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Decomposing the Relationship between Macroeconomic Conditions and Fatal Car Crashes during the Great Recession: Alcohol- and Non-Alcohol-Related Accidents

Chad Cotti and Nathan Tefft

The B.E. Journal of Economic Analysis & Policy, 2011, vol. 11, issue 1, 1-24

Abstract: This paper investigates to what extent and in what ways conditions related to the 2007-2008 recession reduced fatal crashes. It hypothesizes that the reduction in fatal automobile accidents operates through both the quantity of driving and changes in behaviors associated with driving. Using state-by-quarter fixed effects models, the study shows that unemployment rate increases significantly reduce fatal accidents. Decomposing the fatal accident rate into accidents per mile traveled and miles traveled per capita reveals that higher unemployment is significantly associated with fewer accidents per mile, and also reveals that fatal accidents associated with alcohol are more responsive to unemployment rate changes than are accidents overall. These results suggest that the recession’s “lost” fatal accidents occurred in areas hit harder by the recession and were in the form of fewer alcohol-related accidents per mile traveled rather than fewer miles traveled overall.

Date: 2011
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DOI: 10.2202/1935-1682.2860

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