Thursday, November 23, 2006

Speed Limits and Economy

I recently participated in a debate about speed limits. Even if none of the participants were really heavy-duty-speeders, most of them nevertheless strongly opposed to current rather low speed limits (30 or 40 km/h on small streets, 50 on main streets in Helsinki), arguing, for example, it would hamper the national economy. Some debaters even argued that people should be allowed to drive their cars at any speed the driver consider safe. To me, a father of a child with whom I walk between home and day care over seven zebra crossings twice every day, this simply disgusted me.

So, let's make some hyper-optimistic assumptions: a driver drives, say, three kilometers every day in an area where speed limits have been reduced from 40 to 30 km/h, how much will it cost the state? Nothing because most likely this wouldn't increase salaries and consequently tax revenues, but theoretically it could cost the driver up to 1.5 minutes every day, or assuming we count only working days, some 330 minutes during the year. That's five and a half hours of taxable work time. Assuming a relatively well-paid (4000 e/month) driver that would be below 150 euros per year, or below 15 million euros for the approximately 100 000 cars suffering from the reduced speed limit.

Of course that's only theory. In practice driving speed is usually limited by other cars, traffic lights, and taking corners. In fact statistics show that average driving speed dropped only by 1.5 km/h, cutting the cost to yearly drivers to only two million euros.

Ok, even two million euros is money, and spending it has to be justified. So let's look at the issue from the victim's point.

If a car hits a person, the probability of death is 5%, 15% or 40% for speeds 30, 40, and 50 km/h, respectively. The severity of non-fatal injuries and likelihood of a hit is also reduced.

What then is the cost of a death to the society? If the victim is a 30-year old adult, the state loses all its investments in his education and future tax revenues. A typical university degree costs the state approximately a quarter of a million euros, the basic education roughly equally much, and missed taxes 20000 euros per year until the victims retirement. So far the loss is one million euros, and we haven't yet accounted for the economic support for the grieving family. Even if statistics are still scarce, the reduction in driving speeds did have the desired effect: in 1999 to 2003 on average seven pedestrians were killed each year, but in 2005 only two.

The five million euro saving in the reduced deaths already counters for the drivers' lost leasure time, but we haven't yet accounted for non-fatal injuries. Unfortunately I don't have good data on them, but let it be noted that during 1999-2003 approximately 150 non-fatal injuries from car-pedestrian accidents were reported each year. A large fraction of them were probably tissue damages and bone fractures that maybe required only a few surgeries and some months' time to recover, but some of them were also tetraplegics whose life-time medical bills to the society easily reach a million - in addition to the one million in their abrupted careers.

In this treatment I've deliberately concentrated on the economic justification of current reduced speed limits, and that is quite strong. Injuries will cause physical pain, death and even moreso paralysis will cause emotional losses I can't formulate in numbers. I'll only say that it definitely is not the drivers' prerogative to define the level of risk his potential victims should to accept.

We, and the society we live in, pay heavily for speed. And I haven't yet treated all aspects of speed.


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