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An Empirical Test of the Offset Hypothesis

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  • Sen, Anindya

Abstract

I exploit cross-province and time-series variation in Canadian mandatory seat belt legislation to empirically test the offset hypothesis. The results of this study offer modest evidence of the existence of offsetting behavior by drivers. Specifically, increased use of seat belts by drivers after the enactment of seat belt legislation should have led to a 29 percent decrease in driver fatalities. However, econometric estimates indicate that the introduction of seat belt legislation is significantly correlated with only a 21 percent decline in driver fatalities. Furthermore, the use of legislative and nonlegislative factors to control for the effects of independent determinants of traffic fatalities is critical, as the omission of these effects implies that seat belt laws are associated with roughly a 32 percent decrease in driver deaths, thus implying an absence of significant offsetting behavior. Copyright 2001 by the University of Chicago.

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  • Sen, Anindya, 2001. "An Empirical Test of the Offset Hypothesis," Journal of Law and Economics, University of Chicago Press, vol. 44(2), pages 481-510, October.
  • Handle: RePEc:ucp:jlawec:v:44:y:2001:i:2:p:481-510
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    File URL: http://dx.doi.org/10.1086/322051
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    References listed on IDEAS

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    1. Lindgren, Bjorn & Stuart, Charles, 1980. "The Effects of Traffic Safety Regulation in Sweden," Journal of Political Economy, University of Chicago Press, vol. 88(2), pages 412-427, April.
    2. Garbacz, Christopher, 1990. "Estimating seat belt effectiveness with seat belt usage data from the Centers for Disease Control," Economics Letters, Elsevier, vol. 34(1), pages 83-88, September.
    3. Evans, William N & Graham, John D, 1991. "Risk Reduction or Risk Compensation? The Case of Mandatory Safety-Belt Use Laws," Journal of Risk and Uncertainty, Springer, vol. 4(1), pages 61-73, January.
    4. Peterson, Steven & Hoffer, George & Millner, Edward, 1995. "Are Drivers of Air-Bag-Equipped Cars More Aggressive? A Test of the Offsetting Behavior Hypothesis," Journal of Law and Economics, University of Chicago Press, vol. 38(2), pages 251-264, October.
    5. Peltzman, Sam, 1975. "The Effects of Automobile Safety Regulation," Journal of Political Economy, University of Chicago Press, vol. 83(4), pages 677-725, August.
    6. Wesley A. Magat & Michael J. Moore, 1996. "Consumer Product Safety Regulation in the United States and the United Kingdom: The Case of Bicycles," RAND Journal of Economics, The RAND Corporation, vol. 27(1), pages 148-164, Spring.
    7. Crandall, Robert W & Graham, John D, 1984. "Automobile Safety Regulation and Offsetting Behavior: Some New Empirical Estimates," American Economic Review, American Economic Association, vol. 74(2), pages 328-331, May.
    8. Fowles, Richard & Loeb, Peter D, 1989. "Speeding, Coordination, and the 55-MPH Limit: Comment," American Economic Review, American Economic Association, vol. 79(4), pages 916-921, September.
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    Cited by:

    1. Antonio Nicita & Simona Benedettini, 2012. "The Costs of Avoiding Accidents.Selective Compliance and the 'Peltzman Effect' in Italy," Department of Economics University of Siena 631, Department of Economics, University of Siena.
    2. Anindya Sen & May Luong, 2008. "Estimating The Impact Of Beer Prices On The Incidence Of Sexually Transmitted Diseases: Cross-Province And Time Series Evidence From Canada," Contemporary Economic Policy, Western Economic Association International, vol. 26(4), pages 505-517, October.
    3. Liqun Liu, 2008. "Spillover of cause-specific longevity interventions: an independent mortality risk model," The European Journal of Health Economics, Springer;Deutsche Gesellschaft für Gesundheitsökonomie (DGGÖ), vol. 9(2), pages 193-201, May.
    4. Dee, Thomas S. & Sela, Rebecca J., 2003. "The fatality effects of highway speed limits by gender and age," Economics Letters, Elsevier, vol. 79(3), pages 401-408, June.
    5. Elizabeth Kopits & Maureen Cropper, 2008. "Why Have Traffic Fatalities Declined in Industrialised Countries?: Implications for Pedestrians and Vehicle Occupants," Journal of Transport Economics and Policy, University of Bath, vol. 42(1), pages 129-154, January.
    6. Thomas Traynor, 2003. "The impact of safety regulations on externalities," Atlantic Economic Journal, Springer;International Atlantic Economic Society, vol. 31(1), pages 62-70, March.
    7. Anderson, D. Mark & Sandholt, Sina, 2016. "Booster Seats and Traffic Fatalities among Children," IZA Discussion Papers 10071, Institute for the Study of Labor (IZA).
    8. Liu, Liqun & Neilson, William S., 2006. "Endogenous private safety investment and the willingness to pay for mortality risk reductions," European Economic Review, Elsevier, vol. 50(8), pages 2063-2074, November.
    9. Clifford Winston & Vikram Maheshri & Fred Mannering, 2006. "An exploration of the offset hypothesis using disaggregate data: The case of airbags and antilock brakes," Journal of Risk and Uncertainty, Springer, vol. 32(2), pages 83-99, March.
    10. Benedettini, Simona & Nicita, Antonio, 2012. "The costs of avoiding accidents: Selective compliance and the ‘Peltzman effect’ in Italy," International Review of Law and Economics, Elsevier, vol. 32(2), pages 256-270.
    11. Pavel A. Yakovlev & Margaret Inden, 2010. "Mind the Weather: A Panel Data Analysis of Time-Invariant Factors and Traffic Fatalities," Economics Bulletin, AccessEcon, vol. 30(4), pages 2685-2696.

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