Peltzman effect
The Peltzman effect is the hypothesized tendency of people to react to a safety regulation by increasing other risky behavior, offsetting some or all of the benefit of the regulation. It is named after Sam Peltzman, a professor of Economics at the University of Chicago Booth School of Business.
From the foreword of a talk by Peltzman at the American Enterprise Institute:
Sam Peltzman is one of the few economists, and probably the only regulatory economist, to have an effect named after him — the “Peltzman effect.” The Peltzman effect arises when people adjust their behavior to a regulation in ways that counteract the intended effect of the regulation. So, for example, when the government passes a seatbelt law, some drivers may respond by driving less safely. It turns out that the Peltzman effect has widespread application and has spawned, like much of Professor Peltzman’s other work, a veritable cottage industry for economists.[1]
When the offsetting risky behavior encouraged by the safety regulation has negative externalities, the Peltzman effect can result in redistributing risk to innocent bystanders who would behave in a risk-averse manner even without the regulation. For example, if some risk-tolerant drivers who would not otherwise wear a seat belt respond to a seat belt law by driving less safely, there would be more total collisions. Overall injuries and fatalities may still decrease due to greater seat belt use, but drivers who would wear seat belts regardless would see their overall risk increase. Similarly, safety regulations for automobiles may put pedestrians or bicyclists in more danger by encouraging risky behavior in drivers without offering additional protection for pedestrians and cyclists.
The Peltzman effect has been used to explain Smeed's Law, an empirical claim that traffic fatality rates increase with the number of vehicle registrations per capita, and differing safety standards have no effect. Recent empirical studies have rejected Smeed's Law, which is inconsistent with the observation of declining fatality rates in many countries, along with the associated theory of risk homeostasis. [1]. Roy Baumeister has suggested that the use of helmets in football and gloves in boxing lead to examples of the effect[2].
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[edit] Media
This effect is referenced in the 9th season CSI: Crime Scene Investigation episode, Woulda, Coulda, Shoulda: "The safer they make the cars, the more risks the driver is willing to take. It's called the Peltzman effect."
[edit] See also
[edit] External links
- Sam Peltzman on IDEAS at RePEc
- Sam Peltzman podcast Interview at EconTalk
- "Regulation and the Wealth of Nations" (New Perspectives on Political Economy. Volume 3, Number 2, 2007, pp. 185 – 204)
- In "Scrap the Traffic Lights" John Stossel shows some concrete examples.
[edit] Notes
- ^ "Regulation and the Natural Progress of Opulence" (PDF), a lecture by Peltzman at the American Enterprise Institute in 2004
- ^ http://www.econtalk.org/archives/2011/11/baumeister_on_g.html
