Risk compensation

Booth's rule#2: "The safer skydiving gear becomes, the more chances skydivers will take, in order to keep the fatality rate constant"

Risk compensation (also Peltzman effect or risk homeostasis) is an observed effect in ethology whereby people tend to adjust their behavior in response to the perceived level of risk, behaving less cautiously where they feel more protected and more cautiously where they feel a higher level of risk. The theory emerged out of road safety research after it was observed that many interventions failed to achieve the expected level of benefits but has since found application in many other fields.

Notable examples include observations of increased levels of risky behavior by road users following the introduction of compulsory seatbelts and bicycle helmets and motorists driving faster and following more closely behind the vehicle in front following the introduction of anti-lock brakes. Note however that this effect may be small compared to the fundamental benefits of these interventions, resulting in a net safety benefit, albeit one slightly smaller than was expected.

It has also been suggested that free condom distribution programs often fail to reduce HIV prevalence as predicted due to an increase in risky sexual behavior and that safer skydiving has resulted in skydivers taking more risks. Again, evidence of this effect should not be used to argue against such interventions, unless it can be demonstrated that this behaviour change is so large as to negate all of the positive overall effect.

Shared space is a relatively new approach to the design of roads, where the level of uncertainty for drivers and other road users is deliberately increased by removing traditional demarcations between vehicle traffic such as railings and traffic signals, and has been observed to result in lower vehicle speeds and fewer road casualties. In Sweden, following the change from driving on the left to driving on the right there was a 40% drop in crashes, which was linked to the increased apparent risk. The crash rate returned to its former level after people became familiar with the new arrangement.^{[citation needed]}

Moral hazard is a related effect where a decision-maker benefits from the positive effects of a decision, with others suffering the related negative effects.

Examples

Road transport

Anti-lock brakes

Anti-lock braking systems are designed to increase vehicle safety by reducing skidding. The Insurance Institute for Highway Safety released a study in 2010 that found motorcycles with ABS 37% less likely to be involved in a fatal crash than models without ABS. A 2004 study found that ABS reduced the risk of multiple vehicle crashes by 18 percent, but had increased the risk of run-off-road crashes by 35 percent.

A number of studies which show that drivers of vehicles with ABS is to drive faster, follow closer and brake later, accounting for the failure of ABS to result in any measurable improvement in road safety. The studies were performed in Canada, Denmark and Germany. A study led by Fred Mannering, a professor of civil engineering at Purdue University supports risk compensation, terming it the "offset hypothesis". An study of crashes involving taxicabs in Munich of which half had been equipped with anti-lock brakes noted that crash rate was substantially the same for both types of cab, and concluded this was due to drivers of ABS-equipped cabs taking more risks.

Seat belts

A 2007 study based on data from the Fatality Analysis Reporting System (FARS) of the National Highway Traffic Safety Administration concluded that between 1985 and 2002 there were "significant reductions in fatality rates for occupants and motorcyclists after the implementation of belt use laws", and that "seatbelt use rate is significantly related to lower fatality rates for the total, pedestrian, and all non-occupant models even when controlling for the presence of other state traffic safety policies and a variety of demographic factors."

In 1994 research of people both wore and habitually didn't wear seatbelts had concluded that drivers were found to drive faster and less carefully when belted.

In Britain in 1981 at a time when the government was considering the introduction of seat belt legislation, John Adams, of University College London, suggested that there was no convincing evidence of a correlation between the seat-belt legislation and reductions injuries and fatalities based on a comparison between states with and without seat belt laws. He also suggested that some injuries were displaced from car drivers to pedestrians and other road users. The 'Isles Report' echoed these concerns. Adams subsequently argued that the reduction in fatalities that followed the introduction of legislation could not be attributed with confidence to seat-belt use due to the simultaneous introduction of breath testing for driving under the influence of alcohol.

Shared space

Shared space is an urban design approach which seeks to minimise demarcations between vehicle traffic and pedestrians, often by removing features such as curbs, road surface markings, traffic signs and regulations. Typically used on narrower streets within the urban core and as part of living streets within residential areas, the approach has also been applied to busier roads, including Exhibition Road in Kensington, London.

Schemes are often motivated by a desire to reduce the dominance of vehicles, vehicle speeds and road casualty rates. First proposed in 1991, the term is now strongly associated to the work of Hans Monderman who suggested that by creating a greater sense of uncertainty and making it unclear who had right of way, drivers reduce their speed, and everyone reduces their level of risk compensation. The approach is frequently opposed by organisations representing the interests of blind, partially sighted and deaf who often express a strong preference for the clear separation of pedestrian and vehicular traffic.

Speed limits

There is strong evidence that reducing speed limits normally reduces crash, injury and fatality rates, for example, a 2003 review of changes to speed limits in a number of jurisdictions showed that in most cases where speed limits had been decreased that the number of crashes and fatalities had decreased and that where speed limits had been increased the number of crashes and fatalities had increased.

A 1994 study by Jeremy Jackson and Roger Blackman using a driving simulator, reported that increased speed limits and a reduction of speeding fines had significantly increased driving speed but resulted in no change in the accident frequency. It also showed that increased accident cost caused large and significant reductions in accident frequency but no change in speed choice. The abstract states that the results suggest that regulation of specific risky behaviors such as speed choice may have little influence on accident rates.

Bicycle helmets

Main article: Bicycle helmet

The issue of risk compensation has been a central topic in the heated debate concerning the effectiveness of Bicycle helmet use and legislation. See Bicycle Helmet (Risk compensation section) for details.

Sport

Ski helmets

Recent studies have concluded that helmet use is not associated with riskier behavior among skiers and snowboarders, and that helmet usage reduces the risk and severity of head injuries.

Other studies indicate that skiers wearing helmets go faster on average than non-helmeted skiers, and that overall risk index is higher in helmeted skiers than non-helmeted skiers. Moreover, while helmets may help prevent minor head injuries, increased usage of helmets has not reduced the overall fatality rate.

Skydiving

'Booth's rule #2', often attributed to skydiving pioneer Bill Booth, states that "The safer skydiving gear becomes, the more chances skydivers will take, in order to keep the fatality rate constant". Even though skydiving equipment has made huge leaps forward in terms of reliability, including the introduction of safety devices such as AADs, the fatality rate has stayed roughly constant when adjusted for the increasing number of participants. This can largely be attributed to an increase in the popularity of high performance canopies, which fly much faster than traditional parachutes.^{[citation needed]} A greater number landing fatalities in recent years has been attributed to high speed manoeuvres close to the ground.

Safety equipment in children

Experimental studies have suggested that children who wear protective equipment are likely to take more risks.

Health

Risky sexual behavior and HIV/AIDS

Evidence on risk compensation associated with HIV prevention interventions is mixed. Harvard researcher Edward C. Green argued that the risk compensation phenomenon could explain the failure of condom distribution programs to reverse HIV prevalence, providing a detailed explanations of his views in an op-ed article for The Washington Post and an extended interview with the BBC. A 2007 article in the Lancet suggested that "condoms seem to foster disinhibition, in which people engage in risky sex either with condoms or with the intention of using condoms". Another report compared risk behaviour of men based on whether they were circumcised.

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. 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 Peltzman effect.

Risk homeostasis

Professor Gerald J. S. Wilde, a professor emeritus of psychology at Queen's University, Kingston, Ontario, Canada noted that when Sweden changed from driving on the left to driving on the right in 1967, this was followed by a marked reduction in the traffic fatality rate for 18 months after which the trend returned to its previous values. It was suggested that drivers had responded to increased perceived danger by taking more care, only to revert to previous habits as they became accustomed to the new regime.^{[citation needed]} This hypothesis is elucidated in Wilde's book. The hypothesis of risk homeostasis holds that everyone has his or her own fixed level of acceptable risk. When the level of risk in one part of the individual's life changes, there will be a corresponding rise or fall in risk elsewhere to bring the overall risk back to that individual's equilibrium. Wilde argues that the same is true of larger human systems, e.g. a population of drivers.

For example, in a Munich study, part of a fleet of taxicabs were equipped with anti-lock brakes (ABS), while the remainder had conventional brake systems. In other respects, the two types of cars were identical. The crash rates, studied over 3 years, were a little higher for the cabs with ABS, and Wilde concluded that drivers of ABS-equipped cabs took more risks, assuming that ABS would take care of them; non-ABS drivers were said to drive more carefully since the could not rely on ABS in a dangerous situation. There is much more to this study as shown in following reference: Likewise, it has been found that drivers behave less carefully around bicyclists wearing helmets than around unhelmeted riders.

The idea of risk homeostasis has garnered criticism. Some critics say that risk homeostasis theory is contradicted by car crash fatality rates. These rates have fallen after the introduction of seat belt laws.

Other sources

• Adams, John (1995). Risk. Routledge. ISBN 1-85728-068-7. 
• Wilde, Gerald J.S. (1994). Target Risk. PDE Publications. ISBN 0-9699124-0-4. Retrieved 2006-04-26. 

External links

• 'Naked' streets are safer, say Tories – The Times
• 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)
• "Regulation and the Natural Progress of Opulence" (PDF), a lecture by Peltzman at the American Enterprise Institute in 2004
• "Buckle Up Your Seatbelt and Behave - Do we take more risks when we feel safe? " William Ecenbarg Smithsonian magazine April 2009