Dangerous truths

As witnessed in recent years, economics always makes the headlines when there’s a downturn. It gets even more attention when it might point to fraud in a high profile, high-pressure profession, which was the case in 1981 during a nationwide strike by air traffic controllers.

Umbeck and Krannert graduate Michael Staten (PhD ’80) had recently completed a study showing that air traffic controllers could make more money through federal disability insurance compensation than by staying on the job –– an incentive amplified by a growing number of self-reported errors and stress-related claims among the group.

Strike Signs

John Umbeck’s research has addressed such unconventional topics as striking, disability-prone air traffic controllers, drunk-driving laws, and the economics of keeping prisoners of war in Southeast Asia. (Photo by iStock)

The research turned especially hot when the controllers’ employee union declared a strike late that summer. Within days, President Reagan decertified the union, fired the strikers and banned them for life from federal service.

“The story broke in The Wall Street Journal on a Thursday in August, and it seemed like I was on the phone until nine o’clock Friday night,” Umbeck said at the time. “And by Sunday night we were in New York, preparing to go on ABC’s Good Morning, America. In view of the strike, we expected the study to make news, but we didn’t expect such an overwhelming response.”

An avowed capitalist, Umbeck generally eschews government intervention in the behavior of a free market, but if the data supports it, so will he.

When numerous states began stiffening their drunk-driving laws in 1980s, for example, Umbeck co-authored a pair of studies with economics alumnus Richard Theroux (PhD ’79) and former Krannert professor Patrick McCarthy to determine if such laws in Ohio and California actually reduced the number of alcohol-related accidents.

The good news was that harsher penalties did in fact result in a fewer accidents involving drunken drivers. The bad news was that hit-and-runs by drunk drivers increased.

As Umbeck explained to readers of Krannert’s alumni magazine in its spring 1987 issue: “Because the chances of paying a fine and going to jail are much greater, drivers who risk drinking are more likely to want to escape from the scene of an accident.”

Another finding was that areas with higher unemployment rates had more alcohol-related accidents than areas with lower jobless rates. Under the old laws, accident rates were about the same for both employed and unemployed people.

“That means people with jobs have more incentive not to drink and drive –– or at least be more careful if they do –– because spending time in jail is more ‘costly’ to them,” Umbeck said.

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