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Peltzman Effect

Sam Peltzman taught microeconomics at Chicago in 1988. The Peltzman Effect is a theory which states that people are more likely to engage in risky behavior when security measures have been mandated.

The Peltzman Effect is named for Sam Peltzman’s postulation about mandating the use of seatbelts in automobiles.In Peltzman’s view, this was due to “risk compensation,” where drivers who felt safer made riskier choices that canceled out the safety benefits.

Risk compensation is a theory which suggests that people typically adjust their behavior in response to perceived levels of risk, becoming more careful where they sense greater risk and less careful if they feel more protected.


A few illustrations which we would have observed during the time of Covid – 19 pandemic is given below.

> For COVID-19, this has manifested as pandemic fatigue, decreasing adherence to risk reduction strategies in some populations and complicating public health efforts.

> Now, as COVID-19 vaccines are rolled out across the globe. Amid messages of optimism and euphoria, public health officials will have to contend with another feature of risk compensation.

A vaccine heralded as the panacea to the pandemic risks further weakening adherence to other safety measures like social distancing and masks. We might have had come across those who are innoculated tending to indulge in risky behavior like not wearing mask, taking risk of meeting covid patients / suspects etc.

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