March 17, 2006
Moral Hazard Solution c. 1906

From a letter to the editor in the March 17, 1906 NYT:

It is especially desirable for the driver to sit on the left in an automobile, because, in case of collision, under the present custom, it is the passenger who is liable to be hurt, and this passenger is usually a woman.

There would be fewer collisions if the driver had to take the bump.


This sounds like a quasi-Peltzman solution to bad driving. For those not familiar, here is one explanation from fellow DOLer Michael Munger and one that is less sympathetic.

The basic idea is that if a bad driver imposes potential negative externalities on the rest of us, then seat belts and other safety measures, while laudable in as much as they protect the innocent, have the potential downside in encouraging even more risky (and dangerous) behavior by the bad driver. If a bad driver bore the entire cost of his bad behavior, then it is possible his driving would change. Whether the benefits of safety legislation outweigh the negatives is, of course, an empirical question.

What I find neat about little statements like the one from the NYT is that people were thinking like economists long before we economists came along.

Posted by Craig Depken at 01:39 PM in Economics  ·  TrackBack (0)

The statesman who should attempt to direct private people in what manner they ought to employ their capitals would not only load himself with a most unnecessary attention, but assume an authority which could safely be trusted, not only to no single person, but to no council or senate whatever, and which would nowhere be so dangerous as in the hands of a man who had folly and presumption enough to fancy himself fit to exercise it. -Adam Smith

Our Bloggers
Joshua Hall
Robert Lawson
E. Frank Stephenson
Michael C. Munger
Lawrence H. White
Craig Depken
Tim Shaughnessy
Edward J. Lopez
Brad Smith
Mike DeBow
Wilson Mixon
Art Carden

Blogroll

Search

Archives
By Author:
Joshua Hall
Robert Lawson
E. Frank Stephenson
Michael C. Munger
Lawrence H. White
Edward Bierhanzl
Craig Depken
Ralph R. Frasca
Tim Shaughnessy
Edward J. Lopez
Brad Smith
Mike DeBow
Wilson Mixon
Art Carden

By Month:
October 2008
September 2008
August 2008
July 2008
June 2008
May 2008
April 2008
March 2008
February 2008
January 2008
December 2007
November 2007
October 2007
September 2007
August 2007
July 2007
June 2007
May 2007
April 2007
March 2007
February 2007
January 2007
December 2006
November 2006
October 2006
September 2006
August 2006
July 2006
June 2006
May 2006
April 2006
March 2006
February 2006
January 2006
December 2005
November 2005
October 2005
September 2005
August 2005
July 2005
June 2005
May 2005
April 2005
March 2005
February 2005
January 2005
December 2004
November 2004
October 2004
September 2004
August 2004
July 2004

Powered by
Movable Type 2.661

Site design by
Sekimori

XML