Peltzman Effect

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 University of Chicago Graduate School of Business Economics professor.

From the foreword of a talk by Peltzman at the American Enterprise Institute:

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 drivers with a high tolerance for risk who would not otherwise wear a seatbelt respond to a seatbelt law by driving less safely, there will be more total accidents. Overall injuries and fatalities may still decrease due to a higher percentage of drivers involved in accidents wearing seatbelts, but drivers who would wear seatbelts regardless will 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.

ee also

* Risk compensation

External links

* [http://www.chicagogsb.edu/fac/sam.peltzman Sam Peltzman faculty page]
* [http://www.econtalk.org/archives/2006/11/peltzman_on_reg.html Sam Peltzman podcast] Interview at EconTalk
* [http://pcpe.libinst.cz/nppe/3_2/nppe3_2_3.pdf"Regulation and the Wealth of Nations"] ("New Perspectives on Political Economy". Volume 3, Number 2, 2007, pp. 185 – 204)

Notes


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