Does the Enforcement Design Exacerbate the ‘Peltzman Effect’? Evidence from Driver Record Point and Road Safety in Italy

Abstract:     
The ‘Peltzman effect refers to a moral hazard case where people react to safety regulation by increasing other risky behaviors. We investigate whether the enforcement design affects the emergence and the extent of offsetting responses after the introduction of a point – record driving license in Italy. We find that the new sanction mechanism reduced road accidents but produced heterogeneous effects on traffic offenses. Actually, if seat belt offenses benefitted the most by the adoption of the point - record driving license, deterrence of other driving behaviors occurred to a smaller and vanishing extent. Our results point out that seat belt use is generally associated with offsetting responses and that, specifically, compensatory behaviors has occurred with a relatively greater intensity under the penalty point system, through an increase in dangerous speeding and drunk driving offenses. We ascribe this last finding to drivers’ strategic re-directing of penalty points towards the most rewarding uses. Thus the new penalty point system has exacerbated compensatory behaviors. Some policy options are then suggested.

Keywords: offsetting behavior, point – record driving license, seat bealts, traffic law enforcement, traffic fatalities

JEL Classification: D02, K32, K42, L51

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