Perhaps statins, antilock brakes, and vaccines are similar.
All three make life safer. Yes?
Safety Regulations and Risky Behavior
Statins
Assume we have an individual who mostly eats fruit, vegetables, chicken. Told that medication would diminish high cholesterol, that person adds a daily statin and enjoys more cheese, more steak, more ice cream. Her diet becomes less heathy.
Antilock Brakes
Somewhat similarly, we can think of safer driving. During the 1970s, the introduction of antilock brakes should have diminished the severity and number of accidents. When they did not, economists hypothesized that speedier driving offset the safety cushion.
Covid-19 Vaccines
Here, too, we can worry that the efficacy of Covid vaccines could be somewhat diminished by behaviors that are more likely to transmit the virus. People also might perceive the onset of herd immunity long before it arrives.
Our Bottom Line: Tradeoffs
Sam Peltzman was one of the first economists to suggest that safety regulations can make us less safe. The Peltzman Effect predicts that less risk creates the incentive for more unsafe behavior. As a result, when solving a safety problem, you can wind up with the results you are trying to prevent.
We can explain the Peltzman Effect (also called the offset hypothesis) by looking at tradeoffs. Returning to where we began, with statins we are trading some of our safety for delicious food, with anti-lock brakes, it’s faster trips, and for vaccines, we might exchange some safety for risky behavior.
Where are we? As economists, we know always to expect unintended consequences.
My sources and more: Calling it the offset hypothesis, Brookings looked at the Peltzman Effect in 2006 while my statin example is anecdotal. Much more recently, the same ideas were discussed for the pandemic, here and here. And at econlife, too, we have looked at the Peltzman Effect.
Finally, you might enjoy (as did I) this video of Sam Peltzman explaining the Peltzman Effect.
