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Life and Death at the CAFE: Predicting the Impact of Fuel Economy Standards on Vehicle Safety

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  • Damien Sheehan-Connor

    () (Department of Economics, Wesleyan University)

Abstract

Recent changes to the Corporate Average Fuel Economy (CAFE) standards in the United States mandate substantial improvement in automobile fuel economy over the next fteen years. One of the ways that manufacturers improve fuel economy is to lower vehicle weights, which has impacts on safety. The innovation of this project is a novel maximum likelihood model that avoids issues of driver selection to separately identify the impact of vehicle weight on accident mortality. The key findings of the paper are: (1) A modest 5% average reduction in vehicle weight could increase annual accident fatalities by 4.9% or decrease them by 3.4% depending upon whether the reductions are concentrated at the lighter or heavier end of the current weight distribution; (2) Safety externalities attributiable to vehicle weight substantially exceed environmental ones; and (3) The relationship between vehicle weight and external safety effects is such that a simple Pigovian excise tax on gasoline is unlikely to much improve effciency.

Suggested Citation

  • Damien Sheehan-Connor, 2012. "Life and Death at the CAFE: Predicting the Impact of Fuel Economy Standards on Vehicle Safety," Wesleyan Economics Working Papers 2012-002, Wesleyan University, Department of Economics.
  • Handle: RePEc:wes:weswpa:2012-002
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    File URL: http://repec.wesleyan.edu/pdf/dsheehanconn/2012002_SheehanConnor.pdf
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    1. West, Sarah E. & Williams III, Roberton C., 2007. "Optimal taxation and cross-price effects on labor supply: Estimates of the optimal gas tax," Journal of Public Economics, Elsevier, vol. 91(3-4), pages 593-617, April.
    2. Whitefoot, Kate S. & Skerlos, Steven J., 2012. "Design incentives to increase vehicle size created from the U.S. footprint-based fuel economy standards," Energy Policy, Elsevier, vol. 41(C), pages 402-411.
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