Too Many Risks

Do motorcycle helmet laws kill? A study found that between 1987 and 1999 states with helmet laws had more deaths per motorcycle accident than states that lacked such laws.^[5] Helmets are designed to protect riders’ skulls in the event of accidents, so how could laws mandating helmets increase the number of deaths per accident? The helmets undoubtedly provide some head protection, but they also change riders’ behavior.^[6] Knowing you have more protection should cause a rational driver to take more risks, and these risks increase the death rate. Helmets function as insurance against accidents because they reduce the harm of an accident. But, like all types of insurance, they enhance the insured’s willingness to take risks.

Insurance companies also have to be wary of people taking additional risks because they have insurance. For example, having your car stolen is not so bad if you have auto theft insurance, so rational people insured against theft will take more chances with where they park their car. They won’t deliberately cause their car to get stolen. But, like mountain climbers who count on the park rangers or like the motorcyclists who wear helmets, the existence of auto insurance will cause car owners to take additional risks.

Workers’ compensation provides benefits to workers if they are injured on the job. Since this compensation reduces the financial harm of being injured, it decreases the incentive for workers to take care to avoid injuries and thus increases the number of injuries. I realize that this seems far-fetched, a theory thought up by an out-of-touch professor, but consider: Everyone takes risks all the time. When you go to the movie rather than staying at home, you are slightly increasing your risk of death through a car accident. When you eat high-fat foods, you increase the risk of suffering a heart attack. The number of risks we all take is determined by the chance of something bad happening and the harm that results from an accident. Since workers’ compensation reduces the damage of an accident, it should cause us to take more risks.

^[5]Forbes.com (May 3, 1999).

^[6]Ibid.