Abstract
We develop a model of risk assessment that incorporates assumptions from the behavioral theory of the firm into conventional expected utility models of compliance, and test the model using data on injuries and OSHA inspections for 6842 manufacturing plants between 1979 and 1985. Four hypotheses are supported-the specific deterrence effect of an inspection, the importance of lagged effects of general deterrence, the asymmetrical effects of probability and amount of penalty on injuries, and the tendency of injury rates to self-correct over a few years. The model estimates that a 10% increase in enforcement activities will reduce injuries by about 1% for large, frequently inspected firms. Prior analyses reporting lower impacts (Smith, 1979; Viscusi, 1986a) are replicated to distinguish between sampling and modeling differences. The results suggest that further compliance theory needs more detailed models of risk-assessment processes to be tested on samples of firms most affected by enforcement.
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This project would not have been possible without the cooperation of the Bureau of Labor Statistics and the Occupational Safety and Health Administration. Special thanks are due to William Eisenberg at BLS and Frank Frodyma and Joe Dubois at OSHA. We are particularly indebted to John Ruser of BLS, who performed the data merging and solved numerous problems. The project was partially funded by NSF grant SES8420920. These individuals and institutions do not necessarily support the conclusions in this article.
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Scholz, J.T., Gray, W.B. OSHA enforcement and workplace injuries: A behavioral approach to risk assessment. J Risk Uncertainty 3, 283–305 (1990). https://doi.org/10.1007/BF00116786
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DOI: https://doi.org/10.1007/BF00116786