This article develops the economic implications of a head-neck injury tradeoff that underlies the technological limitations of motorcycle helmets as a form of self-insurance. Conditional on this tradeoff, an analysis of the optimal self-insurance decision establishes that mandatory helmet use legislation results in expected welfare losses for a subset of the motorcycling population. These losses are not compensated by other forms of self-insurance expenditures because such expenditures are suboptimal. In the case of increased risk aversion, the model generates standard results for loss reduction activities with known productivities.
LA - SN - 0022-4367 UR - http://dx.doi.org/10.2307/253747 ID - ref1 ER -