Do consumers have imperfect recollection about airline safety?

Abstract

The inquiry examines whether consumers exhibit imperfect recollection about airline accidents. The state of the world is modelled with a Poisson distribution that updates over time. It is found that passengers of small carriers forget about accidents over time, thus leading to a 539% cumulative increase in enplanement while passengers of large carriers do not exhibit such a behaviour.

Notes

These values represent average accident rates.

A trend is not included in the estimation because the data are subject to a stochastic time trend, thus necessitating differencing.

American, Eastern, and TWA were dropped from the estimations for large carriers and Aloha and ValuJet were dropped from the estimations for small carriers.