Policy Ineffectiveness or Offsetting Behavior? An Analysis of Vehicle Safety Inspections

Over 60 million registered motor vehicles in 20 states are subject to mandatory periodic safety inspection. The effect of safety inspection on roadway casualties has been estimated by several studies, with mixed results. We present a unique test of inspection effectiveness by analyzing the policy's impact on old cars in use and on repair industry revenue. Our results indicate that inspection has no significant impact on old cars or repair industry revenue, which implies that inspection does not improve the mechanical condition of vehicles. Unlike studies that examine casualties, our tests allow us to distinguish between policy ineffectiveness and Peltzman-type offsetting behavior as sources of inspection failure.

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