Risk Compensation and Bicycle Helmets

This study investigated risk compensation by cyclists in response to bicycle helmet wearing by observing changes in cycling behavior, reported experience of risk, and a possible objective measure of experienced risk. The suitability of heart rate variability (HRV) as an objective measure of experienced risk was assessed beforehand by recording HRV measures in nine participants watching a thriller film. We observed a significant decrease in HRV in line with expected increases in psychological challenge presented by the film. HRV was then used along with cycling pace and self‐reported risk in a field experiment in which 35 cyclist volunteers cycled 0.4 km downhill, once with and once without a helmet. Routine helmet users reported higher experienced risk and cycled slower when they did not wear their helmet in the experiment than when they did wear their helmet, although there was no corresponding change in HRV. For cyclists not accustomed to helmets, there were no changes in speed, perceived risk, or any other measures when cycling with versus without a helmet. The findings are consistent with the notion that those who use helmets routinely perceive reduced risk when wearing a helmet, and compensate by cycling faster. They thus give some support to those urging caution in the use of helmet laws.     

Offsetting or Enhancing Behavior: An Empirical Analysis of Motorcycle Helmet Safety Legislation

This study uses state‐level panel data from a 33‐year period to test the hypotheses of offsetting and enhancing behavior with regards to motorcycle helmet legislation. Results presented in this article find no evidence of offsetting behavior and are consistent with the presence of enhancing behavior. State motorcycle helmet laws are estimated to reduce motorcycle crashes by 18.4% to 31.9%. In the absence of any behavioral adaptations among motorcyclists mandatory helmet laws are not expected to have any significant impact on motorcycle crash rates. The estimated motorcycle crash reductions do not appear to be driven by omitted variable bias or nonclassical measurement error in reported crashes. Overall, the results strongly suggest that mandatory helmet laws yield significant changes in motorcycle mobility in the form of reduced risk taking and/or decreased utilization.     

The economic evaluation of time: Organizational causes and individual consequences

People acquire ways of thinking about time partly in and from work organizations, where the control and measurement of time use is a prominent feature of modern management—an inevitable consequence of employees selling their time for money. In this paper, we theorize about the role organizational practices play in promoting an economic evaluation of time and time use—where time is thought of primarily in monetary terms and viewed as a scarce resource that should be used as efficiently as possible. While people usually make decisions about time and money differently, we argue that management practices that make the connection between time and money salient can heighten the economic evaluation of time. We consider both the organizational causes of economic evaluation as well as its personal and societal consequences.     

Three Principles for Managing Risk in the Public Interest

We propose three principles and a general framework of reasoning for managing risk in the public interest. Principle 1. Risks shall be managed to maximize the total expected net benefit to society— The principle that the net benefit is to be maximized across society as a whole is argued to be a sufficient and rational guide to assessing the effectiveness of efforts directed at reducing risk and thus improving health and safety. The net benefit of an activity is the excess of the totality of benefits over the totality of detriments. Principle 2. The safety benefit to be promoted is life-expectancy— The goal is to ensure that risk mitigation efforts maximize the net benefit to society in the specific terms of length of life for all individuals. The effect of an activity on life expectancy is proposed as the proper basic measure of its net safety impact. Life expectancy is a universal measure valid for comparisons both within and among countries and can be adjusted to include health expectancy and other factors such as income levels that affect the quality of life. The impact on life expectancy allows a dispassionate accounting of the good and the bad inherent in any proposal or activity that is in the public interest but has some impact on life and health. Principle 3. Decisions for the public in regard to health and safety must be open and apply across the complete range of hazards to life and health— Systematic efforts to evaluate all the important consequences, both direct and indirect, are required to improve the basis for risk management in society. Balancing of the detriments and the benefits of any given initiative is the key aspect of the undertaking. Safety may well be an important objective in society, but it is not the only one. Thus, allocation of society's resources devoted to safety must be openly and continually appraised in light of other competing social needs because there is a limit on the resources that can be expended to save lives. Maximization of healthful life for all is judged the proper basis for managing risk in the public interest, and that this is achieved when the net of the contribution to the total saving of life exceeds the loss of life.     

The Use of Individual and Societal Risk Criteria Within the Dutch Flood Safety Policy—Nationwide Estimates of Societal Risk and Policy Applications

The Dutch government is in the process of revising its flood safety policy. The current safety standards for flood defenses in the Netherlands are largely based on the outcomes of cost‐benefit analyses. Loss of life has not been considered separately in the choice for current standards. This article presents the results of a research project that evaluated the potential roles of two risk metrics, individual and societal risk, to support decision making about new flood safety standards. These risk metrics are already used in the Dutch major hazards policy for the evaluation of risks to the public. Individual risk concerns the annual probability of death of a person. Societal risk concerns the probability of an event with many fatalities. Technical aspects of the use of individual and societal risk metrics in flood risk assessments as well as policy implications are discussed. Preliminary estimates of nationwide levels of societal risk are presented. Societal risk levels appear relatively high in the southwestern part of the country where densely populated dike rings are threatened by a combination of river and coastal floods. It was found that cumulation, the simultaneous flooding of multiple dike rings during a single flood event, has significant impact on the national level of societal risk. Options for the application of the individual and societal risk in the new flood safety policy are presented and discussed.     

Defined contribution--the future for health care

Employers are seeing breathtaking health care premium increases. As action-oriented people, they are not going to cough up additional money to pay for these rate increases. The real question is what solution might employers move to? The most logical answer is defined contribution--a way that employers could give employees health benefit funding that resembles what they have already done in pension funding. Today, facing massive cost pressures from their health care premiums, many employers are wishing that they could create or use the equivalent of a defined contribution plan for health care. The next major evolution of defined benefit health financing needs the full-scope functional equivalent of a 401 (k) administrator to make the concept work--someone to give employers the tools needed for employees to make meaningful choices. Up until now, no one has been able to give consumers meaningful data about health care and health benefit alternatives. A viable 401 (k) health administrator will need to offer an array of choices that will work for all players.     

Valuation of childhood risk reduction: the importance of age, risk preferences, and perspective.

This article explores two problems analysts face in determining how to estimate values for children's health and safety risk reductions. The first addresses the question: Do willingness‐to‐pay estimates for health risk changes differ across children and adults and, if so, how? To answer this question, the article first examines the potential effects of age and risk preferences on willingness to pay. A summary of the literature reporting empirical evidence of differences between willingness to pay for adult health and safety risk reductions and willingness to pay for health and safety risk reductions in children is also provided. The second dimension of the problem is a more fundamental issue: Whose perspective is relevant when valuing children's health effects—society's, children's, adults‐as‐children, or parents'? Each perspective is considered, followed ultimately by the conclusion that adopting a parental perspective through an intrahousehold allocation model seems closest to meeting the needs of the estimation problem at hand. A policy example in which the choice of perspective affects the outcome of a regulatory benefit‐cost analysis rounds out the article and emphasizes the importance of perspective.     

The ethics of health care system reform

The United States is now engaged in a momentous national debate about health care. How can we provide the best care possible while simultaneously containing cost (to promote the general economic integrity of society) and somehow maintain a semblance of a free health care marketplace. This is not just a political question; it is also a question of ethics. It is an ethical consideration because the current debate is not just about designing or promoting health care systems that can best address our concerns for costs, quality, and accessibility. It appears that at least some participants in the debate would not stop at arguing their beliefs as valid; they would make their beliefs law. Some urge the creation of the right to health care as a matter of law. There are significant differences between beliefs and rights, however, and they need to be considered carefully in the ongoing debate over the future of this country's health care delivery and financing system.     

Information Acquisition and Voluntary Disclosure in an Export‐Processing System

We study a strategic information management problem in the export‐processing trade, where the buyer controls the raw material input and sales and the producer is responsible for production. The production is vulnerable to random yield risk. The producer can exert a costly effort to acquire the private yield rate information and discretionarily share it with the buyer. We develop a sequential Bayesian game model that captures three key features of the system—endogenous information endowment, voluntary disclosure, and ex post information sharing—a significant departure from the literature. The optimal disclosure strategy is driven by the trade‐off between the gains from Pareto efficiency improvement and self‐interested overproduction. It is specified by two thresholds on yield rate: only the middle‐yield producers (with yield rate between these two thresholds) share private information to improve supply‐demand match; the low‐ and high‐yield producers withhold information to extract excess input from the buyer. The buyer in response penalizes nondisclosure with reduced input and rewards information sharing with a larger order. This strategic interaction is further exacerbated by the double marginalization effect from decentralization, resulting in severe efficiency loss. We examine the effectiveness of three corrective mechanisms—vertical integration, mandatory disclosure, and production restriction—and reveal the costs of information suppressive effect and overinvestment incentive and the benefit from concessions on the processing fee. Our study endogenizes the asymmetric supply risk and provides the first attempt to rationalize the strategic interactions of informational and operational incentives in the export‐processing system.     

Risk and Benefit Perceptions of Mobile Phone and Base Station Technology in Bangladesh

Research in developed countries showed that many citizens perceive that radio signals transmitted by mobile phones and base stations represent potential health risks. Less research has been conducted in developing countries focused on citizen perceptions of risks and benefits, despite the recent and rapid introduction of mobile communication technologies. This study aims to identify factors that are influential in determining the tradeoffs that Bangladeshi citizens make between risks and benefits in terms of mobile phone technology acceptance and health concerns associated with the technology. Bangladesh was selected as representative of many developing countries inasmuch as terrestrial telephone infrastructure is insubstantial, and mobile phone use has expanded rapidly over the last decade, even among the poor. Issues of importance were identified in a small‐scale qualitative study among Bangladeshi citizens (n = 13), followed by a survey within a sample of Bangladeshi citizens (n = 500). The results demonstrate that, in general, the perceived benefits of mobile phone technology outweigh the risks. The perceived benefits are primarily related to the social and personal advantages of mobile phone use, including the ability to receive emergency news about floods, cyclones, and other natural disasters. Base stations were seen as a symbol of societal advance. The results furthermore suggest that overall risk perceptions are relatively low, in particular health risks, and are primarily driven by perceptions that related to crime and social inconvenience. Perceived health risks are relatively small. These findings show that risk communication and management may be particularly effective when contextual factors of the society where the system is implemented are taken into consideration.     

Using review articles to address societal grand challenges

We introduce a special issue of International Journal of Management Reviews that demonstrates how to use review articles to address societal grand challenges—complex, large-scale issues facing humankind, such as climate change, inequality and poverty. First, we argue that review articles possess unique features that make them particularly useful for addressing societal grand challenges. Second, we discuss three distinct but related roles of review articles in addressing societal grand challenges: (1) advancing theoretical knowledge; (2) advancing methodological knowledge; and (3) advancing practical knowledge. We conclude by providing future directions to enhance contributions of review articles for addressing societal grand challenges further by: (a) spanning disciplinary boundaries; (b) engaging practitioners; and (c) using alternative review approaches.     

Qualitätsmanagement in Netzwerken der Integrierten Gesundheitsversorgung

Quality management in networks of the Integrated health care. Theory and practiceSelf evaluation is one of the most important sources for the quality management in ambulatory care of integrated health care systems. The quality testing of the survey instrument itself is of outstanding importance, since only a high quality instrument is able to supply high quality data, which can serve as a reliable base for improvement strategies. The paper shows the aspects of a quality management in organizational networks for integrated health care delivery systems. The technique allows the management and the single practioner on the one hand to identify the critical areas at a glance and on the other hand to focus — where necessary — on the single aspects in order to define detailed improvement actions.     

Mandatory Belt Use and Driver Risk Taking

A study of driver behavior before and after a mandatory seat belt use law in Newfoundland found that the benefits of such legislation are not reduced by riskier driving, as has been suggested by some theorists. On average, belt use in Newfoundland increased from 16% of drivers before the law to 77% after the law. At the same time, the quality of driving changed very little when compared to control groups of Nova Scotia drivers, who were not subject to the law and whose belt use rates did not change. In only one situation did Newfoundland drivers differ from the control group in Nova Scotia: after the belt law, drivers in Newfoundland became relatively more cautious (slower) in their speeds on four-lane expressways. These data confirm the results of earlier less controlled studies that also found no changes in driving behavior following nonvoluntary changes in occupant protection. Since the "risk-compensation" hypothesis predicts such changes, it seems to have no merit in explaining changes in fatalities and injuries after occupant protection legislation.     

Using input—output models for planning in groups with considerable inter-company trading

In any group where a lot of inter-company trading takes place and where the member companies are allowed a degree of autonomy, conflicts of interest will arise. Actions taken by individual companies in their own best interest will, on occasion, be detrimental to the group as a whole. Furthermore, the accounts relating to a particular company will tell head office management very little about the through-group profitability of the products concerned. Nor will the usual accounts and statistics throw much light on the extent to which individual companies or processes depend on the group's main end markets, since in many cases these companies will be largely or partly concerned with supplying other members of the organization.It follows that in such groups an information system is needed which will not reflect the organizational structure of the enterprise—as do individual company accounts—but which will provide top management with an overall group view. It should also make a contribution, both towards resolving any conflicts of interest which might occur, and to improving the overall return on group assets employed.This article examines the role of the micro input–output model in this situation with particular reference to its application in areas where conflicts of interest between the group and its member companies are likely to arise.     

Validating Benefit and Cost Estimates: The Case of Airbag Regulation

Preregulation estimates of benefits and costs are rarely validated after regulations are implemented. This article performs such a validation for the mandatory automobile airbag requirement. We found that the original 1984 model used to estimate benefits became invalid when 1997 values were input into that 1984 model. However, using a published 1997 cost-effectiveness model, we demonstrate, by replacing the model inputs with the values from 1984, that the 1997 cost-effectiveness ratios, based on real-world crash data and tear-down cost data, are less attractive than what would have been originally anticipated. The three most important errors in the 1984 input values are identified: the overestimation of airbag effectiveness, the overestimation of baseline fatality/injury rates, and the underestimation of manual safety belt use. This case study, which suggests that airbags are a reasonable investment in safety, shows that the regulatory analysis tools do not always produce findings that are biased against health, safety, and environmental regulation. Future validation studies of health, safety, and environmental regulation should focus on validation of benefit and risk estimates, areas where we found significant error, as well as on cost estimates.     

Consumer Responses to Integrated Risk‐Benefit Information Associated with the Consumption of Food

The risk analysis of the health impact of foods is increasingly focused on integrated risk‐benefit assessment, which will also need to be communicated to consumers. It therefore becomes important to understand how consumers respond to integrated risk‐benefit information. Quality‐adjusted‐life‐years (QALYs) is one measure that can be used to assess the balance between risks and benefits associated with a particular food. The effectiveness of QALYs for communicating both positive and negative health effects associated with food consumption to consumers was examined, using a 3 × 2 experiment varying information about health changes in terms of QALYs associated with the consumption of fish (n = 325). The effect of this information on consumer perceptions of the usefulness of QALYs for describing health effects, on risk and benefit perceptions, attitudes, and intentions to consume fish was examined. Results demonstrated that consumers perceived QALYs as useful for communicating health effects associated with food consumption. QALYs communicated as a net effect were preferred for food products associated with negative net effects on health, while separate communication of both risks and benefits may be preferred for food products associated with positive or zero net health effects. Information about health changes in terms of QALYs facilitated informed decision making by consumers, as indicated by the impact on risk and benefit perceptions as intended by the information. The impact of this information on actual food consumption choices merits further investigation.     

Beyond Make‐Buy: Internalization and Integration of Design and Production

Much recent attention in industrial practice has been centered on the question of which activities a manufacturing firm should complete for itself and for which it should rely on outside suppliers. This issue, generally labeled the “make‐buy” decision, has received substantial theoretical and empirical attention. In this paper, we broaden the scope of the make‐buy decision to include product design decisions, as well as production decisions. First, we examine independently the decisions of whether to internalize design and production, and then we consider how design and production organizational decisions are interdependent. The specific research questions we address are: (1) How can design and production sourcing decisions be described in richer terms than “make” and “buy”? (2) Do existing theories of vertical integration apply to product design activities as well as production decisions? (3) What is the relationship between the organization of design and the organization of production? (4) What organizational forms for design and production are seen in practice? After developing theoretical arguments and a conceptual framework, we explore these ideas empirically through an analysis of design and production sourcing decisions for bicycle frames in the U. S. mountain bicycle industry.     

Limited Rationality and Strategic Interaction: The Impact of the Strategic Environment on Nominal Inertia

Much evidence suggests that people are heterogeneous with regard to their abilities to make rational, forward‐looking decisions. This raises the question as to when the rational types are decisive for aggregate outcomes and when the boundedly rational types shape aggregate results. We examine this question in the context of a long‐standing and important economic problem: the adjustment of nominal prices after an anticipated monetary shock. Our experiments suggest that two types of bounded rationality—money illusion and anchoring—are important behavioral forces behind nominal inertia. However, depending on the strategic environment, bounded rationality has vastly different effects on aggregate price adjustment. If agents' actions are strategic substitutes, adjustment to the new equilibrium is extremely quick, whereas under strategic complementarity, adjustment is both very slow and associated with relatively large real effects. This adjustment difference is driven by price expectations, which are very flexible and forward‐looking under substitutability but adaptive and sticky under complementarity. Moreover, subjects' expectations are also considerably more rational under substitutability.     

The Meaning and Meaningfulness of Corporate Social Initiatives

In response to pressures to be more “socially responsible,” corporations are becoming more active in global communities through direct involvement in social initiatives. Critics, however, question the sincerity of these activities and argue that firms are simply attempting to stave off stakeholder pressures without providing a corresponding benefit to society. By drawing on institutional theory and resource dependence theory, we consider what factors influence the adoption of a “meaningful” social initiative—an initiative that is sustainable and has the potential for a significant positive impact on society—as opposed to a symbolic initiative. In addition, we raise the question of how social initiatives—both meaningful and symbolic—participate in the “institutional war” over the meaning of corporate social responsibility.     

Conflict of Interest Mitigation Procedures May Have Little Influence on the Perceived Procedural Fairness of Risk‐Related Research

Two between‐subject experiments explored perceived conflict of interest (COI)—operationalized as perceived procedural unfairness—in a hypothetical public–private research partnership to study the health risks of trans fats. Perceived fairness was measured as subjects’ perceptions that health researchers would be willing to listen to a range of voices and minimize bias (i.e., COI) in the context of a research project. Experiment 1 (n = 1,263) randomly assigned research subjects to a partnership that included (1) a combination of an industry partner, a university partner, and a nongovernmental organization (NGO) partner; and (2) one of three processes aimed at mitigating the potential for COI to harm the quality of the research. The procedures included an arm's‐length process meant to keep the university‐based research team from being influenced by the other partners, an independent advisory board to oversee the project, and a commitment to making all data and analyses openly available. The results suggest that having an industry partner has substantial negative effects on perceived fairness and that the benefit of employing a single COI‐mitigation process may be relatively small. Experiment 2 (n = 1,076) assessed a partnership of (1) a university and either an NGO or industry partner and (b) zero, one, two, or three of the three COI‐mitigation procedures. Results suggest there is little value in combining COI‐mitigation procedures. The study has implications for those who aim to foster confidence in scientific findings for which the underlying research may benefit from industry funding.