Peltzman effect: what is it and what does it explain about social psychology?

The Peltzman effect shows compensatory behaviors that go against protective measures.

Do you know what the Peltzman effect is? It is a phenomenon observed by an economist from the United States (USA), Sam Peltzman, in 1975.

It is an effect that is related to laws, government security measures and risky behaviors in society. In this article we will see what is the relationship between these elements, what this effect consists of, and what are the most relevant researches of this economist in relation to three types of US laws.

Peltzman effect: what does it consist of?

The Peltzman effect is defined as the tendency of people to adopt more risky behaviors in the face of more security measures. This effect was observed by an economist and professor at the University of Chicago, Sam Peltzman.

Through his studies dedicated to the automobile industry, he saw how, the more safety measures, the more risk-taking behavior on the part of drivers.In other words, the number of accidents was not reduced, as expected with such measures.

Peltzman gave the following explanation for this phenomenon: drivers "compensated" for these measures by engaging in risky and dangerous behavior. (as we have seen, what the economist defined as the Peltzman effect).

This effect is mainly spoken of by liberal thinkers, who believe that if the state offers more protective measures, society will act more risky and each of us will stop taking responsibility for ourselves and others. In other words: the greater the security, the greater the irresponsibility in making decisions on the part of citizens and the greater the risk of these decisions.

Research

Sam Peltzman's research on the Peltzman effect went beyond security measures (or regulations) by the state, and studied other types of measures/regulations as well. However, it must be said that his studies on security were the most relevant.

Regulation and the natural progress of opulence was one of Peltzman's most relevant essays.which deals with economics and state regulations. In it, he establishes five basic premises:

• That favorable effects appear in different areas of social life as a consequence of sustained economic progress.
• That such effects may be slow and sometimes not very visible.
• That governments want to accelerate such effects through regulations.
• That people adopt "neutralizing" behaviors.
• That regulations are only eliminated if very disastrous results appear.

Laws studied by Peltzman

Through his research on the Peltzman effect, Sam Peltzman focuses on the study of three types of legislation (laws) of various types in the United States (US). (laws), of different types, in the United States (US).

Here we will see the conclusions drawn from studying the results of each of these laws, and their relationship with the Peltzman effect:

1. The Motor Vehicle Traffic and Safety Act (1966)

This law was intended to increase road safety and, as a consequence, reduce the number of traffic accidents (and their associated fatalities). Statistics for the years 1925-1960 revealed that the number of deaths in traffic accidents was reduced by 3.5% per year.. In other words, safety had improved (before the Act).

What was the reason for this improvement? To different factors: driver knowledge, better roads, etc. Specifically, this law was based on the fact that safety on the roads basically depended on the safety elements available in cars, which had the function of protecting their occupants from accidents (or rather, from their consequences).

However, Peltzman found that these regulations or safety measures by the government, indirectly encouraged drivers to engage in more risky behavior, because "the greater the protection, the greater the risk.because "the greater the protection, the lower the price of being risky" (i.e., there was a "trade-off" that drivers had in mind).

Results

Thus, the additional risks outweighed the benefits of these safety measures; however, Peltzman failed to calculate the exact proportions of these data.

Thus, through this Act, although the number of deaths (of car occupants) due to traffic accidents decreased, the number of accidents (of cyclists, motorcyclists and pedestrians) increased significantly.and the number of deaths of cyclists, motorcyclists and pedestrians increased markedly.

Thus, between 1966 and 2002 (i.e., since the Law came into force), total deaths per accident decreased by 3.5% per year, the same figure as before the Law, although the number of accidents did increase, as we have seen.

2. The Americans with Disabilities Act (1990)

Another study that also evidences the Peltzman effect. Thus, this law prohibits any type of discrimination against people with disabilities in the workplace, and requires that they be offered the opportunity to work.and requires that they be offered a job that is appropriate to their disability.

Before 1990, employment of people with disabilities was already increasing. However, after the law was passed, different studies showed how employment had been reduced in this group. How could this be? It seemed that the law was having just the opposite effect: creating incentives not to hire people with disabilities.

Specifically, what was happening was the following: before the law, some employers hired people with disabilities; sometimes everything went smoothly, and sometimes it did not, which caused the employer to dispense with their services.

What happened with the passing of the Law? That The relative costs of hiring and firing increase..... If the employer did not hire a person with a disability, he could be accused of discrimination, but if he hired and then fired him, he could also be accused of discrimination, and the costs were higher.

Results

According to Sam Peltzman, with the passage of this Act, the employer had to face the cost of hiring and the cost of not hiring.. However, since the former (costs of hiring) were higher, the employer tended not to hire people with disabilities.

Thus, the reduction occurred in new hires after the law, and not so much in the dismissals of those who were already working.

3. The Endangered Species Act (1973)

The third law studied by Peltzman alluded to endangered animals, and the Peltzman effect also appeared in his studies. The Peltzman effect also appeared in his studies, the Act's mission was to protect endangered species.and orders the Fish and Wildlife Service (FWS) to determine which species are endangered (or may be endangered in the future) and which are not.

Thus, the species included in this list were "protected" (since the private owners of their habitat areas could not alter anything that could harm them). What happened? In 1973, the list included 119 species.

Results

In the following 30 years, 40 new species were added to the list every year. The results show that in 30 years only 6 species had been "saved" (no longer considered endangered). Thus, the results of the law were very negative, the results of the law were very negative..

How did Sam Peltzman explain this? This researcher alludes to a neutralizing behavior of people, which he himself calls "preventive development".. To illustrate this, he gives an example: the woodpecker species. This species resides on farms with many trees. If the bird appeared on one of these farms, the owners of nearby farms would cut down the trees (otherwise they would lose all the wood). The same thing happened with other types of species, which ended up leading to the poor recovery of the species shown in Peltzman's results.

Conclusions

We have seen some of Sam Peltzman's most impactful studies, which illustrate how and why the Peltzman effect occurs. From them we can draw two conclusions: if a safety or security law or regulation is enacted, a behavioral impact study should be conducted first, a behavioral impact study should be carried out beforehand..

On the other hand, it is important that, after a specific time interval following the approval of a type of Law such as those exemplified, it is advisable to review whether said Law (regulation or measure) has offered positive or negative results in terms of its initial mission.

Bibliographical references:

• Bambarén, C. and Chú, M. (2013). Regulation of transport and traffic accidents by motor vehicles in Peru. Rev Med Hered, 24(4): 305-310.
• Gregory Mankiw, N. (2012). Principles of economics. (6th Ed.). Cengage Learning.
• Peltzman, S. (2013). Regulation and the Wealth of Nations: The Connection between Government Regulation and Economic Progress.