Sports: Restricting improving technology does not always have expected outcome
The idea for his research has its roots in a 1970s study related to mandatory seatbelt use and safety. The Peltzman effect, named after economist Sam Peltzman, hypothesizes that people tend to react to a safety regulation by increasing other risky or “offsetting” behavior. After the institution of mandatory seatbelt laws, Peltzman found that people tended to drive more recklessly. Regulations meant to protect car occupants from the consequences of bad driving actually seemed to encourage bad driving.
McFall’s research is the first to look at offsetting behavior from an opposite approach, when an improving technology is prohibited rather than required.
Other examples where this research might have policy-making applications is the National Transportation Safety Board’s recommendations to ban drivers from using hands-free cell phone devices, including wireless headsets, and proposed legislation limiting computer-modeled stock market transactions.
“Economics is like water going down a hill,” says McFall. “Regulation is like a rock that forces water around it. Like the water finding a way around a rock, people will find a way around the regulation. So, understanding the relationship between people’s risk tolerance and responses to technological change can aid in policy-making decisions in a number of settings.”