The Peltzman Effect

Fact 1: Over the past 20 years, car makers have introduced a number of safety devices such as seatbelts, air bags and side impact bars .

Fact 2: At the same time, the number of road fatalities per mile driven has increased. How can you reconcile Fact 1 with Fact 2?

 

This can be explained by The Peltzman Effect. This is the hypothesized tendency of people to react to a safety regulation by increasing other risky behaviour, 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. Here it is explained by Herman:

All you have to do is look at this short video to see why we can take more risks in modern cars.

Would you agree with the narrator’s conclusion that “the roads today are safer for the dramatic increases made in car safety over the past fifty years”?