Edited by Chris Nash
Chapter 8: Accidents
Road traffic accidents are estimated to be the eighth leading cause of death globally and approximately 1.24 million people die every year on the world’s roads. In addition, another 20 to 50 million sustain non-fatal injuries annually as a result of road traffic crashes (WHO, 2013). This daily toll of life is a human tragedy and an invaluable loss for family affected and for society at large. Even if the loss of life is invaluable it exits a value on the resources we are prepared to give up to reduce the risk of this dreadful outcome; resources that we both as individuals and as a society are prepared to spend on traffic safety activities. This monetary value is what we discuss in this chapter. After a short introduction into the history of the economic value of accidents (section 8.2) and issues on how to measure the risk of an accident (section 8.3) we introduce the three main components in valuation of accidents; direct economic cost, indirect cost and the so-called risk valuation or value of statistical life (VSL) in section 8.4. The major component is VSL and we therefore give a theoretical introduction into the standard model for VSL and briefly explore issues around age dependency, altruism and non-fatal outcomes (section 8.5). In section 8.6 we present the prevailing methods to empirically estimate VSL but we also examine some of the shortcomings in the current practice.
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