An Empirical Test of the Offset Hypothesis

Anindya Sen ()

Journal of Law and Economics, 2001, vol. 44, issue 2, 481-510

Abstract: I exploit cross-province and time-series variation in Canadian mandatory seat belt legislation to empirically test the offset hypothesis. The results of this study offer modest evidence of the existence of offsetting behavior by drivers. Specifically, increased use of seat belts by drivers after the enactment of seat belt legislation should have led to a 29 percent decrease in driver fatalities. However, econometric estimates indicate that the introduction of seat belt legislation is significantly correlated with only a 21 percent decline in driver fatalities. Furthermore, the use of legislative and nonlegislative factors to control for the effects of independent determinants of traffic fatalities is critical, as the omission of these effects implies that seat belt laws are associated with roughly a 32 percent decrease in driver deaths, thus implying an absence of significant offsetting behavior. Copyright 2001 by the University of Chicago.

Date: 2001
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