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IV. Evaluating fire safety regulation

This study indicates that fire safety regulation in northeastern Santiago has not been successful in reducing the number of structural fires or improving fire safety. We might conjure up of many reasons for regulation's lack of success. It could be that there are moral hazard problems now which did not exist before, since home insurance markets have grown considerably. It could be that people are less educated about fire dangers or any other number of cultural problems. Or it could be that technological improvements have brought certain new dangers, that did not exist beforehand, and these new dangers have caused more fire tragedies.

However, none of these conjectures are particularly relevant to public policy research. Policy-relevant researchers do not ask why there are more structural fires per capita. They simply evaluate the effectiveness of a public policy that was designed to alleviate both the incidence of structural fires and negative externalities caused by them. That is, policy relevant research is interested in knowing why public policies or regulations succeed or, as in the present case, fails. Presumably, regulators would be concerned about why there are increased in structural fires per capita, and what or who causes them, before implementing their decrees. Or, perhaps their inability to know these things has been the downfall of their regulation.

This latter prospect represents the pivotal upshot of this study. There are strong theoretical reasons why fire safety regulation in the public interest is doomed to fail, just as it has failed in northeastern Santiago. Public policy is often fraught with public choice and knowledge problems which engender socially inefficient and even ineffective or bad outcomes. Accordingly, the evidence from northeastern Santiago suggest that regulation has failed to meet its stated objective pertaining to fires and the reasons for its failure might well be explained by either public choice or knowledge problems.

Should building fire safety regulation continue as it is, be expanded, or be diminished? If there were evidence to support the proposition that such regulation has indeed reduced the number of fires, or at least held them in check, then it would be in the public interest to continue it. However, since this has not been the case in Santiago (i.e., providing such regulation has led to greater social costs), and given that the number of structural fires has not been reduced, there is reason to question the continuance of fire safety regulation.

This paper has provided evidence to support policies that promote market-based, private building and fire safety regulation. The evidence of structural fires in northeastern Santiago suggest that fire safety regulation by government has failed. If it continues, it must be greatly modified so that it is better equipped to meet its goals. However, there are strong theoretical reasons to doubt that such an improvement is possible. Thus, it would be better to simply replace the current system with more effective market-based regulatory techniques.

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