The Joy of
Economics: Making Sense out of Life
Robert J. Stonebraker, Winthrop University
Does Speed Kill?
There is more to life than just increasing its speed.
Like other red-blooded Americans, I speed. Not too much. Whizzing along a highway posted at 65 miles-per-hour (mph), I set my cruise control at 69 miles per hour. I'm four mph above the limit, but am among the slowest drivers on the road.
In the ancient years of the 1970s, speed limits dropped precipitously. In the throes of the energy crisis in the early 1970s, with mandatory gas rationing waiting in the wings, President Nixon declared a nationwide maximum of 50 mph in December 1973. OPEC, not safety, drove the initial legislation. Fifty is Thrifty slogans soon hit the airwaves, but Congress substituted the more palatable 55 mph limit in the 1974 Emergency Highway Energy Conservation Act.
And it stuck. Congress extended the limit with 1975 legislation that denied federal highway funds to any state exceeding the 55-mph level. By this time, lower speeds were also credited with saving thousands of lives. Traffic fatalities plunged by 9,100 in the first year alone. The measure was so popular that it passed the Senate with a unanimous 85-0 vote.
But the bloom began to wither and in the early 1980's the energy crisis was history and average speeds were inching up. Pressure mounted to restore the higher pre-OPEC speed limits and several rural states all but refused to enforce the federal 55-mph mandate. For example, wide-open Montana kept the 55-mph limit on the books, but dropped the fine for violations to $5 and ignored all but the most egregious speeders. With falling oil prices and abundant gasoline, proponents of the 55-mph limit ditched their conservation arguments and stressed safety instead. What about the thousands of lives saved by lower speeds? Did they not matter? After all, speed kills.
Or does it? Fatalities were down, but were those lives saved by lower speeds or were other factors at work? When gas prices rose in the 1970s, motorists responded by staying home and/or using public transport. With fewer cars on the road, fatalities would have dropped regardless of speed limit changes. Similarly, safer vehicles and highways could have cut fatalities. Studies trying to identify the importance of lower speeds gave mixed statistical results.
Economists added theoretical fuel to the fire. According to Sam Peltzman, regulatory attempts to improve safety often are counteracted by offsetting consumer behavior. For example, drivers routinely become more alert and cautious in potentially dangerous situations. Could the reverse also be true? Might not drivers be less alert and/or less cautious at seemingly safer lower speeds? If we become more careful at high speeds and less careful at low speeds, changes in legal limits may have very little impact.1
Charles Lave added that high speeds are less dangerous than variable speeds.2 If everyone travels at 65 mph, everyone is relatively safe. If all travel at the same speed, the risk of collision is small. However, if some travel at 70 mph while others plug along at 40 mph, risks rise rapidly. Brake lights fly on, drivers weave in and out of lanes trying to pass, and dangers mount. Slow drivers are as great a hazard as fast ones. According to Lave, lowering speed limits in the 1970s aggravated variability problems. While conservative, law-abiding motorists slowed to the lower 55-mph limit, others continued to drive at the older, suddenly-illegal speeds. If people are more apt to stick to a 65-mph limit than to a 55-mph limit, the faster speed limits might actually reduce variability and increase safety.
Bowing to the shaky statistical and theoretical support for the 55-mph limit, Congress reversed course. In 1987 it allowed states to opt for 65-mph limits on rural interstates and, in the mid 1990s, eased restrictions further. Although many states raised legal limits quickly, others chose to wait and see. Would safety be compromised? Would fatalities rise?
The impacts appear minimal. Economist Patrick McCarthy found that safety was compromised when speed limits on interstates in the state of Indiana rose, but that safety on other Indiana highways and roads improved.3 When speed limits on the interstates rose, more motorists chose to take the interstates rather than alternative routes. The added congestion did cause more accidents on the interstates. However, the drop in traffic on alternative roads meant fewer accidents elsewhere. The net effect was zero. A second study by Ted Keeler found that higher speed limits did impair safety slightly, but only in congested, urban areas.4 A third study by Lave and Elias concluded that adopting the 65-mph limit actually dropped fatality rates by three to five percent.5
If lower speed limits do not decrease highway fatalities, what will? Must we accept the continuing carnage? Maybe. We have no easy solutions. Keeler found that fatalities rise rapidly with alcohol consumption, but attempts to eliminate drunk driving have met with only marginal success. Interestingly, Keeler discovered that fatalities fall as education levels rise. College graduates, all else equal, are less likely to be involved in fatal accidents. He also found that requiring frequent testing for license renewals increases safety, but these effects are quantitatively small.
Any other ideas? Economist Gordon Tullock once floated what he considered a foolproof proposal, but did not hold his breath for it to be adopted. Using the Peltzman notion of offsetting consumer behavior, Tullock offered a cheap and easy solution to reckless driving. Simply affix a sharp dagger on every steering wheel -- a dagger that is pointed directly at the heart of the driver.6 Would it work? Should we do it?
1. Peltzman, Sam, "The Effects of Automobile Safety Regulation," Journal of Political Economy, volume 83, July/August 1975, pp. 677-725.
2. Lave, Charles A., "Speeding, Coordination, and the 55-MPH Limit," American Economic Review, volume 75, number 5, December 1985, pp. 1159-64.
3. McCarthy, Patrick S., "Highway Safety and the 65-mph Speed Limit," Contemporary Policy Issues, volume 9, number 4, October 1991, pp. 82-92.
4. Keeler, Theodore E., "Highway Safety, Economic Behavior, and Driving Environment," American Economic Review, volume 84, number 3, June 1994, pp. 684-93
5. Lave, Charles, and Elias, Patrick, "Resource Allocation in Public Policy: The Effects of the 65-MPH Speed Limit," Economic Inquiry, volume 35, July 1997, pp. 614-620. However, see Greenstone, Michael, "A Reexamination of Resource Allocation Responses to the 65-mph Speed Limit," Economic Inquiry, April 2002, volume 40, number 2, pp. 271-279 for a different reading of the evidence.
6. McKenzie, Richard B. and Tullock, Gordon, The Best of the New World of Economics, 5th edition, Richard D. Irwin, Homewood, Illinois, 1989, pages 40-41.
To test your understanding of the major concepts in this reading, try answering the following:
1. Explain why the U.S. imposed lower speed limits in the 1970’s.
2. Explain Peltzman’s argument of why cutting speed limits might not cut highway fatalities.
3. Explain Lave's argument of why cutting speed limits might not cut highway fatalities.
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