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Private policing and private roads: A Coasian approach to drunk-driving policy
Abstract
"Alcohol-related traffic accidents are externalities, not because of drinking, but because of relatively free access to public roads. Access limits are Coasian (property-rights) policies, but more effective limits will arise if road owners are liable for failing to provide safe roads. This can be achieved by privatising roads, thereby creating strong incentives to employ innovative private traffic policing." Copyright (c) 2007 The Author. Journal compilation (c) Institute of Economic Affairs 2007.
Public policies are often made without much recourse to economic reasoning. Economists are often unaware of what is happening in the world of public affairs. As a result, both the quality of public decision-making and the role that economists play in it are less than optimal. This feature contains short articles on topics that are currently on the agendas of policy-makers, thus illustrating the role of economic analysis in illuminating current debates. Suggestions for future columns and comments on past ones should he sent to Daniel Weinberg, HHES Division, Bureau of the Census, Department of Commerce, Washington, DC 20233.
Alcohol involvement in auto crashes, homicides, and teen drinking is an important policy concern, and the price of alcohol may have significant effects on these behaviors. Are alcohol taxes quickly and fully passed on to consumers? Given the difficulties of accurately measuring beverage prices, are beer taxes a good empirical proxy for the price of alcohol? Using pooled cross section-time series data on state and Federal alcohol taxes and beverage prices, beer taxes are found to be poor predictors of alcohol prices. Controlling for state and period effects, excise taxes appear to be over-shifted: Retail prices rise by more than the amount of the tax, and the rise occurs within 3 months.
This empirical study evaluates the policy responsiveness of teen drinking in models that can condition on the unobserved state-specific attributes that may have biased conventional evaluations. The results demonstrate that cross-state heterogeneity can be important and that beer taxes have relatively small and statistically insignificant effects on teen drinking. Models of youth traffic fatalities also indicate that the conventional beer tax elasticities are not robust to additional controls for omitted variables. The importance of these omitted variables is illustrated by a counterfactual which compares models of nighttime fatalities to those that occur in the daytime when the rate of alcohol involvement is substantially lower.
Using self-reported data on patterns of alcohol use among individuals from the 1989-90 Behavioral Risk Factor Surveys, this study investigates effects of tort liability and third- and first-party insurance, alcohol prices, and criminal sanctions on frequency of binge drinking and driving under the influence of alcohol (DUI). Requiring drivers to purchase third-party insurance discouraged binge drinking, especially in states combining compulsory insurance with a surcharge for a DUI. Implementation of no-fault laws and switching from contributory to comparative negligence increased binge drinking, while higher alcohol prices reduced it. With one exception, neither tort nor contort deterrents affected the fraction of bingeing episodes after which the individual drove. Overall, it appears that deterrence of DUI is achieved by curbing behavior that leads to DUI, namely, binge drinking. Once individuals engage in binge drinking, it appears that many policies designed to be deterrents have little influence. Copyright 1995 by the University of Chicago.
This study describes premium penalties imposed by insurers for drunk driving and other chargeable accidents, assesses why variations in premiums for drivers with clean records and adverse records differ across states and insurers, and determines the effect of imposing penalties on persons convicted of drunk driving. There are significant differences among insurers in treatment of violators, both in underwriting and in premium setting-which are in part attributable to state policies, such as imposition of take-all-comer rules. Imposing premium surcharges for a charge of drunk driving has a significant deterrent effect on the probability of drinking and driving.
The increased use of private policing has led to a growing awareness that policing can no longer be thought of as just being about crime, but as the enforcement of order and the way it can be both established and maintained. Private Policing charts the development of social control mechanisms -- both public and private -- from historical, legal, ethical and managerial perspectives.
This report describes a study of the effects of a Scandinavian-style law concerning alcohol-impaired driving. The past two decades have seen the adoption throughout most of the developed world of drinking-and-driving laws based on principles originally developed in Norway and Sweden. The French law of July 12, 1978, was a part of this general development. Interrupted time-series analysis of French data on crash-related injuries and fatalities shows that the 1978 law had a notable deterrent effect, but that the effect was not permanent.
Throughout the world, people concerned with the problem of drinking and driving have a sore the impression that in Scandinavia- Particularly in Sweden and Norway- that problem has been controlled by means of law. Swedish and Norwegian laws on drinking and driving have, in the past, been distinguished from the laws of other nations by their use of prison as the routine and all day and by the prohibition, not(much while driving, but of attaining a specified level of blood-alcohol as determined by scientific tests of bodily substances. To date, however, very little information other than personal experiences and addict oats has been provided by the Scandinavians and their admirers to support the claim that the Swedish and Norwegian legal approach has the turd drinking drivers. This report presents the findings of a three-month visit to Scandinavia for the purpose of obtaining systematic evidence concerning this deterrents hypothesis for evaluation by the technique of interrupted timeseries analysis To visit found that the widespread belief in the deterrent effect of the Swedish and Norwegian laws has little solid support. The arguments appearing in the Scandinavian literature are inconclusive, and the application of interrupted timeseries method to the available data is not for a support for the current hypothesis. The impression that there is strong and convincing evidence to believe that the Scandinavian laws have detergent drinking and driving is all. This impression they be fairly characterized as "the Scandinavian myth." Available: http://www.jstor.org/stable/724144 Language: en
Some scholars who recognize threats to private property rights from the legislative process, contend that common law is fundamentally different as it establishes 'efficient' rules. Mises argued that such a sharp distinction is inappropriate. This presentation illustrates the significant and growing threat that common-law courts pose to property rights by focusing on product-liability tort law. Recent changes in tort law such as the increasing application of strict liability, growing damage awards for intangible harms and as punishment, and reduced requirements of actual causation, have made the property rights to producers' income increasingly insecure. These rights are 'up for grabs' for anyone who can establish a claim, and this has led to a race for property rights accompanied by tremendous dissipation of wealth. The findings support Mises's view and contradict claims of the efficiency of common law.
Developing countries are introducing private financing in road construction and operation. Franchising process is more and more made though auctions. Private participation is not without problems, some of which are due to the auction design. In this paper we seek to point out the main contributions of Auction Theory that are relevant to design an auction to franchise roads. In auction design details matter and make the difference between a successful auction and a total failure. We pay attention to the mechanism proposed by Engel et al. (97) to allocate road franchises. In particular, we analyze private value and common value aspects present in the model, and we verify the properties (virtues) of the model related to the optimal allocation of risk of Least Present Value Auctions. However we discuss the results of Engel model in relation to optimality of the auction, since it is based in too simple assumptions and does not take into account private value aspects present in the auction. We suggest to implement British auctions to allocate road franchises if bidders are symmetric and risk neutral, and if common value problems are present in the auction. We also suggest that the type of auction to be chosen is not independent of the object to be auctioned. If the object to be auctioned is the duration of the franchise, then the common value problem is bigger than in the case that the object to be auctioned is the present value of income. So, the impact in expected auctioneer income of the use of British auctions is bigger than in the second case.
Summarizes research on the sensitivity of alcohol use and abuse to price changes, and explores the potential of economic research in understanding and mitigating some of the adverse social and medical effects of alcohol. Using statistical–economic simulation techniques, it was found that increases in alcoholic beverage prices would lead to substantial reductions both in the frequency of youth alcohol consumption and in heavy drinking among the young. The effects of alcoholic beverage taxes and prices on various measures of alcohol abuse, including motor vehicle fatality rates and liver cirrhosis death rates are discussed. Results show that increases in federal, state, and local taxes on alcoholic beverages are found to be a potentially effective policy for reducing alcohol consumption and alcohol-related injuries and deaths. (PsycINFO Database Record (c) 2012 APA, all rights reserved)
California has authorized four toll road to be constructed and operated by private groups, and it is considering more. Construction on a similar 14-mile project in Virginia will begin in 1992. Florida, Texas, and Colorado are considering proposals for private toll roads, and there is talk of a 500-mile private connection between Chicago and Kansas City. Outside the United States, private groups are operating toll roads in France and Italy. Indeed, the idea of private toll roads is making a comeback.
The Problem to be ExaminedThe Reciprocal Nature of the ProblemThe Pricing System with Liability for DamageThe Pricing System with No Liability for DamageThe Problem Illustrated AnewThe Cost of Market Transactions Taken into AccountThe Legal Delimitation of Rights and the Economic Problem
Reputation is possible in a small community, but in the Smith‐Lippmann‐Hayekian Great Society people are mainly strangers. I model credit reporting as a system of formalized and surgically‐precise gossip. In the Great Society credit reporting makes possible reputations, which make possible credit relationships. But forming a credit reporting system is no simple matter. Historically it has been local gossip in the small community that has made possible credit reporting “gossip” in the Great Society.
Most studies of alcohol-related traffic fatalities find beer taxes to be an important policy variable. This is surprising since beer taxes only have a small impact on consumption and heavy drinkers are the least responsive to prices. This study shows that the tax relationship is not robust across data periods and that it reflects missing variable biases. While lack of control for law enforcement effort does not appear to bias tax coefficients, failure to include determinants of alcohol consumption other than taxes and drinking age and/or factors that simultaneously determine drinking behavior and political support for alcohol taxes apparently do.
This paper estimates the effects of beer prices, alcohol availability, and policies related to driving under the influence of alcohol on drinking and binge drinking among youths and young adults. Data are from a nationally representative survey of students in U.S. colleges and universities. Separate estimates are obtained for underage male and female students, as well as for older male and female students. The estimates indicate that the drinking practices of male college students are generally insensitive to the price of beer. However, underage drinking and binge drinking by female students do respond significantly to price, although both are relatively inelastic. The results also show that strong drunk driving policies targeting youths and young adults significantly reduce drinking and binge drinking by male students. Similarly, these policies reduce drinking among female college students but appear to have little impact on their binge drinking. Instead, the results indicate that many elements of campus life (including participation in a fraternity or sorority, living on campus, and the ready availability of alcoholic beverages) are among the most important determinants of drinking and binge drinking among college students. Copyright 1996 Western Economic Association International.
Using a panel of state-level data over the years 1982–2000, this study explores the potential relationship between alcohol policy, alcohol consumption, and rape by considering a number of theoretical and methodological issues. First, the potential relationship is examined in the context of an economics-of-crime model, controlling for various deterrence and opportunity cost variables. Second, unlike most studies, consumption of liquor and wine are considered as well as consumption of beer. A third focus is on the potential endogeneity of alcohol consumption. A fourth consideration dictates the focus on rape-rates rather than other violent crime rates. Several studies have discovered a tendency for relatively high alcohol consumption by both offenders and victims. Since rape victims are virtually all female, and at least some alcohol policy variables appear to have differential impacts on females and heavy-drinking males, an examination of policy impacts for rape-rates, unlike other types of violent crime, can suggest the nature of the alcohol-consumption–violence relationship. The empirical results support an “alcohol-increases-potential-victims-vulnerability” hypothesis. In the context of the economic theory of crime, this lowers the expected cost of rape to potential offenders and raises rape-rates. Tests for endogeneity of alcohol consumption and resulting simultaneous equation estimates reinforce this implication because they suggest that potential victims respond to relatively high rape-rates by reducing alcohol consumption.
Background:
There is a considerable body of prior research indicating that a number of public policies that limit alcohol availability affect youth traffic fatalities. These limitations can be economic (e.g., beverage taxation), physical (e.g., numbers or operating hours of alcohol outlets), or demographic (e.g., minimum legal drinking age). The estimated impacts of these policies differ widely across studies. A full-price theoretical approach suggests that people weigh the benefits of drinking against the sum of all the associated costs, including the price of the beverages themselves plus the difficulty of obtaining them and any additional risks of injury or punishment related to their use. This study tested one prediction of this model, namely that the impact from changing one availability-related cost depends on the level of other components of full cost.
Methods:
The current analyses concentrate on 2 forms of limitations on availability that have been shown to affect youth traffic fatalities: minimum legal drinking age (MLDA) laws and beer taxes. The interdependence between the impacts of MLDA and taxes is investigated using a panel of 48 US states over the period 1975 to 2001. All age-group-specific models control for numerous other variables previously shown to affect vehicle fatalities, as well as fixed effects to account for unexplained crosssectional and time-series variation.
Results:
The analyses showed that raising either MLDA or beer taxes in isolation led to fewer youth traffic fatalities. As expected, a given change in MLDA causes a larger proportional change in fatalities when beer taxes are low than when they are high.
Conclusions:
These findings suggest that a community's expected benefit from a proposed limitation on alcohol availability depends on its current regulatory environment. Specifically, communities with relatively strong existing policies might expect smaller impacts than suggested by prior research, while places with weak current regulations might expect larger benefits from the same policy initiative.
Sumario: Causes and consequences of drunk driving -- Law and criminal justice -- Countermeasures based in alcohol policy -- Countermeasures based in transportation policy -- Saving lives in spite of drunk driving -- Paradigms and policies
The purpose of this study is to estimate the effects of drunk driving deterrents and other alcohol related policies on drunk driving. The data set employed is an annual time-series of state cross-sections for the 48 contiguous states of the U.S. from 1982 through 1988. Total and alterative alcohol involved motor vehicle fatality rates, for the general population and for 18 to 20 year olds, are used as measures of drunk driving. The results indicate that the moat effective policies are increased beer taxes and mandatory administrative license actions. Maintaining the beer tax at its real 1951 value would have reduced fatalities by 11.5 percent annually, on average, during the sample period. A mandatory administrative license sanction of one year would have reduced fatalities by 9 percent. The next most effective policies are a 21 year old legal drinking age, preliminary breath test and dram shop laws and relatively large mandatory fines. These policies each reduce total fatalities by about 5 to 6 percent. No plea bargaining provisions and mandatory license sanctions upon conviction are also found to have some deterrent effect. Other drunk driving laws tested include mandatory jail sentences and community service options, illegal per se laws, and open container laws. None of these were found to have a deterrent effect on drunk driving.
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Economic studies using aggregate data generally find that higher taxes are the most effective policy to reduce drunk driving while criminologists report strong evidence supporting law enforcement measures in policy evaluations. This paper evaluates these differing perspectives using the aggregate data that is typically used in the economic literature. OLS and fixed effects models show that police can affect the probability of arrest for drunk driving and, in combination with evidence from DUI deterrence experiments, this suggests that the failure of economic models to detect deterrence reflects the lack of systematic and sustained police efforts against DUI.
In this article we present the strongest evidence to date that chronic heavy drinkers' consumption is responsive to changes in the price of liquor. We estimate that an increase in the liquor excise tax by one dollar (1967 prices) per proof gallon reduces the liver cirrhosis mortality rate by 5.4% in the short run and by perhaps twice that amount in the long run. (The liver cirrhosis mortality rate is a reliable proxy for the prevalence of chronic excess consumption.) Our estimate is based on an analysis of covariance of annual state-level data, for a 16-year panel of 30 states, with state excise taxes and per capita income as the covariates. Of course, our estimate is not sufficient to determine whether an increase in the liquor tax is worthwhile, much less to determine an "optimal" tax. It is, however, an important datum for making these determinations.
A testable hypothesis of deterrence theory is that efforts to increase the expected cost of criminal activity by increasing the threat of punishment should, other things being equal, reduce the crime rate. In this paper, we examine whether the incidence of drinking and driving is responsive to escalation of the punitive threat. The recent national campaign against drunk driving provides a natural experiment in which to test the predictions of deterrence theory. Using state level data over the 1975-1986 period, we report no conclusive evidence that any specific form of punitive legislation is having a measurable effect on motor vehicle fatalities. We report suggestive evidence that multiple laws designed to increase the certainty of punishment (e.g., sobriety checkpoints and preliminary breath tests) have a synergistic deterrent effect. The most striking finding is that mandatory seat belt use laws and beer taxes may be more effective at reducing drunk driving fatalities than policies aimed at general deterrence.