The Peltzman Effect

Do safety measures actually reduce risk? While safety measures themselves can certainly help to lower risk, the Peltzman Effect suggests that when safety measures are implemented, people actually tend to increase their risky behaviors. Why does this happen? According to the Peltzman Effect, when safety measures are implemented, people’s perception of risk decreases, and so people may feel that they can now afford to make riskier decisions. As a result, the phenomenon predicts that mandatory safety measures actually experience a lower benefit than we would expect, because the safety benefits brought about by these measures are offset to some extent by increases in risky behavior.¹

Although the Peltzman Effect has now been applied to a wide range of domains such as extreme sports, health-related behaviors, and financial investments, it was initially first studied with regards to automobile safety, after new automobile safety measures had been introduced in the late 1960’s. It was found that although these new safety measures reduced the risk of death if an accident occured, there was actually no decrease in automobile death rates, because the safety benefits had been offset by an increase in the number of accidents taking place. In fact, Peltzman concluded that while these safety measures increased safety for vehicle occupants, they led to increased deaths for bystanders such as pedestrians or other drivers on the road. Based on the Peltzman Effect, this was because drivers believed that there was a lower risk, so they were more likely to drive recklessly, which ultimately cancelled out the benefits from the safety measures.¹