How effective are non-monetary instruments for safe driving ? : panel data evidence on the effect of the demerit point system in Denmark.

Using unusually rich longitudinal traffic offense data, this paper exploits a reform that introduced a point recording scheme in Denmark to estimate the behavioral responses of drivers to a non-monetary penalty based on demerit points. We find that drivers exhibit substantial behavioral responses to each demerit point assigned to their driving license. We also find that drivers’ effort, and hence response, increases with the number of demerit points accumulated. Depending on the number of demerit points accumulated, drivers with one or more demerit points reduced their frequency of traffic offenses by 9–34 percent. (Author/publisher)