Using Mandated Speed Limits to Measure the Value of a Statistical Life
AbstractIn 1987 the federal government permitted states to raise the speed limit on their rural interstate roads, but not on their urban interstate roads, from 55 mph to 65 mph. Since the states that adopted the higher speed limit must have valued the travel hours they saved more than the fatalities incurred, this institutional change provides an opportunity to estimate an upper bound on the public's willingness to trade off wealth for a change in the probability of death. Our estimates indicate that the adoption of the 65-mph limit increased speeds by approximately 4 percent, or 2.5 mph, and fatality rates by roughly 35 percent. Together, the estimates suggest that about 125,000 hours were saved per lost life. When the time saved is valued at the average hourly wage, the estimates imply that adopting states were willing to accept risks that resulted in a savings of $1.54 million (1997 dollars) per fatality, with a sampling error roughly one-third this value. We set out a simple model of states' decisions to adopt the 65-mph limit that turns on whether their savings exceed their value of a statistical life. The empirical implementation of this model supports the claim that $1.54 million is an upper bound, but it provides imprecise estimates of the value of a statistical life.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
Bibliographic InfoArticle provided by University of Chicago Press in its journal Journal of Political Economy.
Volume (Year): 112 (2004)
Issue (Month): S1 (February)
Contact details of provider:
Web page: http://www.journals.uchicago.edu/JPE/
Other versions of this item:
- Ashenfelter, Orley & Greenstone, Michael, 2003. "Using Mandated Speed Limits to Measure the Value of a Statistical Life," Working paper 86, Regulation2point0.
- Orley Ashenfelter & Michael Greenstone, 2002. "Using Mandated Speed Limits to Measure the Value of a Statistical Life," Working Papers 842, Princeton University, Department of Economics, Industrial Relations Section..
- Orley Ashenfelter & Michael Greenstone, 2002. "Using Mandated Speed Limits to Measure the Value of a Statistical Life," NBER Working Papers 9094, National Bureau of Economic Research, Inc.
- Ashenfelter, Orley & Greenstone, Michael, 2002. "Using Mandated Speed Limits to Measure the Value of a Statistical Life," IZA Discussion Papers 571, Institute for the Study of Labor (IZA).
- J17 - Labor and Demographic Economics - - Demographic Economics - - - Value of Life; Foregone Income
- H43 - Public Economics - - Publicly Provided Goods - - - Project Evaluation; Social Discount Rate
- I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health
- R4 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Transportation Systems
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Deacon, Robert T & Sonstelie, Jon, 1985. "Rationing by Waiting and the Value of Time: Results from a Natural Experiment," Journal of Political Economy, University of Chicago Press, vol. 93(4), pages 627-47, August.
- Lave, Charles A, 1985. "Speeding, Coordination, and the 55 MPH Limit," American Economic Review, American Economic Association, vol. 75(5), pages 1159-64, December.
- Ghosh, Debapriya & Lees, Dennis & Seal, William, 1975. "Optimal Motorway Speed and Some Valuations of Time and Life," The Manchester School of Economic & Social Studies, University of Manchester, vol. 43(2), pages 134-43, June.
- Arianne de Blaeij & Raymond J.G.M. Florax & Piet Rietveld & Erik T. Verhoef, 2000. "The Value of Statistical Life in Road Safety: A Meta-Analysis," Tinbergen Institute Discussion Papers 00-089/3, Tinbergen Institute.
- Hersch, Joni, 1998. "Compensating Differentials for Gender-Specific Job Injury Risks," American Economic Review, American Economic Association, vol. 88(3), pages 598-627, June.
- Keeler, Theodore E, 1994. "Highway Safety, Economic Behavior, and Driving Environment," American Economic Review, American Economic Association, vol. 84(3), pages 684-93, June.
- Lee, N & Dalvi, M Q, 1969. "Variations in the Value of Travel Time," The Manchester School of Economic & Social Studies, University of Manchester, vol. 37(3), pages 213-36, September.
- Christopher J. Ruhm, 1995.
"Alcohol Policies and Highway Vehicle Fatalities,"
NBER Working Papers
5195, National Bureau of Economic Research, Inc.
- Heckman, James J, 1979. "Sample Selection Bias as a Specification Error," Econometrica, Econometric Society, vol. 47(1), pages 153-61, January.
- Glenn C. Blomquist, 2003.
"Self Protection and Averting Behavior, Values of Statistical Lives, and Benefit Cost Analysis of Environmental Policy,"
NCEE Working Paper Series
200302, National Center for Environmental Economics, U.S. Environmental Protection Agency, revised Mar 2003.
- Glenn C. Blomquist, 2004. "Self-Protection and Averting Behavior, Values of Statistical Lives, and Benefit Cost Analysis of Environmental Policy," Review of Economics of the Household, Springer, vol. 2(1), pages 89-110, 03.
- Dee, Thomas S., 1999. "State alcohol policies, teen drinking and traffic fatalities," Journal of Public Economics, Elsevier, vol. 72(2), pages 289-315, May.
- Richard Thaler & Sherwin Rosen, 1976. "The Value of Saving a Life: Evidence from the Labor Market," NBER Chapters, in: Household Production and Consumption, pages 265-302 National Bureau of Economic Research, Inc.
- Fowles, Richard & Loeb, Peter D, 1989. "Speeding, Coordination, and the 55-MPH Limit: Comment," American Economic Review, American Economic Association, vol. 79(4), pages 916-21, September.
This item has more than 25 citations. To prevent cluttering this page, these citations are listed on a separate page. reading list or among the top items on IDEAS.Access and download statistics
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Journals Division).
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.