Economic incentives to accident prevention: An empirical study of the German sugar industry

Kötz, Hein; Schäfer, Hans‐Bernd

doi:10.1016/0144-8188(93)90019-2

Cited by 27 publications

(18 citation statements)

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“…Once again, few studies investigated this phenomenon. Of the five studies (25)(26)(27)(28)(29) included in the synthesis, all five were of medium quality. [See table 3 , to be found on the homepage of the Scandinavian Journal of Work Environment & Health, for details on these studies.]…”

Section: Resultsmentioning

confidence: 99%

Systematic review of the prevention incentives of insurance and regulatory mechanisms for occupational health and safety

Tompa¹,

Trevithick²,

McLeod³

2007

Scand J Work Environ Health

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Objectives The objective of this study was to determine the strength of evidence on the effectiveness of two policy levers-the experience rating of workers' compensation insurance and the enforcement of occupational health and safety regulation-in creating incentives for firms to focus on health and safety issues.Methods An extensive systematic literature review was undertaken in an effort to capture both published and grey literature studies on the topic. Studies that met specific subject-matter and methods criteria underwent a quality assessment. A qualitative approach to evidence synthesis, known as "best-evidence" synthesis, was used. This method ranks the strength of evidence on a particular topic on the basis of the number, quality, and consistency of studies on the topic. ResultsThere was moderate evidence that the degree of experience rating reduces injuries, limited to mixed evidence that inspections offer general and specific deterrence and that citations and penalties aid general deterrence, and strong evidence that actual citations and penalties reduce injuries.Conclusions Although experience rating is a key policy lever of those providing workers' compensation insurance, there is much to be learned about its merits. Few studies have concerned the topic, and most have used crude proxy measures or exploited natural experiments. There have been many more studies on the merits of regulation enforcement, even though here too measures were often crude. Nonetheless, this synthesis indicates that general deterrence is less effective in reducing injury incidence and severity, whereas specific deterrence with regard to citations and penalties does indeed have an impact.Key terms citation; experience rating; inspection; occupational health and safety regulation; penalty; workers' compensation. In this article we use the term "injuries" to refer to both injuries and illness unless expressly referring to both in order to make a distinction between the two. There are two broad avenues by which public policy attempts to influence the prevention of injuries 5 in the workplace: experience rating of workers' compensation insurance premiums and enforcement of occupational health and safety (OHS) regulations. The empirical literature on these policy levers is large, and diverse statistical methods, different levels of data aggregation, and samples from various time periods and jurisdictions are used. As a result, it is difficult to compare and contrast the evidence and quality of evidence provided by different studies. Consequently, synthesizing the evidence for the purposes of informing policy is a formidable task.However, the effort is warranted given that it is a highly significant area of research and policy making. To date, Kralj (1), Hyatt & Thomason (2), Mendeloff (3), and Thomason (4), among others, have reviewed parts of this diverse literature, but none have employed systematic review methodology. To our knowledge, this is the first attempt to perform a systematic review of this literature and one of very few...

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Section: Resultsmentioning

confidence: 99%

Systematic review of the prevention incentives of insurance and regulatory mechanisms for occupational health and safety

Tompa¹,

Trevithick²,

McLeod³

2007

Scand J Work Environ Health

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“…Oi (1974Oi ( , 1995 considers the economics of product safety, and which price is acceptable for safety, Kroger and Fischer's (2000) balances safety and economics, and Gibson (1978) questions whether major hazards should be prevented at all costs. Further, see Hale (2000) for regulations of safety, Kotz and Schafer (1993) for economic incentives to accident prevention, Pape (1997) for the tolerability of risk in the application of ALARP, and Viscusi (1986Viscusi ( , 1989Viscusi ( , 1993 for safety through markets, market incentives for safety, and the value of risk to life and health. For a managerial review considering economic analysis as one of several inputs, see Aven (2003) and Hertz and Thomas (1983).…”

Section: Introductionmentioning

confidence: 99%

Production versus safety in a risky competitive industry

Hausken

2012

IJDSRM

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Each of two firms has a resource that can be converted into safety versus productive investment in the first stage, with Bertrand competition on price in the second stage of a two-stage game. The firms produce differentiated products in a risky environment. If risks are negligible, investing more in safety decreases the price, and producing more increases the price. The results depend on whether risks get reduced concavely or convexly. With concave (convex) risk reduction, higher safety investment by the competitor causes higher (lower) own safety investment. With concave (convex) risk reduction, lower firm loyalty by consumers implies lower (higher) safety investment, higher product substitutability implies higher (lower) safety investment, and more adverse implications of the competitor's productive investment on the demand intercept of the firm implies lower (higher) safety investment. When each firm independently maximises profit in a Nash equilibrium, safety investment is lower than when a social planner maximises social welfare and when maximising joint industry profits. The impact of the income, substitution, and interdependence effects on safety investment and price is finally analysed.

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“…In Sect. 2 I referred to a German study by Kötz and Schäfer (1993). The authors conclude that ''there is a highly significant statistical relation between the introduction of the system of rebates and surcharges, and the reduction in the number of accidents''.…”

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confidence: 99%

“…where the marginal costs of investing in safety equal the marginal benefits of a reduction in accidents), it seems safe to conclude at least that the market forces inherent in the German public insurance system are working fairly well. Kötz and Schäfer (1993), p. 33.…”

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confidence: 99%

“…In that respect workers' compensation would have had more deterrent effects than safety regulation. Kötz and Schäfer (1993) studied the sugar industry in Germany. Their conclusion, which is in line with economic predictions, is that there were far fewer accidents after the introduction of experience-rated premiums (in the form of a system of rebates and surcharges) in the German workplace compensation scheme than before.…”

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confidence: 99%

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Compensation for industrial accidents and incentives for prevention: a theoretical and empirical perspective

Philipsen

2009

Eur J Law Econ

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This paper examines the compensation systems for industrial accidents in Belgium, Germany and Great Britain, thereby taking into account some recent empirical data on industrial accident rates and (although hardly available) amounts of compensation paid out to employee victims. The key question of this paper, derived from past research in law and economics, is whether these particular compensation systems include elements that may contribute to the prevention of industrial accidents. While the three countries examined here all have at least some incentive-based elements, notably in the way those systems are financed, there appears to be room for improvement both in Belgium and Great Britain. The German case study leads to the proposition that giving an organisation the responsibility for both compensation and prevention may have a beneficial effect on the accident rate.

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Economic incentives to accident prevention: An empirical study of the German sugar industry

Cited by 27 publications

References 0 publications

Systematic review of the prevention incentives of insurance and regulatory mechanisms for occupational health and safety

Systematic review of the prevention incentives of insurance and regulatory mechanisms for occupational health and safety

Production versus safety in a risky competitive industry

Compensation for industrial accidents and incentives for prevention: a theoretical and empirical perspective

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