2.6 - Road Safety Economics

Version 7


    Road safety economics embraces a number of key questions at the crossroads between health, economics and mobility.


    For instance, what is the impact of road accidents on a country's economy? And conversely, what effect does a country's economic health have on road safety and the treatment of road casualties? How do social and regional inequalities affect road risk? How do we assess road risk and quantify the benefits of investing in road safety? What is a fair value for compensating road accident victims?


    Most of these research fields are still relatively recent, and international comparisons are still scarce or subject to caution. It is difficult, for example, to compare accident rates from one country to another without taking into account the level of urbanization and motor vehicle usage in the areas considered. Moreover, road safety economics ultimately revolves around the number of lives saved or the number of deaths caused each year.


    We soon run up against the technical and moral problem of putting a price on a life. When someone dies in a road accident, what is the cost for the community? And when the number of fatal accidents diminishes, should we take into consideration the fall in the number of organs available for transplants, and the lives that they might have saved? Such questions may seem out of place, yet it is these questions that road safety economists and statistical approaches to the subject have to deal with.


    Despite these difficulties, researchers and specialized institutes are gaining ground, studies and methods are being honed, and road safety economics is emerging as a fully-fledged discipline. The subjects it deals with are at once very complex and decisive for more effective management of road safety.


    A)  What is the cost of road accidents?



    Estimating the cost of accidents is a decisive step in the process of improving road safety. A government, a local authority, an insurance company, a highway manager or a company will be all the more inclined to invest in transport safety if they have a reasonably accurate idea of the benefits and savings to be gained.


    For example, Sweden's national "Vision Zero" policy (which is aiming for no deaths or serious injuries on the country's roads) was sparked by a radical change in the way the cost of accidents is seen. Up until the early 80s, investment in road infrastructures was based on a traditional cost-benefit analysis: accidents were a variable called "grief and suffering", which was estimated in a mechanical, approximate way. From 1985 onwards, the Swedish government funded research aimed at more accurately calculating the cost of road deaths and casualties. These studies led to a much higher estimate than in the traditional analysis: the cost of a fatal accident was estimated at €2.2 million, compared with €189,000 under the "grief and suffering" approach.


    Since the official statistical cost of accidents had become far higher (multiplied by 12), it became far more cost-effective to invest in road safety. And, thanks to its investments, Sweden is today one of the countries with the safest roads in the world.





    Estimated road accident mortality rate per

    100,000 inhabitants











    United Kingdom












    United States


















    Deaths from road traffic accidents per 100,000 inhabitants

    Source: WHO (World Health Organization) - Global status report on road safety



    Following in Sweden's footsteps, most developed countries have set up statistical instruments and research teams to more accurately estimate the direct and indirect cost of road accidents, better understand their impact on the national economy, guide government action and share a medium and long-term investment strategy.


    Approaches vary from one country to another


    Since all of the research ultimately involved putting a price on human life - an eminently sensitive if not impossible subject for many scientists - the methods and calculations are inevitably arbitrary and random to some extent. A 1990 study comparing the approaches by country found differences in the ratio of 1 to 25.

    Two of the main differentiating factors are whether or not certain direct or indirect costs of road accidents are included, and of course the method used to estimate these costs.

    A study on costing human life, entitled "Prix de la vie humaine, application à l’évaluation du coût économique de l’insécurité routière", listed the following costs:







    Direct market costs

    Medical and welfare costs

    Cost of transport by ambulance, emergency first aid, medical care, medicine and special equipment, convalescence, rehabilitation, return home, home help

    Funeral costs

    Material costs

    Damage to vehicles, public property, private property

    Material harm to the people involved in the accident

    Damage to the environment

    Incidental expenses: fuel consumption in the traffic jam caused by the accident, towing, travel

    General expenses

    Cost of fire brigade, police, expert appraisal, legal system, cost of insurance services, miscellaneous administrative costs



    Indirect market costs

    Person killed

    Future loss of production of the people killed

    People injured, third parties

    Temporary loss of production of the injured people; the people jailed following the accident; the people blocked by the accident; the injured people's family members


    Loss of production of the accident victims' potential descendants


    Non-market costs

    Person killed

    moral damage, pretium mortis, transfer of the pretium doloris from the deceased to the heirs

    Person injured

    Pretium doloris, disfiguration damage, loss of amenities, ancillary damage, indirect third-party damage

    Source: "Prix de la vie humaine, application à l’évaluation du coût économique de l’insécurité routière", Michel Le Net.


    Costs with a strong psychological impact


    The wide variety of methods logically yields very different estimates of the economic impact of road accidents. Within Europe, for example, the cost of a fatal accident (i.e. the cost of a human life) has been estimated at €200,000 in Slovakia and Spain, €800,000 in Hungary, €1.2 million in France, €1.4 million in the United Kingdom, and €1.6 million in Switzerland (source: PREDIT, 2002). In the United States, the Federal Highway Administration has set the cost of a fatal accident at €2.5 million per person.

    These unit costs (per deceased person, per severely or slightly injured person, per accident) are then multiplied by the number of occurrences per year (number of fatalities, casualties, etc.) to obtain the total cost of road accidents.

    This figure has a decisive effect on the way a community sees the harmfulness of road accidents, and motorists' awareness of the issue.

    Example: In the United States, the media regularly broadcast press releases and reports on what road accidents cost every American. The American Automobile Association (AAA), among others, recently published rather eloquent figures: the cost of road accidents comes to over $1,000 per year and per citizen, yielding a total annual cost of $164 billion, 2.5 times the price of traffic jams. The National Highway Traffic Safety Administration (NHTSA) immediately replied that the actual cost was probably much higher. "Society is paying a huge price for motor vehicle crashes on our roadways," said Elly Martin, spokeswoman for the NHTSA. These messages alternate with others reporting on the significant advances regularly made on the road accident front.


    An investment driver


    Despite their differences, economic approaches to road accidents have led authorities everywhere to revise the cost of accidents upwards and bring in a far more active investment policy in road safety and accident prevention, at every level: communication campaigns, increased material and human resources, tighter legislation, research and technological development, etc.


    In France, for example, the introduction of a new method of calculation in the early 90s doubled the value of human life that had been used up until then to estimate the cost of accidents. Then in 1995 an approach based on per capita GDP again doubled the costs associated with the various repercussions of accidents: the person killed, the slightly injured person, the severely injured person, and material damage. Every year, these costs are increased in step with the percentage rise in household spending (for the people killed) and the inflation rate for the material damage.

    The growth in spending on road safety, stemming from a broader perception of the damages (bodily injury, material damage, direct and indirect damages) caused by accidents, has resulted in a significant improvement in the situation.


    Trends in the number of people killed on the road and the cost of accidents in France





    Number of people killed




    Number of severely injured people




    Number of slightly injured people




    Cost of bodily injuries (€billion)




    Cost of material harm (€billion)




    Total cost (€billion)






    Source: ONISR (French National Interministerial Road Accident Observatory)


    B) Change-drivers in road safety economics



    Several progress factors work in conjunction in the road safety eco-system. The following are some of the main change drivers:


    Develop new technology


    • The vehicles coming onto the market are safer, more reliable, equipped with electronic or mechanical systems to anticipate risk situations, warn and inform the driver, optimize the driving and automatically correct deviations from the intended path, protect the driver and passengers in the event of an accident, automatically alert emergency response services, etc.
    • Develop intelligent infrastructures to more effectively regulate traffic, inform motorists (of accidents, slowdowns, bad weather conditions, etc.), record incidents and accidents, and automatically warm emergency response services
    • Develop new road surfaces, more efficient road signage, and communication systems to give the driver the right information at the right time

    Make roads safer


    • Analyze accident research data to identify problem spots and make them safe (road signage, traffic calming systems, wider roads, new lanes, etc.)
    • Increase the number of road traffic control and management centers, and make them more efficient
    • Build specific sites for bicycles, two-wheel vehicles and public transport
    • Reinforce the protection of pedestrian crossings and walkways
    • Reduce traffic by developing alternatives to the private car and boosting intermodal transport



    • Bring in new laws to lower driving speeds and make driving subject to various health and safety parameters (blood alcohol levels, mobile phone use while driving, number of points on the driver's license, accompanied learner drivers, etc.)
    • Specific measures for young drivers (probationary driver's license, specific speed limits, graduated driver licensing, etc.) and elderly drivers (obligation to take a driving course or pass medical checkups, license renewal and the associated tests at more frequent intervals)
    • Specific measures (speed limits, road worthiness inspections, alternate driving days, etc.) for trucks
    • Regular raising of the level required to obtain and maintain a driver's license
    • Broaden the range of accident-prevention and safety equipment required for cars and motorists, two-wheel vehicles, road works teams, etc.
    • Bring in stricter safety standards everywhere for vehicle manufacturing and road infrastructure construction
    • Increase police resources (staffing levels, automatic and mobile speed radars, video surveillance, etc.), diversify the types of controls (speed, drink driving, tire pressure, etc.)
    • Bring in heavier penalties for people who infringe the highway code

    Organize the emergency response and care chain

    • Invest in material and human resources capable of rapidly coming to the assistance of people involved in accidents
    • Coordinate the collection of information and the treatment of accident victims by the various emergency response and care stakeholders
    • Increase the efficiency of the pre-hospital and hospital treatment

    Get businesses involved Draw up company travel plans (PDEs) for employees

    • Adjust working times and provide alternative means of transportation to help everyone commute in the best possible conditions
    • Bring in rules for employees who travel for their job, to enforce careful driving and mandatory rest times
    • Provide company cars that have a satisfactory level of safety
    • Run awareness and training courses in eco-driving and preventing road risks, etc.

    Get insurance companies involved

    • Bring out personalized contracts that index the premium on the driver's driving behavior: "pay as you drive" policies, plans for "pay as you speed" insurance, etc.
    • Give insurance companies and their federations a role to play in accident-prevention and road safety campaigns


    • Run accident-prevention and road safety campaigns
    • Tailored awareness-raising campaigns for the most vulnerable user groups (school children, elderly people, etc.)
    • Run frequent, intensive communication campaigns on high-risk behaviors (drink driving, mobile phone use while driving, etc.)
    • Run driver education and training courses
    • Get businesses to run awareness and training courses for their employees

    International cooperation

    • Harmonize road safety standards and equipment
    • Partially align national legislations on the strictest or most effective regulations in force in certain countries
    • Raise the level of requirements for obtaining an international driver's license; introduce a European driver's license
    • Form R&D partnerships, and consortiums of public and private stakeholders to develop new road safety technologies and methods
    • Encourage the emergence of international NGOs, non-profits and projects to promote road safety: Global Road Safety Partnership, Road Safety Fund, Association for Safe International Road Travel, Driving School Association of the Americas, etc.
    • Organize international aid and cooperation to develop road safety in low-income countries

    Example: In Norway, the authorities have assessed the effectiveness of various types of measures and investments in improving road safety.


    Contribution to reducing road mortality (where usage and effectiveness were optimal)

    Improve road infrastructures


    Manage and control road traffic


    Develop in-vehicle safety equipment


    Increase police resources and controls


    Bring in new legislation and more intensive driver training


    Source: Institute of Transport Economics


    Based on this assessment, which helped them establish the priorities for investment, the Norwegian authorities estimated the cost-benefit ratio of the measures under consideration.


    Annual cost of road accidents (€billion)


    Cost of the measures under consideration (€billion)


    Annual benefits of the measures under consideration (5% reduction in the cost of accidents) (€billion)


    Source: Institute of Transport Economics


    By calling on a leading research institute, the Institute of Transport Economics, the Norwegian government was able to establish, quite accurately, the most effective types of investment and the level and duration of the returns on investment. Today Norway has one of the lowest road mortality rates in the world, behind only Switzerland and Singapore in the WHO ranking.


    C) Road accidents: revealing inequalities



    While road accidents have a significant impact on a country's economic health, the opposite is also true: the state of the economy has a major influence on driving safety. The extent to which drivers are exposed to road accidents depends on their country, where they live, their social standing, their income and even their family history.


    Stark contrasts between countries


    According to the World Health Organization (WHO), road accidents kill over 1.2 million people and injure another 50 million people every year. And over 90% of road deaths occur in low or middle-income countries, which represent only 48% of the global automobile fleet. Low-income countries alone represent nearly 42% of road accident fatalities, though they account for only 9.2% of the global automobile fleet.



    Low-income countries

    Middle-income countries

    High-income countries

    % of the global population




    % of the global automobile fleet




    % of road accident fatalities




    Source: WHO, Global status report on road safety


    Moreover, in low-income countries, the majority of road accident victims are vulnerable users: pedestrians, cyclists, and the drivers of two-wheel and three-wheel motorized vehicles. They therefore represent over 75% of road deaths in low-income countries in the Eastern Mediterranean, nearly 65% of road deaths in the Western Pacific low-income countries, and nearly 60% in poor countries in Africa and Southeast Asia.


    There are many reasons for the higher levels of road fatalities in poor countries:

    • Little or no road legislation
    • Shortage of police officers and insufficient police controls
    • "Uncontrolled" urban development, resulting in dense, poorly regulated traffic flows
    • Urban planning and development focuses on automobile traffic, and provides little protection or space for pedestrians, cyclists and the drivers of two-wheel or three-wheel motorized vehicles.
    • Unregulated cohabitation of cars, trucks, pedestrians, two-wheel vehicles and public transport on the same roads
    • Lower-quality vehicles, providing less protection for the driver and passengers
    • Overloaded vehicles
    • Emergency response and care systems are inadequate or saturated
    • Insufficient campaigns on accident prevention and road safety


    Risk levels vary with social standing


    Many studies have shown that the risk of road accident is higher for certain population categories, even within the same country. And the following categories are most at risk: young drivers, underprivileged areas and low-income road users. The studies also show that the main factors for a higher risk of accident are: long, frequent trips in dense, poorly-regulated automobile traffic; roads with little or no safety equipment; high population density, with a high proportion of young people and children; high-risk behaviors (e.g. higher alcohol consumption among young drivers, whatever social category they belong to).


    In France, two studies are currently being carried out on these social and regional inequalities:




    Factors for above-average road risk

    Isomerr study

    Social and regional inequalities in adolescent mobility and road risk

    . High-risk behaviors

    . Compound inequalities (social, family-related and regional)

    . Above-average road risk, in underprivileged areas, for pedestrians, children and people with reduced mobility

    Atserr study

    Analysis of above-average road risk for residents of sensitive urban areas (ZUS)

    . Long commutes and the ensuing fatigue and stress

    . Under-investment in road safety


    The correlation between income level, place of residence and road accidents has been corroborated by research conducted in various countries. In Australia, a study carried out in the state of New South Wales in 2008 found that children from underprivileged socio-economic backgrounds were more exposed to road accidents.

    Other research carried out in Bangalore in India showed that road mortality rates were distinctly higher for the poorest sections of the population.


    Road mortality rates in Bangalore (India) Number of deaths per 100,000 inhabitants

    Economically disadvantaged population

    Urban areas


    Rural areas


    Economically well-off population

    Urban areas


    Rural areas


    Source: UK Department for International Development


    Based on this research, some countries are introducing differentiated and specific accident-prevention and road safety measures. In 2002 the United Kingdom, for example, launched the Neighborhood Road Safety Initiative (NRSI), a fund dedicated to reducing the number of people killed and injured in road accidents in economically disadvantaged districts.