Cost of Road Accident Fatalities to the Economy

Dimitrios Dimitriou and Thomas Poufinas
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Dimitrios Dimitriou: Democritus University of Thrace

International Advances in Economic Research, 2016, vol. 22, issue 4, No 6, 433-445

Abstract: Abstract Road accidents have a major impact on the economy as well as society. In other words, such an event also has an impact on the affected individuals’ contribution back to society and state. The purpose of this paper is to study the effect of traffic accidents on the economy. We evaluate the value or cost of a human life in traffic accidents. To estimate the cost, we need to know the income contribution of each individual via his or her employment or other earnings, i.e. his or her income-generating capacity for the remainder of his or her life, had the incident not occurred. Then we find the “present value” of such income, adjusted for the probability of such an event (fatality) happening. This is similar to the calculation of a pure insurance premium. Assessment of the economic impact caused by human life loss is dealt with using insurance-based methods. We calculate the burning cost of an insurance policy that provides coverage for the risk under investigation. It is of interest to the state and the family of the deceased to recover as much of this lost income as possible.

Keywords: Traffic accident; Fatality; Mortality; Human life value; Fatalities cost; Protection; Pure insurance premium; H00; I00; J10; J14 (search for similar items in EconPapers)
Date: 2016
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Citations: View citations in EconPapers (1)

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DOI: 10.1007/s11294-016-9601-0

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