Behavioural Economics Seminar: Long-Term Effects of Alternative Deterrence Policies: Panel Data Evidence from Traffic Punishments in Denmark
The Behavioral Economics group at Department of Food and Resource Economics (IFRO) invite to open seminars with a range of subjects within behavioural economics.
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Goytom Abraha Kahsay, Postdoc, Department of Food and Resource Economics, will present: Long-Term Effects of Alternative Deterrence Policies: Panel Data Evidence from Traffic Punishments in Denmark
This paper aims to quantify the long-term effects of alternative traffic punishments, ranging from demerit point assignment to conditional suspension of driving privileges. We theoretically characterize drivers’ behavior considering a driving environment in which traffic violation involves monetary and non-monetary punishments. We then employ unique longitudinal traffic offense data and exploit the introduction of a point-recording scheme in Denmark to evaluate empirically the effectiveness of alternative traffic punishments. We find that drivers who are assigned one or more demerit points reduce their frequency of traffic offenses and that these effects increase with the number of demerit points accumulated. However, these effects are short-lived, lasting only for the first two years post-reform and fading thereafter. In contrast, a stricter traffic punishment that conditionally suspends the driving license seems to have significant short-run and long-run effects. Our investigation into the types of offenses suggests that the deterrence effects are specific to the offense type for which they are imposed rather than generic improvements in driving behavior. These results imply that the effects of some of the existing traffic punishments are not only short-lived but also provide “specific deterrence.”
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