Home > Economics - General > More research on speeding and road deaths

More research on speeding and road deaths

April 15th, 2004

Thanks to reader Christoper Short for alerting me to this NBER Working Paper by Orley Ashenfelter and Michael Greenstone which gives more information on speeding and road deaths. Most of the article concerns statistical pitfalls in estimation, but I’ll focus on the bottom line which is their estimate that the implicit value of the time saved per life lost as a result of relaxation of rural speed limits in the US in the 1980s was in the range $1.2 million to $3.2 million in 1997 values.

This sounds like a lot, but it’s lower than most estimates of the value people place on risks to life (for example, looking at stated willingness to accept risk, wage premiums for risky occupations, or costs of medical procedures that are generally accepted as cost-effective). I discuss this a bit more here and you can find more discussion by searching the site for “speeding”[1].

A couple of other points are worth noting.

First, while “number of deaths” is taken as a proxy for the danger of accidents there are numerous injuries (some severely disabling) for each death – the cost needs to take these into account. This probably doesn’t have a big effect on comparisons with estimates based on wage premiums, where injuries are treated in the same way), but is important relative to measures derived from stated preferences or from comparison with medical procedures.

Second, Ashenfelter and Greenstone value time saved at the average pretax wage, which is an upper bound estimate. Most studies treat time saved on non-work travel as being less valuable than paid labour time.

To sum up, the value of time saved by the increase in speed limits is, on these estimates, lower than the value of lives lost, implying that the policy reduces social welfare.

As Ashenfelter and Greenstone note, the outcome appears to reflect the political preferences of Americans, as mediated by the political system there. I have no problem in putting forward the hypothesis that this is an instance of government failure, either because participants in the process are not behaving rationally or because the process is failing to take proper account of preferences. I’m pleased to say that the Australian process seems to produce more rational outcomes.

fn1. This reminds me that I’m still hoping to resurrect the excellent comments threads on some of these posts

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  1. Uncle Milton
    April 15th, 2004 at 13:04 | #1

    Why is it irrational to have preferences for higher speed limits?

    If there are 51 good drivers and 49 bad drivers (who are more likely to die if the speed limit is raised) then it might be completely rational for the 51 good drivers to vote for higher speed limits. While raising the speed limit increases the probability that all drivers die in car crashes, the probability is raised a bit for good drivers and a a lot for bad drivers. For good drivers, the cost of being killed, weighted by the probability of it happening, might be less than the benefits of driving faster.

    The good drivers might gaining at the expense of the bad drivers, but that is selfish, not irrational, behaviour.

    I suppose the good drivers might be irrational if raising the speed limit for everyone means they are significantly more likely to be killed by the bad drivers. That is a factual question.

  2. kyan gadac
    April 16th, 2004 at 03:45 | #2

    Ah but Uncle Milton, being a good driver is not independent of speed. I’m a good driver at 100kmh, Michael Shumacher is a good driver at 200kmh. The ratio between good and bad drivers decreases non-linearly(i.e exponentially) as speed increases. Therefore irrationality starts to exceed selfishness as overall speed increases. As a sidebar, of course the nature of the road/environment comes into the equation as well.

  3. Uncle Milton
    April 16th, 2004 at 11:24 | #3

    I agree that there are probably very few good drivers at 200kph. But I doubt that many good drivers at 100 kph become bad drivers at 110kph, which is what we are talking about here.

  4. April 19th, 2004 at 01:27 | #4

    Uncle, being killed by an idiot is what we all fear. And we submit to tiresome rules (as genius drivers) to stop the idiots behaving even more badly. Now, this may sound flippant, but the whole point of road regulations is to set them for bad drivers and poor conditions; the political task is to get your “rational” good driver to understand that safety lies in this strategy.

    One of the elements in this concerns relative speeds. I drive at 100km on the highway and my car changes speed relative to anyone else at a glacial pace. Someone drops an engine on the road, or hits a patch of oil, or falls asleep, and everything starts to happen very very fast, so fast my ability as a driver can make very little difference (unless I am maintaining the two second buffer).

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