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Der Wert der Sicherheit: Anmerkungen zur Ökonomie der Sicherheit
[The value of safety: Some remarks on the economics of safety]

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  • Entorf, Horst

Abstract

Safety is costly, but lack of safety can be even more expensive. This contribution considers the various dimensions of “Economics of Safety”, ranging from safety at work to road safety, terrorism and crime. Economic science helps to understand the role of safety as a (public or private) good which is supplied and demanded under technological and budgetary constraints as well as individual incentives. However, realized equilibrium levels of safety might be affected by market failure, for instance due to moral hazard problems. The paper highlights the need for regulated safety markets and minimum standards. The level of safety in a society depends on the opportunity costs of non-realized safety levels. For instance, when societal costs of crime are considered exuberant, public pressure will be high and more police would be hired. Thus, measuring costs of lacking safety and willingness-to-pay for security measures are crucial for practical policy and empirical aspects of the economics of safety. This paper presents common approaches found in the literature which distinguish between direct and indirect costs as well as between tangible and intangible costs. An illustrative example is taken from the calculation of societal costs of fatal traffic accidents which is contrasted by the way such costs measures are considered in the health sector and the economics of crime. Approaches are similar but differ in the evaluation of pain, harm and mental illness. Future policy advice would benefit from standardisation of intangible cost measures.

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Bibliographic Info

Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 49692.

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Date of creation: 09 Sep 2013
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Handle: RePEc:pra:mprapa:49692

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Keywords: Public Goods; safety economics; economic costs of accidents; intangible costs; safety market;

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  1. Peter A. Diamond & Jerry A. Hausman, 1994. "Contingent Valuation: Is Some Number Better than No Number?," Journal of Economic Perspectives, American Economic Association, vol. 8(4), pages 45-64, Fall.
  2. Holz-Rau, Christian & Scheiner, Joachim, 2011. "Safety and travel time in cost-benefit analysis: A sensitivity analysis for North Rhine-Westphalia," Transport Policy, Elsevier, vol. 18(2), pages 336-346, March.
  3. Jens Ludwig & Philip J. Cook, 1999. "The Benefits of Reducing Gun Violence: Evidence from Contingent-Valuation Survey Data," NBER Working Papers 7166, National Bureau of Economic Research, Inc.
  4. Paul R. Portney, 1994. "The Contingent Valuation Debate: Why Economists Should Care," Journal of Economic Perspectives, American Economic Association, vol. 8(4), pages 3-17, Fall.
  5. Hammitt, James K & Graham, John D, 1999. "Willingness to Pay for Health Protection: Inadequate Sensitivity to Probability?," Journal of Risk and Uncertainty, Springer, vol. 18(1), pages 33-62, April.
  6. Kahneman, Daniel & Knetsch, Jack L., 1992. "Valuing public goods: The purchase of moral satisfaction," Journal of Environmental Economics and Management, Elsevier, vol. 22(1), pages 57-70, January.
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