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Are Automated Vehicles Coming at the Right Speed?

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  • Donald N. Dewees

Abstract

Recent press reports have celebrated the development of automated or ‘self-driving’ cars and the benefits they would bring, yet actual benefits may fall far short of this potential. Drivers are exposed to only a fraction of the costs of accidents that they cause, they may underestimate the risks of accidents, and automated features may work in only a fraction of all driving situations. Studies have found that some drivers respond to safety devices by driving more ‘intensely,’ and some drivers refuse to accept even proven occupant protection devices such as seat belts. More drivers will resist the purchase and utilization of automated vehicle features that change their driving behaviour, especially if this reduces the speed or enjoyment of their driving. This paper analyzes the likely response of drivers to automated safety features. It suggests that benefits will be much less than forecast and will mostly occur a decade or two in the future because of driver behaviour and our likely reluctance to force drivers to submit to automated control in most driving situations. The shortfall in benefits will depend in part on the details of motor vehicle insurance policies and on public policies adopted by state, provincial and federal governments. There is an economic argument for policy encouragement of cost-effective accident-avoidance features but not for features that save time for the driver.

Suggested Citation

  • Donald N. Dewees, 2016. "Are Automated Vehicles Coming at the Right Speed?," Working Papers tecipa-564, University of Toronto, Department of Economics.
  • Handle: RePEc:tor:tecipa:tecipa-564
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    File URL: https://www.economics.utoronto.ca/public/workingPapers/tecipa-564.pdf
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    References listed on IDEAS

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    1. Cohen, Alma & Dehejia, Rajeev, 2004. "The Effect of Automobile Insurance and Accident Liability Laws on Traffic Fatalities," Journal of Law and Economics, University of Chicago Press, vol. 47(2), pages 357-393, October.
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    3. Clifford Winston & Vikram Maheshri & Fred Mannering, 2006. "An exploration of the offset hypothesis using disaggregate data: The case of airbags and antilock brakes," Journal of Risk and Uncertainty, Springer, vol. 32(2), pages 83-99, March.
    4. Mannering, Fred & Winston, Clifford, 1995. "Automobile Air Bags in the 1990s: Market Failure or Market Efficiency?," Journal of Law and Economics, University of Chicago Press, vol. 38(2), pages 265-279, October.
    5. Peltzman, Sam, 1975. "The Effects of Automobile Safety Regulation," Journal of Political Economy, University of Chicago Press, vol. 83(4), pages 677-725, August.
    6. Steven Shavell, 1979. "On Moral Hazard and Insurance," The Quarterly Journal of Economics, Oxford University Press, vol. 93(4), pages 541-562.
    7. Alma Cohen & Liran Einav, 2003. "The Effects of Mandatory Seat Belt Laws on Driving Behavior and Traffic Fatalities," The Review of Economics and Statistics, MIT Press, vol. 85(4), pages 828-843, November.
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    More about this item

    Keywords

    autonomous vehicles; automobile accident avoidance; driving intensity; auto insurance risk-rating; moral hazard;

    JEL classification:

    • K13 - Law and Economics - - Basic Areas of Law - - - Tort Law and Product Liability; Forensic Economics
    • R41 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Transportation Economics - - - Transportation: Demand, Supply, and Congestion; Travel Time; Safety and Accidents; Transportation Noise

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