Minor Thoughts from me to you

Aviation, Liability Law, and Moral Hazard

Aviation, Liability Law, and Moral Hazard →

Alex Tabarrok, of George Mason University, shares an interesting account of regulation, deregulation, and increased safety. In the mid-90's, Piper, Cessna, and Beach were no longer producing small airplanes for the general public. They were too afraid of lawsuits over planes that were decades old.

Congress eventually responded by saying that "manufacturers could not be held liable for accidents involving aircraft more than 18 years old". The result: an increase in overall safety.

a significant (on the order of 13.6 percent) reduction in the probability of an accident. The evidence suggests that modest decreases in the amount and nature of flying were largely responsible. After GARA, for example, aircraft owners and pilots retired older aircraft, took fewer night flights, and invested more in a variety of safety procedures and precautions, such as wearing seat belts and filing flight plans. Minor and major accidents not involving mechanical failure—those more likely to be under the control of the pilot—declined notably.

When it cames to safety regulation, more is not always better. Sometimes it's just more. People are more likely to be cautious if they believe that they bear risk themselves rather than believing that someone else bears all of the risk.