- From the article
- "The University of Chicago economist Sam Peltzman introduced the idea of moral hazard to health policy in 1975. His data, he claimed, showed that seatbelt laws backfire because when drivers feel safer they take more risks, canceling out any benefit. Also known as risk compensation, the concept rapidly caught on as an argument against regulation."
- "But later research (as well as a continued significant decline in fatalities per mile as safety improvements continued) poured cold water on his conclusions. Researchers occasionally find a small moral hazard effect that is rarely enough to outweigh benefits. However, in most studies in areas as diverse as the influence of bicycle helmets on rider speed and the human papillomavirus vaccine on teen sexual behavior, moral hazard simply isn’t observed."
For more information on safety belts and the politicization of safety, see
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Footnotes:
Link to Peltzman paper:
- The Effects of Automobile Safety Regulation
Abstract
- 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.
- Also a review from The Decision Lab: 'The Peltzman Effect'
Which includes:- History
- The Peltzman Effect was first introduced by economist Sam Peltzman in his study titled “The Effects of Automobile Safety Regulation”, published in the Journal of Political Economy in 1975.3 In the late 1960’s, new automobile safety measures such as seatbelt mandates and improved car safety technologies had been introduced, and Peltzman wanted to study whether these measures would lead to decreases in automobile death rates. Ultimately, Peltzman found that there was no decrease in automobile death rates, and theorized that this was because drivers felt safer and therefore were more likely to make riskier driving decisions, which consequently increased the likelihood of a car crash occurring. This theory later came to be known as the Peltzman Effect.
After Peltzman published his 1975 paper, several other researchers also conducted related studies on risk behavior. For example, John Adams, a geography professor at University College London, published a study in 1981 on the impact of seat belts on highway fatalities, in response to the British government’s consideration of implementing a seat belt law. According to Adams, “It appears that measures that protect drivers from the consequences of bad driving encourage bad driving. The principal effect of seat belt legislation has been a shift in the burden of risk from those already best protected in cars, to the most vulnerable, pedestrians and cyclists, outside cars.” Along with Peltzman’s findings, these other findings relating to how risk perception affects behaviour were grouped together under the concept of “risk compensation”. Extending on Peltzman’s findings, risk compensation is currently used to describe how people adjust their behaviors based on their perception of risk, with people tending to be more careful when we believe there is greater risk, and less careful when we feel that we are protected.
- The Peltzman Effect was first introduced by economist Sam Peltzman in his study titled “The Effects of Automobile Safety Regulation”, published in the Journal of Political Economy in 1975.3 In the late 1960’s, new automobile safety measures such as seatbelt mandates and improved car safety technologies had been introduced, and Peltzman wanted to study whether these measures would lead to decreases in automobile death rates. Ultimately, Peltzman found that there was no decrease in automobile death rates, and theorized that this was because drivers felt safer and therefore were more likely to make riskier driving decisions, which consequently increased the likelihood of a car crash occurring. This theory later came to be known as the Peltzman Effect.
- History