes the impact of judgements and choices about low probability, high consequence events on the policymaking process. Empirical evidence indicates that normative models of choice, such as expected utility theory, are inadequate descriptions of individual choices. The ambiguity of low probabilities also affects decisions in ways that are not normative. Further, people exhibit biases in judgments about risks and probabilities. These findings have stimulated development of new theories, such as prospect theory and generalized utility theories incorporating attributes such as regret. The authors survey many of these empirical results and explore their implications for policy. They consider the role of information, economic incentives, compensation, and regulation in inducing socially desirable effects through the reframing of outcomes. They suggest that surveys and experiments can help analysts better understand the decision process for low probability events and design more effective public policies.
Sumario: I. The pluralist perspective -- II. The birth of federal regulation -- III. The technology-forcing strategy -- IV. The Nixon White House and Ford's "Better Idea" -- V. Negotiating safety -- VI. Congressional stalemate -- VII. "Regulatory relief" and the Supreme Court -- VIII. The master pluralist -- IX. A new strategy at Ford.
This paper uses a national survey of 3,119 individuals to examine the effect of lung cancer risk perceptions on smoking activity. Both smokers and nonsmokers greatly overestimated the lung cancer risk of cigarette smoking, and the extent of the overestimation is much greater than the extent of underestimation. These risk perceptions in turn significantly reduce the probability of smoking, as suggested by an economic model of risky consumption decisions. Cigarette excise taxes in effect endow individuals with additional risk perceptions comparable to their current assessed lung cancer risks. Copyright 1990 by University of Chicago Press.
Technological studies imply that annual highway deaths would be 20 percent greater without legally mandated installation of various safety devices on automobiles. However, this literature ignores offsetting effects of nonregulatory demand for safety and driver response to the devices. This article indicates that these offsets are virtually complete, so that regulation has not decreased highway deaths. Time-series (but not cross-section) data imply some saving of auto occupants' lives at the expense of more pedestrian deaths and more nonfatal accidents, a pattern consistent with optimal driver response to regulation.
A maximum likelihood method for estimating and testing for the proper functional form in first difference regression models is developed. The parametric transformation of the regression variables we propose includes simple first differences and percentage changes as special cases. The method has a simple relationship to the familiar Box-Cox test, and the coefficient estimation and LR testing are easily implemented with standard regression packages. We apply the new method to three published studies: The St. Louis equation, a money demand model, and a model relating poverty to economic growth.
This study examined parameters under which risk compensation in driving can occur following the use of safety belts. Risk compensation theories hypothesize that if individuals use safety belts, they will drive in a more risky manner than if they do not use safety belts due to an increased perception of safety. Although the existence of risk compensation in driving has been debated in the literature for many years, the current study was the first experimental analysis of this theory that permitted a controlled examination of both between-subject and within-subject effects. This study required subjects to drive a 5-hp. go-kart around an oval track either buckled or unbuckled in the first of two phases of 15 driving trials. After the first phase the safety condition was switched for half the subjects (i.e., the safety belt was removed from subjects using it or was used by subjects who previously did not use it). Dependent measures included latency for each lap, deviations from the prescribed lane, and perceived safety while driving. The amount of time it took for subjects to travel to the go-kart track and their safety belt use during that trip was also measured. Risk compensation theory was not supported in the between-subject analyses of the research data; however, some within-subject comparisons did demonstrate risk compensation. Subjects who switched from not using the safety belt to using it increased driving speed during the second phase significantly more than subjects who used the safety belt during both driving phases. The study suggested that the occurrence of risk compensation is dependent upon individuals being able to compare the sensations using a safety belt with those of not using a safety belt. Risk compensation did not manifest itself in between-subject studies because this comparison could not take place. The implications of this study to driving automobiles on multi-user roadways is discussed. Suggestions for research to further expand the knowledge about how and when risk compensation occurs are also provided.
Based on a time series of state cross sections for the period from 1975 through 1981, we find that motor vehicle accident mortality rates of youths ages 15 through 17, 18 through 20, and 21 through 24 are negatively related to the real beer excise tax. We also find that the death rate of 18 through 20 year olds is inversely related to the minimum legal age for the purchase of beer. Simulations suggest that the lives of 1,022 youths between the ages of 18 and 20 would have been saved in a typical year during the sample period if the Federal excise tax rate on beer, which has been fixed in nominal terms since 1951, had been indexed to the rate of inflation since 1951. This represents a 15 percent decline in the number of lives lost in fatal crashes. The simulations also suggest that the lives of 555 youths per year would have been saved if the drinking age had been 21 in all states of the U.S. These figures indicate that, if reductions in youth motor vehicle accident deaths are desired, both a uniform drinking age of 21 and an increase in the Federal excise tax rate on beerare effective policies to accomplish this goal. They also indicate that the tax policy may be more potent than the drinking age policy.
A re-estimation of the basic Peltzman (1975) model using a richer data set strongly indicates that mandated automobile safety legislation has been important in reducing traffic fatalities. There is little or no evidence of offsetting consumer behavior.
We briefly review the rationale behind technological alliances and provide a snapshot of their role in global competition, especially insofar as it is based around intellectual capital. They nicely illustrate the increased importance of horizontal agreements and thus establish the relevance of the topic. We move on to discuss the organisation of industries in a dynamic context and draw out consequences for competition policy. We conclude with an outlook on the underlying tensions between technology alliances, competition policy, and industrial policy.
CHIRINKO is an Assistant Professor of Public Policy, School of Public Policy Studies, University of Chicago
- Buckle Up
- Slow Down ? Robert S Edward P
- Harper
- Jr
Buckle Up or Slow Down? ROBERT S. CHIRINKO is an Assistant Professor of Public Policy, School of Public Policy Studies, University of Chicago. EDWARD P. HARPER, JR. holds a M.A. degree from the School of Public Policy Studies, University of Chicago. REFERENCES Arrow, Kenneth J. (1982), " Risk Perception in Psychology and Economics, " Economic Inquiry 20 (January), pp. 1-9.
The Value of Life Saving
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Estimation and Testing for Functional Form in First Difference Models The Regulation of Accidents Auto Safety Regulation: The Cure or the Problem?
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