Point-record driving licence and road safety: An economic approach

Bourgeon, Jean Marc; Picard, Pierre

doi:10.1016/j.jpubeco.2006.05.007

Cited by 42 publications

(43 citation statements)

References 21 publications

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“…The incentives with two points accumulated are much stronger than with four points, which con…rms the analysis following equation (4). The overall average of v n (t) with respect to t and n is close to $12, a 9% increase for an $130 average …ne.…”

Section: About Heresupporting

confidence: 71%

“…4 Increases in premium after an event and "no claims discount" clauses observed in non-life insurance can be explained by the revelation e¤ect of unobserved heterogeneity. 5 Selecting at random one percent of the new license holders every year would evidently have been a preferable sampling procedure.…”

Section: Notesmentioning

confidence: 99%

“…Bourgeon and Picard (2007) show how point-record driver's licenses provide incentives for road safety among normal drivers (those who respond to the usual incentive schemes) when the judicial system or the insurance market fail to provide optimal incentives. Point-record driver's licenses also allow the government to incapacitate reckless drivers because …nes for tra¢ c violations are bounded above in many jurisdictions.…”

Section: Introductionmentioning

confidence: 99%

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Incentive Mechanisms for Safe Driving: A Comparative Analysis with Dynamic Data

Dionne

Pinquet

Maisonneuve

et al. 2011

Review of Economics and Statistics

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Résumé:Les politiques de sécurité routière utilisent souvent des mécanismes incitatifs basés sur les infractions pour améliorer le comportement des conducteurs. Ces mécanismes sont par exemple des amendes, des primes d'assurance ou des permis à points. Nous analysons l'efficacité incitative de ces mécanismes. Nous obtenons leurs propriétés théoriques par rapport au nombre de points associés aux infractions et par rapport au temps contrat. Ces propriétés sont ensuite testées empiriquement avec des données issues du système public d'assurance au Québec. Nous concluons à la présence d'aléa moral dans les données, qui traduit le fait que les conducteurs qui accumulent les points deviennent plus prudents car ils sont plus sous risque de perdre leur permis. Par ailleurs, la prime indicée sur les points introduite en 1992 a réduit de 15% la fréquence d'infractions. Nous utilisons ce résultat pour calculer des équivalents monétaires pour les infractions et les retraits de permis. Abstract:Road safety policies often use incentive mechanisms based on traffic violations to promote safe driving. Examples of mechanisms are fines, experience rating and point-record driving licenses. We analyse the effectiveness of these mechanisms in promoting safe driving. We derive their theoretical properties with respect to contract time and accumulated demerit points. These properties are tested empirically with data from the Quebec public insurance plan. We find evidence of moral hazard, which means that drivers who accumulate demerit points become more careful because they are at threat of losing their license. The insurance rating scheme introduced in 1992 reduced the frequency of traffic violations by 15%. We use this result to derive monetary equivalents for traffic violations and license suspensions. Mots clés :Mécanismes incitatifs, permis à points, sécurité routière

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Section: About Heresupporting

confidence: 71%

Section: Notesmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

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Incentive Mechanisms for Safe Driving: A Comparative Analysis with Dynamic Data

Dionne

Pinquet

Maisonneuve

et al. 2011

Review of Economics and Statistics

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show abstract

“…Both schemes have been proved to be efficient for handling moral hazard and adverse selection (see Shavell, 1979;Rothschild and Stiglitz, 1976, for partial insurance, and Chiappori et al, 1994; Dionne and Lasserre, 1985, for experience rating). Different empirical tests have been proposed to measure the efficiency of such mechanisms for road safety (Sloan et al, 1995;Boyer and Dionne, 1989) 5 . Their approach consists in analysing the behavior of policyholders in the studied insurance setting and contrasting this behavior with that predicted by theoretical models under moral hazard and adverse selection.…”

Section: Literature Review On Asymmetric Information and Road Safetymentioning

confidence: 99%

“…Redemption clauses are added so that this penalty can be avoided in the long run. 3 Bourgeon and Picard (2007) investigate the most desirable features of point-record licenses in terms of road safety incentives and discuss how they can be combined with fines to design an optimal system that internalizes the social cost of road accidents. They do not take into account insurance pricing based on traffic violations.…”

Section: Introductionmentioning

confidence: 99%

Point-Record Incentives, Asymmetric Information and Dynamic Data

et al. 2007

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. Point-record incentives, asymmetric information and dynamic data. CECO-1635CECO- . 2007 Cahier n° Résumé:Les politiques de sécurité routière utilisent souvent des mécanismes incitatifs basés sur les infractions pour améliorer le comportement des conducteurs. Ces mécanismes sont soit monétaires (amendes, primes d'assurance), soit non monétaires (permis à points). Nous utilisons des données québécoises couvrant une période allant de 1983 à 1996 pour analyser l'efficacité incitative de ces mécanismes. Nous analysons leurs propriétés théoriques par rapport au nombre de points associés aux infractions et par rapport au temps contrat. Ces propriétés sont ensuite testées empiriquement. Nous comparons l'efficacité globale des différents mécanismes incitatifs et nous relions les résultats obtenus avec les propriétés de la relation entre l'effort de conduite prudente et le risque d'infractions. Nous concluons à la présence d'aléa moral dans les données. Par ailleurs, la prime indicée sur les points introduite en 1992 a réduit de 15% la fréquence d'infractions. Abstract:Road safety policies often use incentive mechanisms based on traffic violations to promote safe driving. These mechanisms are both monetary (fines, insurance premiums) and non-monetary (point-record driving licenses). We use Quebec data collected between 1983 and 1996 to analyze the efficiency of these mechanisms in reducing the effects of asymmetric information. We derive the theoretical properties of the incentive mechanisms with respect to contract time and accumulated demerit points. These properties are then tested empirically. We compare the overall efficiency of the different incentive schemes and try to link global results with the theoretical properties of the relation between safe driving effort and traffic violation risk. We do not reject the presence of moral hazard in the data. Moreover, the experience rating premium introduced in 1992 did reduce the frequency of traffic violations by 15%. Mots clés :Mécanismes incitatifs, permis à points, sécurité routière

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The Empirical Measure of Information Problems with Emphasis on Insurance Fraud and Dynamic Data

Dionne

2013

Handbook of Insurance

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The author would like to thank Marie-Gloriose Ingabire for her help with bibliographical research, and FQRSC-Quebec and SSHRC-Canada for their financial support. He would also like to acknowledge the researchers who helped him develop several of the ideas on the subject over the years: Abstract:We discuss the difficult question of measuring the effects of asymmetric information problems on resource allocation. Three problems are examined: moral hazard, adverse selection, and asymmetric learning. One theoretical conclusion, drawn by many authors, is that information problems may introduce significant distortions into the economy. However, we verify, in different markets, that efficient mechanisms have been introduced in order to reduce these distortions and even eliminate, at the margin some residual information problems. This conclusion is stronger for pure adverse selection. One explanation is that adverse selection is related to exogenous characteristics, while asymmetric learning and moral hazard are due to endogenous actions that may change at any point in time. Dynamic data help to identify the three information problems by permitting causality tests.

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Point-record driving licence and road safety: An economic approach

Cited by 42 publications

References 21 publications

Incentive Mechanisms for Safe Driving: A Comparative Analysis with Dynamic Data

Incentive Mechanisms for Safe Driving: A Comparative Analysis with Dynamic Data

Point-Record Incentives, Asymmetric Information and Dynamic Data

The Empirical Measure of Information Problems with Emphasis on Insurance Fraud and Dynamic Data

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