Comparing Alternative Policies to Reduce Traffic Accidents

Ian Parry

RFF Working Paper Series from Resources for the Future

Abstract: This paper derives and implements formulas for the welfare effects of differentiated and uniform mileage taxes, gasoline taxes, and per mile insurance premiums, for reducing the external costs of passenger vehicle accidents. The model distinguishes three driver groups and five vehicle groups, and we obtain estimates of external accident costs per mile for each group from crash data. The (average) external accident cost is estimated at 2.2-6.6 cents per mile. Accidents costs differ substantially across drivers of different ages, but only moderately across different vehicles groups. Annual welfare gains from a mileage tax differentiated across drivers and vehicles according to marginal external costs 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.

Keywords: traffic accidents; external costs; pricing policies; insurance reform (search for similar items in EconPapers)
JEL-codes: H22 H23 R48 (search for similar items in EconPapers)
Date: 2003-12-31
New Economics Papers: this item is included in nep-ias and nep-pbe
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

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Related works:
Journal Article: Comparing alternative policies to reduce traffic accidents (2004)
Working Paper: Comparing Alternative Policies to Reduce Traffic Accidents (2003)
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