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Risk homeostasis is a psychological theory developed by Gerald J.S. Wilde, a professor emeritus of psychology at Queen's University, Kingston, Ontario, Canada. This theory is fleshed out in Wilde's book¹.

The theory of risk homeostasis states that an individual has an inbuilt target level of acceptable risk which does not change. This level varies between individuals. When the level of acceptable risk in one part of the individual's life changes; there will be a corresponding rise/drop in acceptable risk elsewhere. The same, argues Wilde, is true of larger human systems (e.g. a population of drivers).

For example, in the famous Munich taxicab study, half of a fleet of cabs were equipped with antilock braking system (ABS) brakes, while the other half had older brake systems. The accident rate for both types of car (ABS and non-ABS) remained the same, because ABS-car drivers took more risks, assuming that ABS would take care of them. They raised their risk taking, assuming the ABS would then lower the real risks, leaving their "target level" of risk unchanged. The non-ABS drivers drove the same way, thinking that they had to be more careful, since ABS would not be there to help in case of a dangerous situation.

Similarly, in the late 1970s, the government of British Columbia, a province in western Canada, undertook a massive anti-drunk-driving campaign. They succeeded in reducing the accident rate (due to drunken driving) by nearly 18% over a four-month period. However, accidents caused by other factors increased by 19% during the same time. People took fewer risks driving while intoxicated, but more doing other dangerous actions on the road.

Wilde cites a multitude of other studies which show the same thing. Anti-smoking campaigns do not work; neither do industrial safety campaigns of most kinds. The massive increase in car safety features has had little effect on the overall accident rate or the cost of such accidents (the death rate from traffic accidents, however, has decreased).

Wilde argues that safety campaigns tend to "move risk taking behaviour around," rather than reducing it. In order to increase safety, two things need to happen. First, people's future expectations need to be raised. Many studies have shown that those who value the future more highly have lower accident rates and less risk taking behaviour than those who discount the value of the future (an alternative explanation about why behaviours such as smoking are predominantly lower socio-economic class phenomena). Second, there needs to be direct incentives for people to behave safely. In some companies, direct payments to workers for zero accidents (and very small fines when accidents do happen) have massively lowered accident rates. The functional approach thus seems to be "much carrot, little bit of stick."

The implications of Wilde's work on areas such as health care are startling. Given baby boomers’ increasing use of health-care resources in most industrialised societies, Wilde's theory seems to suggest that health care systems should be directly financially rewarding healthy behaviour and extracting payment for unhealthy behaviour.

It should be noted, however, that Wilde's work is not widely accepted and has garnered significant criticism. [1]

• Risk compensation

• Target Risk - web version of the first edition of Wilde's book
• Risk homeostasis hypothesis: a rebuttal - rebuttal of Wilde's findings citing additional academic sources.

• 1. Target Risk 2: A New Psychology of Safety and Health, Gerald J.S. Wilde ISBN 0-9699124-3-9