Peltzman Effect
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[edit] Definition
The Peltzman Effect refers to the tendency of people to react to safety measures by increasing the risky behavior, or cease active safety measures, thus offsetting some, perhaps even all, of the benefit.
The effect is named after Sam Peltzman of the University of Chicago Graduate School of Business.
[edit] Examples
Speed limits have often been claimed to be a necessary highway safety regulation. However, when Montana removed speed limits on its interstates and rural highways, fatalities on those highways plummeted. Officials found that drivers responded to the lack of speed limits by being more careful and more courteous to other drivers, while only changing their speed by a few miles per hour. When speed limits were reinstated, this safe driver behavior disappeared and fatalities rose again.
Traffic engineers have found the same thing with other safety regulations. In northern Holland, traffic engineers have experimented with removing traffic safety signs. The result is drivers engaging in safer driving behavior.
The effect can occur in reverse as well. A recent study on cell phone use and vehicle crashes found that increased cell phone use did not increase crashes. The authors attributed this effect to drivers compensating by driving more safely when they talk on their cell phones, as well as ceasing other distracting behavior.
The reasons for this were laid out by W. Kip Viscusi of the Harvard Center for Risk Analysis in his book Rational Risk Policy. He found that people tend to overestimate small risks while underestimating larger risks. This results in an irrational market response to safety measures. He shows this effect in everything from safety caps on medicine to insurance. This also results in irrational regulations, since there is a tendency to overregulate small risks.
[edit] See also
[edit] References
- Sam Peltzman's faculty page
- Dornsife, Chad, "MONTANA: No Speed Limit Safety Paradox," The Highway Safety Group, 2/11/00
- McNichol, Tom, "Roads Gone Wild," Wired, Vol. 12 Issue 12
- Bhargava, Saurabh, and Vikram Pathania, "Driving Under the (Cellular) Influence: The Link Between Cell Phone Use and Vehicle Crashes," AEI-Brookings Joint Center for Regulatory Studies, July 2007
- Viscusi, W. Kip, Rational Risk Policy: The 1996 Arne Ryde Memorial Lectures, 1998. ISBN-13: 978-0-19-829363-7
