I read this article a couple of days ago, but this little snippet was what stuck in my head. It was cool to see John Stossel build a ‘snow mobile’ out of these ideas, and to learn about Spontaneous Order and the Peltzman Effect. You learn something new all the time, and perhaps some of you out there, or even myself, will build something out of these concepts in the future?
One thing that I would like to add to this article is the ‘roundabout‘. I like the roundabout, because it is the best mixture of channeling traffic efficiently as well as putting more decision making in the minds of drivers. You enter the thing, you are channeled throughout the entire process, and you decide when to turn out. There is also a faster flow of traffic, and less idle time which equates to better fuel usage in those areas that use the system. And according to these guys, they are safer and more efficient. There are some signs for the roundabout, like to indicate it is coming up or to yield to oncoming traffic, but it is not nearly as sign intensive or as confusing as the standard traffic stop in the US or elsewhere. –Matt
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From John Stossel’s Private Industry Does It Better, Page 2
August 5th, 2010
It’s Friedrich Hayek’s “spontaneous” order in action: Instead of sitting at a mechanized light waiting to be told when to go, drivers meet in an intersection and negotiate their way through by making eye contact and gesturing. The secret is that drivers must pay attention to their surroundings — to pedestrians and other cars — rather than just to signs and signals. It demonstrates the “Peltzman Effect” (named after retired University of Chicago economist Sam Peltzman): People tend to behave more recklessly when their sense of safety is increased. By removing signs, lights and barriers, drivers feel less safe, so they drive more carefully. They pay more attention.
In Drachten, Holland, lights and signs were removed from an intersection handling about 30,000 cars a day. Average waiting times dropped from 50 seconds to less than 30 seconds. Accidents dropped from an average of eight per year to just one.
On Kensington High Street in London, after pedestrian railing and other traffic markers were removed, accidents dropped by 44 percent.
“What these signs are doing is treating the driver as if they were an idiot,” says traffic architect Ben Hamilton-Baillie. “If you do so, drivers exhibit no intelligence.”
Story here.
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By Wikipedia
The Peltzman effect is the hypothesized tendency of people to react to a safety regulation by increasing other risky behavior, offsetting some or all of the benefit of the regulation. It is named after Sam Peltzman, a professor of Economics at the University of Chicago Booth School of Business.
From the foreword of a talk by Peltzman at the American Enterprise Institute:
Sam Peltzman is one of the few economists, and probably the only regulatory economist, to have an effect named after him — the “Peltzman effect.” The Peltzman effect arises when people adjust their behavior to a regulation in ways that counteract the intended effect of the regulation. So, for example, when the government passes a seatbelt law, some drivers may respond by driving less safely. It turns out that the Peltzman effect has widespread application and has spawned, like much of Professor Peltzman’s other work, a veritable cottage industry for economists.
When the offsetting risky behavior encouraged by the safety regulation has negative externalities, the Peltzman effect can result in redistributing risk to innocent bystanders who would behave in a risk-averse manner even without the regulation. For example, if some risk-tolerant drivers who would not otherwise wear a seat belt respond to a seat belt law by driving less safely, there would be more total collisions. Overall injuries and fatalities may still decrease due to greater seat belt use, but drivers who would wear seat belts regardless would see their overall risk increase. Similarly, safety regulations for automobiles may put pedestrians or bicyclists in more danger by encouraging risky behavior in drivers without offering additional protection for pedestrians and cyclists.
The Peltzman effect is a contributing factor in the explanation of Smeed’s Law, an empirical observation that traffic fatality rates in many countries are correlated with the number of vehicle registrations per capita, and differing safety standards do not appear to be significant.
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By Wikipedia
Spontaneous order is the spontaneous emergence of order out of seeming chaos; the emergence of various kinds of social order from a combination of self-interested individuals who are not intentionally trying to create order. The evolution of life on Earth, language, and a free market economy have all been proposed as examples of systems which evolved through spontaneous order. Naturalists often point to the inherent “watch-like” precision of uncultivated ecosystems and to the universe itself as ultimate examples of this phenomenon.
Spontaneous order is also used as a synonym for any emergent behavior of which self-interested spontaneous order is just an instance.
History of the theory
According to Murray Rothbard, Chuang Tzu (369-c. 286 B.c.) was the first to work out the idea of spontaneous order, before Pierre-Joseph Proudhon and Friedrich Hayek. The Taoist Zhuangzi said, “Good order results spontaneously when things are let alone.” . Proudhon said, “The notion of anarchy in politics is just as rational and positive as any other. It means that once industrial functions have taken over from political functions, then business transactions alone produce the social order.” Proudhon’s position was that freedom is prerequisite for spontaneous order to take place, rather than liberty being the result of spontaneous order. Hence his statement, liberty “is not the daughter but the mother of order.”
The thinkers of the Scottish Enlightenment were the first to seriously develop and inquire into the idea of the market as a ‘spontaneous order’ (the “result of human action, but not the execution of any human design”, as Adam Ferguson put it first).
The Austrian School of Economics, led by Carl Menger, Ludwig von Mises and Friedrich Hayek, would later refine the concept and use it as a centerpiece in its social and economic thought. Although many Austrian School thinkers and other libertarian figures such as Milton Friedman concurred with Proudhon’s position mentioned above, not all have embraced anarchism like Rothbard; a good deal of libertarians maintained support for existence of a minimal state to maintain the liberty requisite for spontaneous order to take place.
In 2004, the understanding of the thermodynamics of spontaneous ordering (creation, existence, and destruction) was made straightforward by the formulation of nine succinct directives. These directives follow jointly from the broken symmetry spelled by the Entropy Principle and the Law of Maximum Entropy Production, which is the statement for nature’s preference for selecting paths of least resistance for minimizing gradients of field variables.
Markets
Many economic classical liberals, such as Hayek, have argued that market economies are creative of a spontaneous order – “a more efficient allocation of societal resources than any design could achieve.” They claim this spontaneous order (referred to as the extended order in Hayek’s “The Fatal Conceit”)is superior to any order human mind can design due to the specifics of the information required. Centralized statistical data cannot convey this information because the statistics are created by abstracting away from the particulars of the situation. In a market economy, price is the aggregation of information acquired when people are free to use their individual knowledge. Price then allows everyone dealing in a commodity or its substitutes to make decisions based on more information than they could personally acquire, information not statistically conveyable to a centralized authority. Interference from a central authority which affects price will have consequences they could not foresee because they do not know all of the particulars involved. This is illustrated in the concept of the invisible hand proposed by Adam Smith in The Wealth of Nations. Thus in this view by acting on information with greater detail and accuracy than possible for any centralized authority, a more efficient economy is created to the benefit of a whole society.
Game studies
The concept of spontaneous order is closely related with modern game studies. As early as in the 1940s, historian Johan Huizinga wrote that “in myth and ritual the great instinctive forces of civilized life have their origin: law and order, commerce and profit, craft and art, poetry, wisdom and science. All are rooted in the primeval soil of play”. Following on this in his book The Fatal Conceit, Hayek notably wrote that “A game is indeed a clear instance of a process wherein obedience to common rules by elements pursuing different and even conflicting purposes results in overall order”.
Anarchism
Anarchists argue that the state is in fact an artificial creation of the ruling elite, and that true spontaneous order would arise if it was eliminated. Construed by some but not all as the ushering in of organization by anarchist law. In the anarchist view, such spontaneous order would involve the voluntary cooperation of individuals. According to the Oxford Dictionary of Sociology, “the work of many symbolic interactionists is largely compatible with the anarchist vision, since it harbours a view of society as spontaneous order.”
Sobornost
The concept of spontaneous order can also be seen in the works of the Russian slavophile movements and in specific the works of Fyodor Dostoyevsky. The concept of an organic social manifestation as a concept in Russia expressed under the idea of sobornost. Sobornost was also used by Leo Tolstoy as an underpinning to the ideology of Christian anarchism. The concept was used to describe the uniting force behind the peasant or serf Obshchina in pre-Soviet Russia.