The Impact of Inspector Group Size on Enforcement: Evidence from Oil Platforms in the Gulf of Mexico
Abstract: This paper estimates the effect of inspection intensity on enforcement on oil platforms in the Gulf of Mexico. The paper estimates the causal effect that an additional inspector joining an inspection has on the likelihood that violations will be detected and cited, and the severity of any sanction imposed. Important limitations to investigating the effect of an additional inspector are endogeneity and selection bias. To deal with this issue, we use exogenous variation in helicopter flying conditions as an instrumental variable for the number of inspectors that are sent to offshore oil and gas platforms. We find that an additional inspector results in an increase in the number of severe sanctions that are issued. To further understand why an additional inspector matters, we consider several alternative explanations---ingroup bias and regulatory capture. First, we examine the effect of conducting the inspection in a familiar group (as opposed to a group that has not worked together before) and find no effect. Second, as a measure of regulatory capture, we examine whether the enforcement actions are affected by the frequency with which an inspector has visited the platform or the operator before. Using these measures, we find no evidence of regulatory capture.
