Incentive Mechanisms for Safe Driving: A Comparative Analysis with Dynamic Data
AbstractRoad safety policies often use incentive mechanisms based on traffic violations to promote safe driving. Examples of mechanisms are fines, experience rating and point-record driving licenses. We analyse the effectiveness of these mechanisms in promoting safe driving. We derive their theoretical properties with respect to contract time and accumulated demerit points. These properties are tested empirically with data from the Quebec public insurance plan. We find evidence of moral hazard, which means that drivers who accumulate demerit points become more careful because they are at threat of losing their license. The insurance rating scheme introduced in 1992 reduced the frequency of traffic violations by 15%. We use this result to derive monetary equivalents for traffic violations and license suspensions.
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Bibliographic InfoPaper provided by HAL in its series Post-Print with number hal-00567866.
Date of creation: Feb 2011
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Publication status: Published, The Review of Economics and Statistics, 2011, 93, 1, 218-227
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Other versions of this item:
- Georges Dionne & Jean Pinquet & Mathieu Maurice & Charles Vanasse, 2011. "Incentive Mechanisms for Safe Driving: A Comparative Analysis with Dynamic Data," The Review of Economics and Statistics, MIT Press, vol. 93(1), pages 218-227, February.
- Jean Pinquet & Georges Dionne & Charles Vanasse & Mathieu Maurice, 2009. "Incentive Mechanisms for Safe Driving: A Comparative Analysis with Dynamic Data," Working Papers hal-00414479, HAL.
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- Georges Dionne, 2012. "The Empirical Measure of Information Problems with Emphasis on Insurance Fraud and Dynamic Data," Cahiers de recherche 1233, CIRPEE.
- Chandler, Vincent, 2012. "Assessing the Impact of Deterrence on Road Safety due to the Demerit Point System," MPRA Paper 39439, University Library of Munich, Germany.
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- Jean Pinquet, 2012. "Experience rating in non-life insurance," Working Papers hal-00677100, HAL.
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