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July 22, 2008
Coase and California
Russell Roberts
One of the deepest insights of Coase's 1960 article on externalities is the understanding that externalities are reciprocal and that rules and norms affect how much care people take in a risky situation when they are linked to others.
McCloskey taught me this in my first grad price theory class arguing that if drivers are liable for hitting pedestrians, then they will be more cautious and pedestrians will be more careless. If drivers bear no liability for hitting pedestrians then drivers will be less careful and pedestrians will take more care.
On the surface, this seems silly. It is wrong to run someone over, so justice requires drivers to be liable.
Yet Coase's point is that it's not clear which set of rules is socially desirable. If the goal is to minimize pedestrian fatalities from cars, it might be better to have drivers take less care and pedestrians take more care.
A key word in the previous sentence is "might." It might not be. It depends on who can avoid the harm most effectively and cheaply. It would seem in this case, that drivers can avoid the harm most cheaply and effectively, so they should be liable. But the other factor is how elastic the response will be from the side that is not liable. If pedestrians respond to driver care by being very reckless, the outcome could still be very costly.
In this particular case, the whole issue seems moot--after all, how reckless can pedestrians be, especially compared to how reckless cars can be?
And the kicker would seem to be that whether drivers are liable or not, they still feel guilt at running someone over. And pedestrians are going to be badly hurt or killed when they get hit, so how reckless can they really be?
But being out in California for a visit, it is obvious how differently people behave here. Here, unlike much or all of the rest of the country, the pedestrian is king. It is partly a social norm, partly the result of social legislation. The mix doesn't matter. What matters is that pedestrians cross streets in ways that are very different than in Washington DC where I live. The driver takes more care here. You have to if you don't want to hit someone.
So here's my hypothesis. Of the people who do get hit by cars here in California, I would guess that a disproportionate share get hit by drivers who are visiting from out-of-state in rental cars who are not used to the California norms and legislation.
I don't know if the data are out there. I think the place to start would be with the rental car companies to see if there are higher accident rates involving civilians per mile traveled in California than elsewhere.
Posted by Russell Roberts in Risk and Safety | Permalink
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Comments
I have seen similar events. I drive a bus on my college campus in Boulder, CO and therefore see a lot of vehicles. During the school year and the summer, most/all of the driver's understand that pedestrians have the unquestionable right of way. However, during move-in/move-out times, when there are a lot of parents visiting, it is common to see cars cutting off pedestrians and the occasional pedestrian get hit. In this state, a pedestrian has complete right of way on any road technically, assuming they are walking. I'm not sure if it would be more effective changing that, though, so I would also like to see numbers from a rental company.
Posted by: EconStudent | Jul 22, 2008 7:28:17 PM
If you go to Manhattan, you will see that the pedestrians dominate. Drivers take all blame if a pedestrian is struck. The city long ago banned turning right on red as a pedestrian safety measure. But, if you give Manhattan pedestrians an inch, they will take the whole street. Pedestrians keep crossing even during the Don't Walk signal. They jaywalk in large groups and block vehicle traffic. They swarm around the front and back of cars stopped at the crosswalk. At lunchtime, when many workers are rushing to eat or shop, the effect is so bad that it is faster to walk than travel by taxi.
Posted by: Dr. T | Jul 22, 2008 8:08:09 PM
Precisely, Dr. T. That is exactly why Manhattan needs to implement congestion tariffs and prohibit cars during certain hours of the day.
Posted by: Axel Molotov | Jul 22, 2008 8:34:25 PM
I would bet that the majority of pedestrians who get hurt in LA are hurt by people who have no idea how to drive. Particularly immigrants who did not grow up driving a car and teens who have little experience and/or judgment.
Most non-sociopaths don't want to hit anyone regardless as to who will have to bear the risk of loss - the driver's insurance or the the pedestrian. Certainly, no pedestrian is looking to get hit by a car, particularly because some subset of the non-economic injury suffered will not be compensated and another 1/3 of any recovery will get eaten up by an attorney.
Because of insurance, btw, drivers are already in a moral hazard situation. They bear only part of the costs of their own negligence. If one wanted better driving, outlawing liability auto-insurance would be the way to go.
Posted by: jdd | Jul 22, 2008 9:12:48 PM
Here's a good chance to get some research done for me.
I live in the Phoenix metro area, and I personally know two people that have hit pedestrians - to no fault of their own - and I was on the scene seconds after a pedestrian was hit and saw the carnage.
This seems like a high ratio of first/second hand knowledge of pedestrian deaths.
Phoenix is the 5th largest city in America. We are geographically spread out more than most other cities, much like SoCal, so we drive more than the average American. We have a high homeless population because of our climate.
In all 3 deaths that I mentioned above, the pedestrian was drunk, 1 was homeless and the other 2 were vagrants but not technically without homes.
How normal is it for someone in a large city to have this much 1st or 2nd hand knowledge of pedestrian accidents? I'm thinking it's peculiar to Phoenix, LA and possibly San Diego, though I haven't done any research on that yet.
And for a trivial bonus note, the pedestrian death I happened upon was the man the local Bishop Thomas hit and fled.
Posted by: Ray G | Jul 23, 2008 1:18:52 AM
You must be in NorCal. Because here in SoCal, when I walk my dogs, I make eye contact with drivers in the right turn lane before crossing a street when I have the green pedestrian walk light. If I didn't do that, I would have been killed 50 times in the past year.
The most awkward and dangerous moment walking usually comes when I am stopped at a crosswalk and a driver is stopped in the right turn lane and my light turns green. Often enough, the driver has started moving as or just after my light turns green.
Posted by: BoscoH | Jul 23, 2008 2:31:32 AM
I just wanted to make a comment about this particular post. I have worked in DC for 4 years now and just a few months ago got a desk right next to the window. I have noticed that for the most part people obey the cross walk signals, but that is not to say that all people cross at the crosswalk. A man outside of Union station was struck and killed because he ignored the crosswalk signs and stepped out infront of a truck. This goes back to post, I believ on this blog (might have been on The Austrian Economist blog), about how many towns in Europe are take away signage and letting the social norms rule. It apparently has made both pedastrians and motorvehicle drivers responsible and more aware.
It might be interesting to change the actual participants in this particular line of study to bicylcists and vehicles. From my perch in the building the majority of cyclist ignore the traffic laws or even social norms that motorized vehicles follow. For example, at my little intersection. It is very difficult to make left turns across traffic, in all four directions. One left turn is even protected, but the pedestrians don't follow the crosswalk signs most of the time on that side, it backs traffic up. Most of the time it seems a lefte turning driver has to wait for the light to turn yellow or even red. Rarely does the traffic that now has the green light honk their horns. From my observations, cyclist throw out the norms that most people driving motorized vehicle use. They don't wait for the red lights or they even ride up the lanes of on coming traffic, fly around stopped cars waiting to make the left turn.
This information seems to be born out in several articles of late about how, because of higher gas prices, there are more cyclist on the road. Since the increase, there have increased number of fatalities. But it ranges from the driver of the motorized vehicle to the cyclists fault. I am sure you could find sufficient statistics on that front.
Posted by: Matt C. | Jul 23, 2008 9:35:13 AM
Up here in the Boston area, we try to ensure that the pedestrians either stay on sidewalks or better yet, get in cars. The automobile has the undisputed right of way. The fastest way to kill yourself up here is to set foot in the road in front of a taxi. The second fastest is to be the guy on a bicycle who thinks that he has the right of way over a car.
Posted by: John | Jul 23, 2008 11:59:34 AM
Re: Manhattan, I routinely see taxis dart (accelerate) forward towards large group of pedestrians while leaning on their horns. The pedestrians literally dive out of the way to avoid being struck.
Posted by: Cliff | Jul 23, 2008 1:39:12 PM
I live in a university town, and half the bicycles I see are not following the traffic flow - they ride the wrong way up the street, come off sidewalks into intersections, blatantly run stop signs. Yet we have the annual letter to the editor in the paper about how drivers never give bicycles a break.
As an aside, I had a friend who moved from California years ago, where cars are apparently expected to stop for pedestrians, even if they step into traffic outside crosswalks. He was nearly run over.
Posted by: rmark | Jul 23, 2008 1:54:00 PM
I like ferrets.
Posted by: Bark | Jul 23, 2008 9:42:04 PM
But are the ferrets mindful of pedestrians?
Posted by: Ray G | Jul 23, 2008 10:03:24 PM
Russ,
Doesn't the Coase theorem suggest that we need to think deeply about the assigning of rights precisely because, more often than not, transaction costs are high? What would this mean for your pedestrian/car scenario?
Steve
Posted by: Steve | Jul 24, 2008 11:58:16 AM
Besides pedestrians and drivers, there may be a third party with some responsibility/liability...the local government that designed the roads and may have some determination of traffic flow and patterns. For example, some communities use "traffic calming" devices such as speed bumps and narrowing of roads to slow traffic. Also, as others have pointed out, pedestrians who cross between cars, or who are intoxicated are at greater risk than those who don't drink and don't jaywalk.
Age of pedestrians is also a factor. Young children may not fully appreciate their risks when crossing streets. Older pedestrians may not have the reaction time to avoid being hit or the speed to cross a street quickly enough. This is especially true when crossing wide boulevards without islands halfway across.
There is another form of auto vs pedestrian to consider. In Pennsylvania, we have a large number of accidents where no on is "at fault." Drivers all over the state hit 4 legged pedestrians (usually without, but sometimes with antlers). Obviously the deer don't know rules of the road or when to cross and drivers suffer the financial consequences of damaged and destroyed cars and trucks. They may also be injured in such accidents. On the other hand the deer suffer the ultimate penalty. Eventually, through natural selection, we may have deer that are smarter, less likely to cross highways, etc.
Someone once suggested that drivers would be more careful if they didn't have seatbelts and there was a spear mounted on the steering wheel aime at the driver's heart.
Posted by: Phil | Jul 25, 2008 10:38:37 AM
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