Fear of Flying? Economic Analysis of Airline Safety

Nancy L. Rose

NBER Working Paper No. 3784
Issued in July 1991
NBER Program(s):   IO

The safety of the commercial airline industry has attracted considerable public attention and debate since economic deregulation of the industry in 1978. These concerns have energized economic research on three aspects of airline safety. First, has the level of airline safety declined since deregulation? Research on this topic investigates whether heightened public concerns about air safety derive from objective increases in accident risks. Second. what accounts for differences in safety performance across carriers? This literature analyzes heterogeneity in carriers' safety records as a means of learning about factors that influence safety performance. Third, how do markets respond to airline accidents? This work explores the effectiveness of market incentives in constraining the safety provision of firms. This paper describes our progress in answering each of these queries.

(579 K)

Published: Journal of Economic Perspectives, Spring 1992, pp. 75-94

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