Comparing alternative policies to reduce traffic accidents

Abstract

This paper derives and implements formulas for the welfare effects of uniform mileage taxes, gasoline taxes, per-mile insurance premiums, and mileage taxes differentiated across vehicle and driver groups, for reducing the external costs of passenger vehicle accidents. The (average) external accident cost is estimated at 2.2-6.6 cents per mile. Accidents costs differ substantially across driver groups, but only moderately across vehicles groups. Annual welfare gains from a mileage tax equal to marginal external costs for each driver/vehicle group are $9.4 billion in the benchmark case. The uniform mileage tax and per-mile insurance reform can achieve 76 and 65% of this welfare gain, respectively, while the gasoline tax can achieve only 28% of the welfare gain. Unlike other policies, the gasoline tax induces costly improvements in average fleet fuel economy that have little effect on reducing external costs.  2004 Elsevier Inc. All rights reserved. JEL classification: R48; H22; H23

Automobile Externalities and Policies

“…Productivity effects are internal for own-driver injury risks but not for pedestrians. Recent studies using this general approach put the marginal external costs for the United States at around 2 to 7 cents per mile (US FHWA 1997, Miller et al 1998, Parry 2004). This range is about 13-44% of the average social cost per vehicle mile, which is broadly consistent with European studies (e.g., Lindberg 2001, Mayeres et al 1996.…”

“…But for our purposes, we are interested in how (marginal) external costs differ across vehicle types; external costs are quite different from total injuries as they exclude own-driver injury risks, but include property damage, travel delay, and other costs listed in Table 2. Surprisingly, studies that allocate injuries from crash data to different vehicle types involved in crashes, and quantify costs using components in Table 2, find only modest differences in external costs per mile driven between cars and light trucks (US FHWA 1997, Miller et al 1998, Parry 2004. However a potential problem with these studies is that they only control for, at most, a very limited number of non-vehicle characteristics, such as driver age and region; ideally, one would also control for speed, negligence, gender, road class, weather, seatbelt use, etc.…”

Reducing the Risk of Injury from Table Saw Use: The Potential Benefits and Costs of Automatic Protection

“…The average consumer's willingness to pay money to avoid an annual injury risk of 0.0035 is assumed to be $45 per year ($12,822 × 0.0035), or a present value of $384 using a 3% rate of discount and a 10‐year saw life. The $12,822 figure is based on a benefit transfer from car safety, where the lowest‐severity category of car crash injuries is assumed to be equivalent to the average table saw injury . This low‐severity category includes only crash injuries that are treatable and do not cause any permanent functional impairment of the motorist.…”

International Fuel Tax Assessment: An Application to Chile

“…are external (they are largely borne by third parties, particularly government medical services). Again, we obtain the total external cost from valuing 85 percent of non-fatal injuries using the medical costs implied by Parry (2004) and by Rizzi (2008b) (in each case medical costs per injury are one-quarter of personal injury costs) and split the difference. This produces an additional external cost of $0.09 billion.…”