Perception risk compensation

Risk compensation - taking greater risks as a result of the perception that safety... 

Risk compensation is a human behavioral effect whereby individual people may tend to adjust their behavior in response to perceived changes in risk. Individuals will tend to behave in a more cautious manner if their perception of risk or danger increases. Another way of stating this is that individuals will behave less cautiously in situations where they feel safer or more protected. 

People are presumed to adjust their behavior to compensate for changes in perceived risk. If a job is made safer with machine guards or the use of personal protective equipment, workers might reduce their perception of risk and, thus, perform more recklessly. For example, if the individual depicted in Figure 5.11 is taking a risk owing to the perceived security of fall protection, we would have support for the risk compensation theory (Peltzman, 1975). 

The between subject comparisons showed no risk compensation. Subjects who used the safety belt for all trials did not drive faster than subjects who never used the safety belt. Perceptions of risk were not different across tiiese groups of subjects, either. 

In Chapter 2, we compared the individual benefit-cost approach to the less general technological and risk homeostatic approaches and reviewed representative evidence on insurance, gambling, risk perception and safety belt use. We concluded the approach is useful for thinking about traffic safety policy. The evidence reviewed in this chapter led us to conclude that risk compensation exists in auto safety regulation and that policy benefits were overestimated. The evidence demonstrates that a general model such as ours must be used if formulation and evaluation of traffic safety policy is to be of high quality. 

The public and legislative debate which led up to the Enactment of the Comprehensive Environmental Response, Compensation, and Liability Act of 1980 ("Superfund") focused extensively on assessing the risks from old hazardous waste dump sites. Indeed, much of the controversy and difficulty in enacting the bill was a result of greatly differing perceptions about the risks posed by old dump sites and exposure to minimal levels of hazardous waste. 

Another indicator of credit risk is the credit risk premium the spread between the yields on corporate bonds and those of government bonds in the same currency. This spread is the compensation required by investors for holding bonds that are not default-free. The size of the credit premium changes with the market s perception of the financial health of individual companies and sectors and of the economy in general. The variability of the premium is illustrated in FIGURES 10.2 and 10.3 on the following page, which show the spreads between the U.S.-dollar-swap and Treasury yield curves in, respectively, February 2001 and February 2004. 

Ward, N.J. and WUde, G.J.S. 1996. Driver approach behaviour at railway crossings before and after enhancement of lateral sight distances An experimental investigation of a risk perception and behavioural compensation hypothesis. Strfety Science, 22, 63-75. 

The most common of all the motivations considered by driving researchers is risk the minimization of risk or the compensation for risk. The minimization models assume that we do not drive to maximize safety, but we drive to minimize risk. An early approach offered by Naatanen and Summala (1976) and later revised by Summala (1985, 1988) argued that drivers adjust their driving in order to maintain a zero-risk level. In other words, most drivers behave as if most of the time there is no risk at all (a perception often not shared by their passengers Dillon and Dunn, 2005). To modify the driving, the perceived risk has to exceed the zero level by some threshold amount. Thus, most of the time drivers are assumed to be driving with a perceived level of zero risk - more or less. Only when that level is seriously compromised do they change their behavior. 

A discussion of risk perception would not be complete without examining one of the most controversial concepts in the field of safety. In recent years, it has been given different labels, including risk homeostasis, risk or danger compensation, risk-offsetting behavior, and perverse compensation. Whatever the name, the basic idea is quite simple and straightforward. 

The notion of taking more risks to compensate for lower risk perception certainly seems intuitive. I bet every reader has experienced this phenomenon. I clearly remember taking more risks after donning a standard high school football uniform. With helmet and shoulder pads, I would willingly throw my body in the path of another player or leap to catch a pass. I did not perform these behaviors until perceiving security from the personal protective equipment (PPE). 

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