Most of economics can be summarized in four words: "People respond to incentives." The rest is commentary.#5103•
I am old enough to remember the late 1970s and waiting half an hour to buy a tank of gasoline at a federally controlled price. Virtually all economists agreed that if the price were allowed to rise freely, people would buy less gasoline. Many noneconomists believed otherwise. The economists were right: When price controls were lifted, the lines disappeared.#5109•
Back when seat belts (or air bags or antilock brakes) were first introduced, any economist could have predicted one of the consequences: The number of car accidents increased. That's because the threat of being killed in an accident is a powerful incentive to drive carefully. But a driver with a seat belt or an air bag faces less of a threat.
Because people respond to incentives, drivers are less careful.
The result is more accidents.#5105•
How big is the effect in question? How many additional accidents are caused by seat belts, air bags, and other safety equipment? Here is a striking way to frame the question: Seat belts tend to reduce the number of driver deaths by making it easier to survive an accident. At the same time, seat belts tend to increase the number of driver deaths by encouraging reckless behavior.
Which effect is the greater? Is the net effect to decrease or to increase the number of driver deaths?#5093•
The first person to do that was Sam Peltzman of the University of Chicago. He found that the two effects are of approximately equal size and therefore cancel each other out. When seat belts were first introduced (along with padded dashboards and collapsible steering columns) there were more accidents and fewer driver deaths per accident, but the total number of driver deaths remained essentially unchanged.
Pedestrian deaths, however, appear to have increased—pedestrians, after all, are not equipped with padded dashboards.
Subsequent studies have found comparable results for air bags and antilock brakes.#5102•