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Peltzman on Regulation

Here’s the latest episode of EconTalk: an interview with Sam Peltzman. We discuss automobile safety and his startling finding that making cars safer can lead to more death. We discuss how the requirement that drug makers prove drug efficacy kills people. And we talk about the political economy of regulation—why bad laws persist. Two parts of the interview I liked:

• Sam’s point that a national safety requirement like air bags is particularly harmful when it turns out to produce unintended consequences (killing women and children, initially, because of the power of the airbags). If one state or one manufacturer had made air bags too powerful, we’d have learned from it and fixed it. But more people die when it’s nationally mandated.

• Sam’s insight that the mobilization of the AIDS lobby to get the FDA to give people who are dying access to life-saving drugs ahead of normal approval times proves how dysfunctional the current system is—you have to have an enormous political effort in the midst of a horrific tragedy to get redress. The rest of us just have to wait.

Here’s an earlier post on Sam’s overview of the relationship between opulence and regulation.