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Section 1: Overview. Today, it is the routine of most drivers to get into their vehicles, and immediately put their seat belt on. It is the common belief that seat belts save lives. Parents and driving instructors have told drivers this from the day they began driving. States have even gone as far as creating laws, which require drivers and their passengers to “buckle up”. However, do these drivers ever consider the effectiveness, benefits, or costs of this polyester strap that is entrusted to protect themselves and their occupants during the time of a crash?
Safety standards have come a long way in the past three decades. Most recently, in April of 2014 the National Highway Traffic Safety Administration (NHTSA) proposed a rule that would require all light vehicles produced after 2018 to have a rear-view camera system (Woodyard, 2014). However, the safety of vehicles has not always been as high of a concern as it is today. Kip Viscussi and Joseph Harrington write in their book, Economics of Regulation and Antitrust (2005), that in the early 1960s “there were no requirements that automobiles include safety belts, and in general they did not” (p. 789). However, significant changes were made during the 1980s, which are still very relevant today.
On July 11, 1984, the “Amendment to Federal Motor Vehicle Safety Standard 208 Passenger Car Front Seat Occupant Protection,” was passed and applies to vehicles produced after September 1, 1989. This amendment requires that there is a constraint installed in a vehicle, whether that is a seat belt or air bag, to protect the occupant. The initial amendment was phased-in starting in 1987, but after 1989, it was required for all cars manufactured ("Third Report to Congress Effectiveness of Occupa...

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...e adoption of air bags was a rational market outcome. Air bags were offered by automakers because consumers were willing to pay for them--increasingly willing as information about actual experiences with air bags spread through the media and friends.”
In Richard Arnould’s and Henry Grabowski’s article, “Auto safety regulation: An Analysis of Market Failure,” (1981) the authors argue the opposite about seat belts. The authors explain that because of drivers’ low perceived probability that they will be involved in a car accident, they often do not wear seat belts. “If individuals have perfect information about the probability distribution of personal injuries and there are no externalities, and also assuming the postulates of rational behavior, a competitive market will lead to an optimal use of protective devices like seat belts” (Arnould and Hrabowski, 1981).

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