November 13, 2006, Featuring Sam Peltzman
Sam Peltzman of the University of Chicago talks about his views on safety, regulation, unintended consequences and the political economy of bad regulation. The focus is on his pioneering studies of automobile safety and FDA pharmaceutical regulation and the perverse incentives that even good intentions can produce.
Readings and Links related to this podcast
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Podcast Readings
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Highlights
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Podcast Highlights
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| 0:42 | Automobile safety regulation |
| 1:37 | Seatbelts lower the price of safety, which causes people to take more risks |
| 6:17 | What were the reactions to Peltzman's findings? |
| 9:18 | Regulations change incentives |
| 11:12 | Non-economists' disbelief |
| 16:10 | Income effect: Hasn't demand for safety increased without government intervention as income has increased? |
| 20:02 | Unregulated innovations: turn-signals, rear-view mirrors. Unintended consequences of regulated changes: airbags. |
| 23:47 | FDA regulations, drug safety |
| 35:00 | Home-made deregulation, AIDS epidemic. World without the FDA, counterfactual (baseline comparison) |
| 42:19 | Why do these regulations persist? |
- On Ticket Scalping and Opportunity Cost: Josh Knox asks his friends a question posed by Mike Munger: Why am I reluctant to buy a ticket from a scalper for $1000, but likely to use one--rather than sell it for $1000--if I find it on the ground? Is that irrational? Maybe it's fear of fraud or the underground element in dealing with a scalper.
Posted by Russ Roberts
Comments (1)
I disagree with the 'bad reputation' idea. I think that it has more to do with anchoring and risk aversion. In other words, when I find the ticket I view it more as a 'free ticket' than as a 'free thousand dollars'.
People also tend to be more risk averse than rational. So in the first case I can predict that after the concert I will be worse off than I was before the concert by $700 (assuming that I was willing to pay $300). But in the second case (finding and using the ticket) I am no worse off than before financially plus I have seen the concert.
Posted on November 20, 2006 02:41 PM
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