Subjective beliefs, deterrence, and the propensity to drive while intoxicated
Yiqun Chen, Frank Sloan 15 December 2014
Driving while intoxicated is a serious problem in the US. What policymakers disagree about is how best to discourage drunk driving. This column argues that the perceived risk for detection has a deterrent effect on drunk driving. Harsher sanctions do not convey the desired effect if the perceived risk for detection is low. The best policy thus should increase the probability of detection or manipulate peoples’ beliefs for such a risk.
Driving while intoxicated (DWI) is a serious problem in the US, having caused more than 10,000 deaths in 2010 (US National Centre for Statistics and Analysis 2012). Studies have documented that 2% of weekend night time drivers on US roads had illegal blood alcohol concentrations (Lacey et al. 2009), and more than 110 million alcohol-impaired driving episodes occur in US annually (Bergen et al. 2011). Legally intoxicated drivers are 13 times more likely to cause fatal crashes than sober drivers (Levitt and Porter 2001).
Frontiers of economic research
drunk driving, detection, deterrence, sanctions
Countering sanctions: The unequal geographic impact of economic sanctions in North Korea
Yong-Suk Lee 06 November 2014
How does an autocratic regime domestically counter the impact of economic sanctions? This column studies the impact of sanctions on North Korea using satellite night-time lights data and finds that the burden of sanctions falls on the vulnerable population and not the elites in power towards whom the sanctions are aimed. Sanctions that fail to change the leader’s behaviour likely increase inequality at a cost to the already marginalised hinterlands.
Economic sanctions have become a more frequent foreign policy tool in recent decades. North Korea and Iran have been sanctioned for their nuclear pursuit, Syria for mass civilian killings, and recently Russia for annexing Crimea. However, these sanctions do not seem to be effective in achieving their intended goals. Hufbauer et al. (2009) document 174 sanction cases and find that only 34% were at least partially successful with most of the successes happening before the 1970s. What explains such inefficacy of sanctions?
Politics and economics
North Korea, sanctions, satellite data
Europe’s Russian connections
Aasim M. Husain, Anna Ilyina, Li Zeng 29 August 2014
The conflict in Ukraine and the sanctions against Russia have already affected the Russian financial markets. This column discusses the repercussions for the rest of Europe of possible disruptions in the trade and financial flows with Russia. Eastern European countries could be seriously affected by a slowdown in the Russian economy due to their close links with Russia. Western countries – despite having looser links with it – could also experience significant effects.
The conflict in Ukraine and the imposition of new sanctions against Russia by the US and the EU (second half of July) followed by Russia's counter-sanctions (August 7) signal an escalation of geopolitical tensions that has been strongly felt in Russian financial markets (see Chart 1). A deterioration in the conflict, as well as further escalation of sanctions and counter-sanctions, could have a substantial adverse impact on the Russian economy through direct and indirect (confidence) channels (IMF 2014a).
Europe's nations and regions Politics and economics
Russia, sanctions, Eastern Europe
Russia’s tit for tat
Peter A.G. van Bergeijk 25 April 2014
In reaction to the Crimean crisis, the EU imposed certain sanctions on Russia. Russia responded by blacklisting EU and US officials. This column discusses the comparative vulnerability of the EU and Russia amid this tit for tat pattern. In purely economic terms, the EU is in a much better position than Russia. However, political regimes also matter. The autocracy score for Russia dampens the impact that the economic sanctions would have politically. The democratic nature of the European governments would translate the sanctions imposed by Russia into great political pressure for the EU. This makes the Russian tit for tat threat realistic.
Since 16 March 2014, the EU (in concerted action with the US) has frozen assets and imposed travel bans on 33 persons and an individual bank. On 20 March, Russia counteracted with the reciprocal blacklisting of EU and US officials. This pattern of tit for tat raises the question of the comparative vulnerability of the EU and Russia. In assessing this vulnerability, is not just the ability to inflict economic damage that matters, however, but also the way economic damage translates into political change. This means that one needs to consider the political system.
Politics and economics
Russia, EU, sanctions, Crimean crisis