USING MANDATED SPEED LIMITS TO MEASURE THE VALUE OF A STATISTICAL LIFE

In 1987, the federal government allowed states to raise the speed limit on their rural interstate roads, but not on their urban interstate roads, from 55 to 65 mph. Since states adopting the higher speed limit must have valued the travel hours they saved more than the fatalities incurred, this institutional change offers an opportunity to estimate an upper bound on the public's willingness to trade off wealth for a change in the probability of death. The authors' estimates indicate that the adoption of the 65-mph limit increased speeds by approximately 4%, or 2.5 mph, and fatality rates by roughly 35%. Together, the estimates suggest that about 125,000 hrs 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/fatality, with a sampling error roughly one-third this value. The authors 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.

• Availability:
  • Find a library where document is available. Order URL: http://worldcat.org/issn/00223808
• Corporate Authors:

  University of Chicago Press

  1427 E. 60th Street
  Chicago, IL  United States  60637-2954
• Authors:
  • Ashenfelter, O
  • Greenstone, M
• Publication Date: 2004-2

Language

• English

Media Info

• Features: Figures; References; Tables;
• Pagination: p. 226-267
• Serial:
  • Journal of Political Economy
  • Volume: 112
  • Issue Number: 1
  • Publisher: University of Chicago Press
  • ISSN: 0022-3808

Subject/Index Terms

• TRT Terms: 55 mph speed limit; 65 mph speed limit; Empirical methods; Highway safety; Quantitative analysis; Socioeconomic factors; Speed limits; State laws; Statistical analysis; Value capture; Value of life
• Subject Areas: Data and Information Technology; Economics; Highways; Society; I10: Economics and Administration;

Filing Info

• Accession Number: 00975262
• Record Type: Publication
• Files: TRIS
• Created Date: Jun 16 2004 12:00AM