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Evaluating Automobile Inspection Policy Using Auto Insurance Data

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  • KUNIYOSHI SAITO

Abstract

"This paper examines the effect of mandatory periodic safety inspections on traffic accident rates. Using a data set of more than 15,000 auto insurance policyholders in Japan, we investigate the relationship between car age and accident rates and find little evidence that accident rates decline due to safety inspections, specifically in the inspection year. The result holds, even if we take the heterogeneity across drivers into account, and is robust to various parametric and nonparametric procedures. We conjecture that our results are obtained (a) because most motor vehicle accidents are not caused by mechanical failures and (b) because government regulations impose too strict and frequent inspections on car owners in Japan. "("JEL "C14, K32, L51, L98, R41) Copyright (c) 2008 Western Economic Association International.

Suggested Citation

  • Kuniyoshi Saito, 2009. "Evaluating Automobile Inspection Policy Using Auto Insurance Data," Contemporary Economic Policy, Western Economic Association International, vol. 27(2), pages 200-215, April.
  • Handle: RePEc:bla:coecpo:v:27:y:2009:i:2:p:200-215
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    References listed on IDEAS

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    1. Marc Poitras & Daniel Sutter, 2002. "Policy Ineffectiveness or Offsetting Behavior? An Analysis of Vehicle Safety Inspections," Southern Economic Journal, Southern Economic Association, vol. 68(4), pages 922-934, April.
    2. Leigh, J Paul, 1994. "Non-random Assignment, Vehicle Safety Inspection Laws and Highway Fatalities," Public Choice, Springer, vol. 78(3-4), pages 373-387, March.
    3. George J. Stigler, 1971. "The Theory of Economic Regulation," Bell Journal of Economics, The RAND Corporation, vol. 2(1), pages 3-21, Spring.
    4. Lewbel, Arthur, 2000. "Semiparametric qualitative response model estimation with unknown heteroscedasticity or instrumental variables," Journal of Econometrics, Elsevier, vol. 97(1), pages 145-177, July.
    5. Glazer, Amihai & Klein, Daniel B. & Lave, Charles, 1995. "Clean on Paper, Dirty on the Road: Troubles with California's Smog Check," University of California Transportation Center, Working Papers qt5514s0hg, University of California Transportation Center.
    6. Peltzman, Sam, 1975. "The Effects of Automobile Safety Regulation," Journal of Political Economy, University of Chicago Press, vol. 83(4), pages 677-725, August.
    7. Richard A. Posner, 1974. "Theories of Economic Regulation," Bell Journal of Economics, The RAND Corporation, vol. 5(2), pages 335-358, Autumn.
    8. David Hemenway, 1989. "A failing grade for auto inspections-and motorists like it that way," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 8(2), pages 321-325.
    9. Thomas N. Hubbard, 1997. "Using Inspection And Maintenance Programs To Regulate Vehicle Emissions," Contemporary Economic Policy, Western Economic Association International, vol. 15(2), pages 52-62, April.
    10. Yatchew,Adonis, 2003. "Semiparametric Regression for the Applied Econometrician," Cambridge Books, Cambridge University Press, number 9780521012263, March.
    11. Sutter, Daniel & Poitras, Marc, 2002. "The Political Economy of Automobile Safety Inspections," Public Choice, Springer, vol. 113(3-4), pages 367-387, December.
    12. Saffer, Henry & Grossman, Michael, 1987. "Drinking Age Laws and Highway Mortality Rates: Cause and Effect," Economic Inquiry, Western Economic Association International, vol. 25(3), pages 403-417, July.
    13. David Merrell & Marc Poitras & Daniel Sutter, 1999. "The Effectiveness of Vehicle Safety Inspections: An Analysis Using Panel Data," Southern Economic Journal, Southern Economic Association, vol. 65(3), pages 571-583, January.
    14. Thomas N. Hubbard, 1998. "An Empirical Examination of Moral Hazard in the Vehicle Inspection Market," RAND Journal of Economics, The RAND Corporation, vol. 29(2), pages 406-426, Summer.
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    More about this item

    JEL classification:

    • C14 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Semiparametric and Nonparametric Methods: General
    • K32 - Law and Economics - - Other Substantive Areas of Law - - - Energy, Environmental, Health, and Safety Law
    • L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation
    • L98 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Government Policy
    • R41 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Transportation Economics - - - Transportation: Demand, Supply, and Congestion; Travel Time; Safety and Accidents; Transportation Noise

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