The Peltzman Effect (also Risk Compensation) denotes a behavioral response in which risk management measures or regulation mandating risk reduction may have the unintended consequence of encouraging riskier behavior as people feel safer.
The effect has been highlighted by Peltzman in the context of safety belt regulation
Issues and Challenges
- It is generally difficut to isolate the impact of this behavior from other confounding factors
- Peltzman, S., 1975, “The Effects of Automobile Safety Regulation,” Journal of Political Economy, 83, 677–725