Mandatory Vehicle Inspections Under Fire

Vehicle Safety Inspection Systems: How Effective?, by W. Mark Crain, Washington, D.C.: American Enterprise Institute, 1980, 70 pp., $4.25 paper.

It all seems so obvious. Mandatory vehicle inspections mean safer cars. Safer cars mean fewer accidents. Anyone who challenges mandatory vehicle inspection must be a misanthrope.

Or an economist. W. Mark Crain, associate professor of economics at Virginia Polytechnic Institute, compared the accident records of states that have mandatory vehicle inspection programs with those that don't have such programs. He found "no evidence that vehicle inspection systems are effective in reducing highway deaths or accidents." Crain reached this conclusion through statistical analysis. He compared state accident records (death rate, nonfatal injury rate, nonfatal accident rate) with nine variables: (1) the existence and nature of inspection systems, (2) population density, (3) median family income, (4) fuel consumption, (5) federal highways, (6) population age, (7) procedure for driver's license renewal, (8) alcohol consumption, and (9) minimum damage required for reporting an accident. Only the first, the existence and nature of state inspection systems, yielded counterintuitive results.

Crain offers two possible interpretations of these results. First, periodic inspections don't improve the inherent safety characteristics of vehicles. Second, periodic inspections do make vehicles safer, but this potential for improved highway safety is dissipated by adjustments in driver behavior.

The former interpretation is supported by several types of evidence. First, only a small portion of highway accidents—2 to 6 percent—are conclusively attributable to mechanical defects. In addition, no single mechanically related factor stands out as a cause of accidents. Thus, diagnostic attention cannot be concentrated on particular problem areas. Finally, as several studies have shown, the detection rate of real defects is often less than 50 percent.

The role of incentives is particularly important in Crain's analysis. In the absence of mandatory inspection, vehicle owners certainly have incentives for maintaining their vehicles. They also have incentives to seek out inspection stations that ignore borderline defects. Inspectors have incentives to minimize "hassling" and to "discover" nonexistent defects.

Adjustments in driver behavior are difficult to document, but Crain offers two plausible possibilities. The first (drawing on the work of economist Sam Peltzman) is that the perception of safer cars leads to more risk taking by drivers. The second is a belief by drivers that government responsibility for safety maintenance makes cars safer and thus less in need of maintenance attention.

Incentives also play a role in identifying the supporters of mandatory periodic inspection:

The theory of economic regulation which stresses the gains to special interests offers useful insights here, a point of particular interest because the theory has been developed primarily in the analysis of economic regulation and has not been applied to social regulation (including consumer-protection regulation). This special interest approach would predict that the primary proponents of a nationally standardized inspection program are those trade associations of industries involved either directly in providing inspections or indirectly in manufacturing and distributing vehicle parts and accessories.

This, Crain shows, turns out to be the case. The supporters of government regulation are the special-interest beneficiaries, not the general public. Shouldn't that be obvious?

Brian Summers is a member of the staff of the Foundation for Economic Education.