How Deregulation Drives Railroad Safety

By: Jerry Ellig and Patrick A McLaughlin, Mercatus Senior Research Fellows

The dramatic improvement in railroad safety since the 1970s has been accompanied by a substantial increase in safety regulation and a substantial reduction in economic regulation after 1980. We assessed the effects of both regulatory changes on railroad safety with the use of RegData: a new data set that measures the amount of regulation that is imposed by specific regulatory agencies on specific industries.
We found that partial economic deregulation is associated with improved safety. Safety regulation was most closely associated with improved railroad safety during the period when economic regulation curtailed railroads’ incentives to operate safely.

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