The costs and benefits of speeding

John Quiggin26 Comments

Various commentators (notably including Tom Nankivell) have raised the issue of the costs and benefits of current speed limits and of more or less rigorous enforcement of those limits, and have asked that I consider costs as well as benefits of enforcing speed limits. I’m going to give some back-of-the-envelope numbers in an effort to inform the debate. The total economic cost of road crashes in Australia is at least $20 billion per year (This BTRE study gives direct costs of $15 billion for 1996, but an analysis based on economic welfare theory would include substantial costs (for example, in the BTRE analysis, there is zero cost in the case when a retired person is killed instantly in a crash).

The main cost of speeding restrictions is that of additional travel time. Assuming that complete abolition of speed limits would reduce average travel time by 20 per cent (very generous, since a lot of travel is on congested roads where the speed limit isn’t a constraint), and taking the BTRE estimate that value of reduced travel time is $10/hour, the total travel time cost of speed limits is around $5 billion per year.

It’s pretty obvious that abolishing speed limits altogether would raise road death rates by more than 25 per cent (the NT is the only jurisdiction in Australia without speed limits and its death rates are several times higher than in the rest of the country, though there are other factors as well as speed in play). The same argument applies, essentially pro-rata to more limited relaxation of limits. It gets harder to justify further reductions as the limit gets lower, but I’d say there’s a pretty good case for more general application of 50k limits in suburban areas to cover everything except main roads.

Turning to other costs and benefits, the survey evidence I’ve seen suggests that the disutility imposed by speeders on other drivers (particularly through tailgating, forcing their way back into traffic etc) is at least as large as any psychic benefits gained by the speeders.

Finally, on the enforcement issue, one point that has secured a lot of agreement is that variance in speed is as much of a problem as speed itself. On the assumption that there are a large number of law-abiding drivers travelling at or near the legal limit, and vehicles such as trucks that cannot safely exceed the limit, this provides a strong argument for both rigorous enforcement and tight tolerances. It also implies that excessively slow driving should be penalised.

How much is water worth in the US ?

John Quiggin1 Comment

This NYT story shows the similarity between Australia’s water problems and those of the Western US. There as here, rights originally allocated to irrigators for little or nothing are being bought back at substantially higher values.

The San Diego district will pay market prices for the water, or about $258 per acre-foot at the outset. The farmers typically pay only delivery fees for their water, which amount to $15 or $20 per acre-foot.

If my arithmetic is correct, the market price quoted here is about $A300/ML while the farm delivery price is around $A20/ML. An acre-foot (enough to put a foot of water on an acre of land) is about 1.2 ML (a megalitre enough to put 10cm of water on a hectare of land) and in purchasing-power-parity terms, an Australian dollar is worth about $US0.70 which, coincidentally, is close to the current market exchange rate.

Vote!

John Quiggin16 Comments

In the Monday Message Board before last, I asked for suggestions for a possible name for this blog. When I started blogging, I didn’t really think too much about this. I knew I didn’t want to run a pseudonymous blog (disclaimer: some of my best friends are pseudonymous bloggers, or might be) so I just used my own name for the blog as well as when I signed my posts. But now I think a name for the blog might be a good idea. In addition, I’m interested in testing out polling plugins.

When I thought about it, my own idea for a name was “Honest disagreement”. It lacks the irony that most blognames seem to display, but it does give an idea of the kind of forum I hope to provide. Of the many suggestions by commenters, the two I liked best were “QED” and “Quog”. And of course, there’s the option, favored by at least some, of sticking to the existing name.

So, here’s my poll. The usual caveats apply. The results do not represent a scientific sample of anything and I am not bound to pay any attention to them if I don’t feel like it.


You must turn on JavaScript to view the PulsePoll. For tech support: co-laboratory

A nice plug

John Quiggin4 Comments

British journal Economica is currently listing one of my papers (with Simon Grant) as its feature article on its website. I’m very happy about this, since the paper makes what I think is one of my most important policy arguments, that the discount rate for public investment should be less than the rate of return demanded by private equity investors in comparable projects.

I’d be interested to debate this point with readers, but please have a look at the article first – you don’t need to go through all the algebra to get the main point.

Trouble with pronouns

John Quiggin7 Comments

Stanley Gudgeon, aka Professor Bunyip, aka Imre writes

Being of the left, it goes without saying that John Quiggin is an enemy of pleasure — at least those that don’t involve curtailing the not-good-for-you joys of others.

(Link via Ken Parish who points out some inconsistencies in the Professor’s own position.)

On the contrary, what I want to curtail is the bad-for-me pleasures of people (speeding drivers, gun fans etc) who are happy to say I should take some risks to facilitate their fun.

As I mentioned quite a while ago, if we could find a suitable location for gun fans and speedsters to act out their Grand Theft Auto fantasies away from everyone else, I’d support it*. In fact, I’d sign up for pay-TV to watch.

*James Farrell made a similar suggestion in the comments thread

A puzzle for the libertarians

John Quiggin16 Comments

One of the striking features of the debate over road safety is the extent to which the opinions of blogosphere residents can be predicted on the basis of political affiliation. Rightwingers, both libertarians and law-and-order types, are in favor both of soft laws (high speed limits etc) and weak law enforcement, and leftwingers the opposite. A number of commentators on both sides have made this point.

So I was interested to see this pro-speeding site [thanks to TJW for the link]. The main argument is fairly standard (everybody speeds, so travelling at the speed limit is dangerous so speed limits should not be enforced). But what’s interesting is this para

In the United States, just two speeding tickets can increase your insurance premiums by 50%! In BC, the penalty points from two speeding tickets will cost you $300.

The Insurance Institute for Highway Safety (IIHS), a powerful lobby group funded by the US insurance industry, has been the chief opponent of moves to raise speed limits.

Insurance companies in the US (and ICBC in BC) frequently purchase radar and laser guns for police forces to issue more speeding tickets.

which presents an obvious paradox for libertarian supporters of speeding. A fully privatised system would give more power to the insurance companies to impose their own conditions on insured drivers and, if this site is correct, the companies would be keen to tighten the rules.

In my experience, libertarians love the kind of intellectual gymnastics required to produce free-market solutions to puzzles of this kind, so I’m offering it for their enjoyment.

Strike!

John Quiggin8 Comments

Like most academics, I’m somewhat ambivalent about strike action. On the one hand, given the nature of the work, a one-day or even a one-week strike would barely be noticed by the employers (and, as I’ll mention below, it’s not clear whether the employers are the universities or the government). On the other hand, the right to strike is an important one, that has been struggled for and defended for nearly 200 years, and we have plenty of reasons for wanting to exercise it.

In practice, there’s never been a national strike of more than one day, and my response has usually been to stay home and work there, occasionally turning out on a ‘picket’ (more accurately, ‘protest’) line. Even the loss of pay has been spotty. For the same reasons as strikes are somewhat ineffectual, it’s hard to verify who is on strike and who is simply out of the office for some other reason on a given day. So the university is generally reduced to asking people to dob themselves in and the old-style unionist in me objects to helping the boss in this way.

But on this occasion, I’ll be doing things properly. I’m going to spend the day catching up on non-uni jobs (including, I hope, polishing up the blog) and I’ve already advised the uni so they can dock my pay for the day. The issues are worth a strike

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Tailgating

John Quiggin16 Comments

The comments thread for the previous post raises the issue of tailgating. I’ve seen surveys in which the two most common annoyances are (1) tailgating and (2) slow drivers. Given that, in my experience, at least 95 per cent of drivers drive within a few k of the speed limit whenever they can, I’d guess that a large proportion of those giving response (2) are the people who annoy those of us giving response (1). Road safety would be greatly enhanced if these people could either be deterred or delicensed.

But there’s no obvious way of enforcing laws against this species of dangerous driving. I can think of various possibilities, but I can also think of technical difficulties with all of them. About the most promising would be a fixed video camera that would record all passing traffic. It ought to be able to infer both speed and distance between cars, and then prosecute tailgaters, but the computational requirements of recording this digitally and processing it automatically would be immense. Still, Moore’s Law is on our side, here.

Rolling the dice

John Quiggin4 Comments

An interesting Four Corners last night. Here’s the transcript. I worked on gambling issues back in the 90s, and put in a submission to the Productivity Commission inquiry in 1999. Having worked in the field, there are a number of things that everybody knows (including the casinos). Among them:
The bulk of the money comes from a small number of heavy gamblers
A problem gambler is a heavy gambler who’s run out of money
There’s nothing casinos will resist more vigorously than an interruption to play
All of this came out in the program.

On the analysis that I did and also that of the Productivity Commission, it’s pretty clear that some forms of gambling cause more social harm than good, if you apply standard consumer theory to moderate gamblers but assume that heavy/problem gamblers are not getting any benefits from gambling. Pokies and racetrack betting are the worst, lotteries are the best.

One last feature, showing that this blog is still in touch with the zeitgeist was the use of the MRD response “They would say that, wouldn’t they”, in an entirely appropriate context.