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While airbags in cars have saved lives and lowered fatality rates, they have caused MORE accidents. Why has this happened? What do we call this idea in economics? Suppose the government was hoping to reduce the number of accidents (and was not concerned about fatalities), what should they require automakers to do?

1 Answer

2 votes

The idea that airbags in cars have caused more accidents is known as the moral hazard problem in economics. This occurs when people take on more risk because they feel protected by insurance or safety features. In the case of airbags, drivers may feel invincible and drive more recklessly because they believe the airbag will protect them in case of an accident.

If the government was hoping to reduce the number of accidents and was not concerned about fatalities, they could require automakers to install technology that limits the speed of the vehicle or increases the distance between cars. They could also require automakers to install sensors that detect when a car is too close to another car and issue a warning to the driver. These measures would encourage safer driving practices and reduce the likelihood of accidents.

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User Yocheved
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