Nonmarket Failure An Obstacle to Policy Perfection

Unintended side effects, or derived externalities, are another nonmarket failure found in traffic safety poUcy. The most striking example comes from the review of the evidence on the safety effects of vehicle safety standards. In Chapter 3 we concluded that while overall highway travel is safer, nonoccupants such as pedestrians, bicyclists and motorcycUsts are in greater danger. Because the policy approach ignored risk compensation this occupant-nonoccupant tradeoff was unexpected by policy makers. 

Unfortimately, the bulk of this information was not utilized by NHTSA. Relying almost exclusively on engineering test results, the agency determined to its satisfaction that the standard would measurably improve safety. Only in the 

Eads continues by noting that the possibility of problems due to pushing an untested, complex technical device into the field was not even considered. It turned out that the field experience mth the anti-lock brakes was so disappointing that some wondered if there had been a net reduction in safety. Eads point is that NHTSA had good information, was legitimately criticized for ignoring it, issued a standard anyway, and that the mistake could have been avoided in a forthright analysis of the proposed standard. 

DOT provided us [GAO] with 44 pages of detailed comments which it stated represented NHTSA s position. 

The detailed comments, for the most part, provided information on what NHTSA believed to be the true perspective of the highway safety grant program, ich NHTSA said we had failed to recognize. Many of the comments were irrelevant because they did not address the issues being discussed in our report. 

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