Do Consumers Feel More Secure When They Consume Risky Products Under Stronger Regulation

다국어 초록 (Multilingual Abstract)

This paper investigates the effects of safety regulation on consumer behavior, using individual- level data in the U.S. When consumers use potentially risky products, such as vehicles, they may face injuries or damage. In order to protect consumers from unexpected injuries, regulatory agents often enforce safety regulations, such as seatbelt laws. Some previous papers have argued that safety regulation is ineffective in protecting consumers. For instance, according to the offsetting behavior theory, when consumers wear seatbelt because of the seatbelt law, they may feel more secure. This increased sense of security makes them consume (drive) their cars less carefully, causing more pedestrian-involved accidents. If this increased number of pedestrian-involved accidents were equal or greater than the decreased number of driver- and passenger-involved accidents, seatbelt regulation would be ineffective. Using an example of seatbelt regulation, I find that consumers consume their potentially risky products more carefully when more stringent safety regulation is in effect. I also find that careful consumption (driving) is not associated with accidents involving pedestrians. Thus, the results prove that consumers do not show offsetting behavior in consuming their cars when stronger safety regulation is applied on the roads. This is different from what the offsetting effects imply. This paper suggests that road safety measures in Korea, such as airbags, should be mandatory, not optional, like the Korean seatbelt law.

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