Chapter 90 Question ○81

Why is it legal to eat a hamburger while driving, but not to use a cell phone while driving? (Evan Psalopoulos) Evidence shows that talking on a cell phone while driving increases the chances of a driver being involved in an accident, so many states ban the practice, but some allow drivers to use hands-free headsets while driving.But the law allows drivers to engage in other seemingly dangerous activities while driving: eating fast food, drinking hot drinks, listening to CDs, and even putting on makeup.Since such activities can distract drivers as much as cell phone calls, why aren't they illegal?

One possible reason is that cell phone calls are more distracting than other activities.For example, a driver who is having a conversation is less attentive than a driver who is just eating a burger.But it is legal for drivers to talk to other passengers while driving.Some argue that talking on a cell phone is more of a distraction for a driver than talking to a passenger in a car, who can judge traffic and cut off the conversation.But since lawmakers in most states allow drivers to wear headphones and make calls, that explanation also seems insufficient. Assuming all interpretations of this law fail, let's see how it might change the earnings of those affected by it.Suppose lawmakers banned drivers from drinking coffee and eating hamburgers while driving, sales at fast food restaurants would plummet.Lawmakers are reluctant to enact such laws for fear that big business will retaliate by withholding campaign contributions.Lawmakers have avoided the risk of banning cell phone calls while driving, but allowing them while wearing headphones, because wireless phone carriers can still attract as many customers as ever.In fact, many operators can even earn higher profits through the sale of headsets.

Another factor at play is that eating while driving was a practice long before society imposed safety rules on individual behaviour.So cellphone calls and other potentially risky behaviors have become more tempting targets in the eyes of lawmakers.Here, the final say is history. The last two examples in this chapter show how economic principles have influenced the design of laws intended to protect consumers from firms that wield market power.Both examples refer to the taxi industry in New York, where the municipality stipulates that you cannot drive a taxi without first purchasing a driver's license badge (the badge that serves as a symbol of a taxi license) or an operating permit.This creates a legal monopoly situation.To alleviate traffic congestion, the municipality issues a fairly limited number of licenses, which results in fewer taxis (less than there would be on the taxi market if there were no such regulation).

As a result, licensees gain considerable market power, allowing them to charge passengers unrestricted fares for taxi fares well above their actual cost.Therefore, municipalities not only have to regulate the number of taxis that can operate, but also limit their fares.The purpose of these regulations is not only to protect consumers from unfair treatment, but also to promote more effective decisions about the use of taxis.