Testing for Offsetting Behavior and Adverse Recruitment Among Drivers of Airbag‐Equipped Vehicles

David Harless () and George E. Hoffer

Journal of Risk & Insurance, 2003, vol. 70, issue 4, 629-650

Abstract: Earlier studies reported that an insurance industry index of personal‐injury claims rose after automobiles adopted driver's side airbags and that drivers of airbag‐equipped vehicles were more likely to be at fault in fatal multivehicle accidents. These findings can be explained by the offsetting behavior hypothesis or by at‐risk drivers systematically selecting vehicles with airbags (i.e., adverse recruitment). We test for offsetting behavior and adverse recruitment after airbag adoption using a database containing information on fatal accidents including information on drivers' previous records and drivers' actions that contributed to the occurrence of the accident. Further, we reexamine the personal injury claims index data for newly airbag‐equipped vehicles and show that the rise in the index after airbag adoption may be attributable to moral hazard and a new vehicle ownership pattern. Rental car drivers are much more likely to commit grievous acts than other drivers, and the proportion of new automobiles in daily rental service more than doubled during the period of airbag adoption.

Date: 2003
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