Using Mandated Speed Limits to Measure the Value of a Statistical Life
In 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 for the first time in over a decade. Since the states that adopted the higher speed limit must have valued the travel hours they saved more than the fatalities incurred, this experiment provides a way to estimate an upper bound on the public's willingness to trade off wealth for a change in the probability of death. We find that the 65 mph limit increased speeds by approximately 3.5% (i.e., 2 mph), and increased fatality rates by roughly 35%. In the 21 states that raised the speed limit and for whom we have complete data, the estimates suggest that about 125,000 hours were saved per lost life. Valuing the time saved at the average hourly wage implies that adopting states were willing to accept risks that resulted in a savings of $1.54 million (1997$) per fatality, with a sampling error that might be around one-third this value. Since this estimate is an upper bound of the value of a statistical life (VSL), we set out a simple structural model that is identified by variability across the states in the probability of the adoption of increased speed limits to recover the VSL. The impirical implementation of this model produces estimates of the VSL that are generally smaller that $1.54 million, but these estimates are very imprecise.
|Date of creation:||Aug 2002|
|Date of revision:|
|Publication status:||published as Ashenfelter, Orley and Micahel Greenstone. "Using Mandated Speed Limits To Measure The Value Of A Statistical Life," Journal of Political Economy, 2004, v112(2,Part2), S226-S267.|
|Note:||HC LS PE|
|Contact details of provider:|| Postal: |
Web page: http://www.nber.org
More information through EDIRC
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.:
- 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.
- Lave, Charles A, 1985. "Speeding, Coordination, and the 55 MPH Limit," American Economic Review, American Economic Association, vol. 75(5), pages 1159-64, December.
- Ruhm, Christopher J., 1996.
"Alcohol policies and highway vehicle fatalities,"
Journal of Health Economics,
Elsevier, vol. 15(4), pages 435-454, August.
- Lave, Charles, 1989. "Speeding, Coordination, and the 55-MPH Limit: Reply," American Economic Review, American Economic Association, vol. 79(4), pages 926-31, September.
- Levy, David T & Asch, Peter, 1989. "Speeding, Coordination, and the 55-MPH Limit: Comment," American Economic Review, American Economic Association, vol. 79(4), pages 913-15, September.
- Heckman, James, 2013.
"Sample selection bias as a specification error,"
Publishing House "SINERGIA PRESS", vol. 31(3), pages 129-137.
- 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.
- Hersch, Joni, 1998. "Compensating Differentials for Gender-Specific Job Injury Risks," American Economic Review, American Economic Association, vol. 88(3), pages 598-627, June.
- 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.
- Dee, Thomas S., 1999. "State alcohol policies, teen drinking and traffic fatalities," Journal of Public Economics, Elsevier, vol. 72(2), pages 289-315, May.
- 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.
- Keeler, Theodore E, 1994. "Highway Safety, Economic Behavior, and Driving Environment," American Economic Review, American Economic Association, vol. 84(3), pages 684-93, June.
- Lave, Charles & Elias, Patrick, 1997. "Resource Allocation in Public Policy: The Effects of the 65-MPH Speed Limit," Economic Inquiry, Western Economic Association International, vol. 35(3), pages 614-20, July.
- 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.
- 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.
When requesting a correction, please mention this item's handle: RePEc:nbr:nberwo:9094. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ()
If references are entirely missing, you can add them using this form.