Sunday, March 28, 2010

High Gas Prices Save Lives

It's now official.  Traffic fatalities in 2009 were at their lowest since 1954, and in 2008 were at their lowest since 1961.  This was despite the fact that now the population is much larger, there are much more cars on the road, and much more vehicle miles traveled than back then.  Similar trends have been noted in preliminary data from Canada as well.  While many factors likely contributed to this lifesaving trend, perhaps the most salient one of all was gas prices, which had been rising steadily since 2004 and spiked dramatically in 2008.

Gas prices are now known to have a significant effect, and are thus now emerging as one of the most cost-effective ways to save lives on the road.  Carefully controlled studies have found this to be true, and the fatality rates of 2008 and 2009 confirm this.  While 2009 had lower gas prices than 2008, the driving habits learned in 2008 had yet to be unlearned, and this was likely prolonged by the recession.  Similar effects of gas prices (and recessions) occurred in 1974-1975, 1980-1983, and 1990-1993.  Contrary to popular opinion, the price elasticity of gasoline is not zero, or even close to zero, and it seems to rise dramatically when prices go above $3.00/gallon.  Longer-term elasticites are about twice as strong, suggesting the effect builds over time.

The effects on fatalities are not limited to reduced vehicle miles traveled; while that drops too, even controlling for this we can see a decrease in deaths.  "Discretionary" driving declines the most when gas prices rise, and most fatalities occur from this type of driving, including the majority of alcohol-related fatalities.  Speeding and aggressive driving also decline in an effort to save fuel and money.  Thus, the price elasticity for gasoline demand actually understates the effect on fatalities.

By that logic, it seems that one of the best ways we can reduce traffic fatalities (both alcohol and non-alcohol) would be to raise the gas tax.  Of course, that would make a lot of people mad.  But if it saves even one life, it's worth it, right?  Isn't that what groups like MADD have said about things like the 21 drinking age?  Judging by the lack of enthusiasm about raising the gas tax, it appears that the pro-21 crowd doesn't practice what they preach.  Or maybe it's all about liberty for "just us," not all.

If we know higher gas prices save lives, not to mention the planet, what are we waiting for?

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