Peltzman Effect

Risk compensation (also Peltzman effect, risk homeostasis) is an observed effect in ethology whereby people tend to adjust their behavior in response to perceived level of risk, behaving less cautiously where they feel more protected and more cautiously where they feel a higher level of risk. The theory emerged out of road safety research after it was observed that many interventions failed to achieve the expected level of benefits but has since found application in many other fields.

Notable examples include observations of increased levels of risky behaviour by road users following the introduction of compulsory seatbelts and bicycle helmet and motorists driving faster and following more closely behind the vehicle in front following the introduction of antilock brakes. Note however that this effect may be small compared to the fundamental benefits of these interventions, resulting in a net safety benefit, albeit one slightly smaller than was expected.

It has also been suggested that free condom distribution programs often fails to reduce HIV prevalence as predicted due to an increase in risky sexual behavior and that safer skydiving has resulted in skydivers taking more risks. Again, evidence of this effect should not be used to argue against such interventions, unless it can be demonstrated that this behaviour change is so large as to make negate all of the positive overall effect.

Shared space is a relatively new approach to the design of roads where the level of uncertainty for drivers and other road users is deliberately increased by removing traditional demarcations between vehicle traffic such as railings and traffic signals, and has been observed to result in lower vehicle speeds and fewer road casualties. In Sweden, following the change from driving on the left to driving on the right there was a 40% drop in crashes, which was linked to the increased apparent risk. The crash rate returned to its former level after people became familiar with the new arrangement.

Moral hazard is a related effect where a decision-maker benefits from the positive effects of a decision, with others suffering the related negative effects.