Self-Insurance: The Case of Motorcycle Helmets

This article develops the economic implications of a head-neck injury tradeoff that underlies the technological limitations of motorcycle helmets as a form of self-insurance. Conditional on this tradeoff, an analysis of the optimal self-insurance decision establishes that mandatory helmet use legisl...

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Bibliographic Details
Published in:The Journal of risk and insurance 1996-06, Vol.63 (2), p.313-322
Main Author: Goldstein, Jonathan P.
Format: Article
Language:English
Subjects:
Automobile insurance
Average speed
Econometrics
Equipment and supplies
Evaluation
Expected utility
Expenditures
Headgear
Helmet use
Helmets
Injuries
Motorcycles
Motorcyclists
Risk aversion
Self insurance
Shorter Article
Studies
Tradeoffs
Traffic accidents & safety
Traffic safety
Welfare losses
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Summary:This article develops the economic implications of a head-neck injury tradeoff that underlies the technological limitations of motorcycle helmets as a form of self-insurance. Conditional on this tradeoff, an analysis of the optimal self-insurance decision establishes that mandatory helmet use legislation results in expected welfare losses for a subset of the motorcycling population. These losses are not compensated by other forms of self-insurance expenditures because such expenditures are suboptimal. In the case of increased risk aversion, the model generates standard results for loss reduction activities with known productivities.
ISSN:0022-4367
1539-6975
DOI:10.2307/253747