By Amitrajeet A. Batabyal
In his thought-provoking book “Luxury Fever,” economist Robert Frank noted that in order to operate effectively in complex social environments, we need ways to assess how well we are doing and make decisions about how best to adapt to changing environments. The key point to note is that these decisions almost always depend significantly on how we are doing relative to others in a particular reference group. So, if most or all members of this group drive Honda Civics or Toyota Corollas, then we would feel quite comfortable driving either of these two vehicles. In contrast, if most or all of the reference group members are driving BMWs or Jaguars, then we are likely to be less pleased being seen driving a Honda Civic.
Put differently, when pondering the question of what kind of vehicle to drive, the problem confronting many American families is similar to the one confronting a nation in an “arms race.”
From a private perspective, heavier vehicles are safer than lighter vehicles. More specifically, in an accident, a heavier vehicle is safer for its own occupants but more hazardous for the occupants of other vehicles. In other words, the safety benefits of heavy vehicles are internal or private but the safety costs of such vehicles are external or public. This private versus public tradeoff is well understood by economists. Nevertheless, until very recently, there was virtually no quantitative research on the public safety costs associated with driving heavy vehicles. This gap in our knowledge has been ably addressed by economists Michael Anderson and Maximillian Auffhammer in interesting new research.
These researchers use a census of police-reported crashes in eight different states. Their data includes information about both fatal and non-fatal accidents. Using this information, these researchers estimate the external effects of vehicle weight on fatalities and serious injuries given that a collision has occurred. Their research shows that a 1,000-pound increase in the weight of a striking vehicle increases the probability of a fatality in the struck vehicle by 47 percent. Second, when this higher probability is appropriately monetized, the public costs of vehicle weight from fatalities alone equal the staggering figure of $136 billion. Finally, the aggregate accident-related public costs exceed the annual social cost of carbon emissions in the United States.
These are sobering findings and they tell us that an unregulated vehicle fleet is inefficiently heavy because of the “arms race” nature of vehicle choice alluded to above. This problem can be addressed with a suitably designed gasoline tax. However, it is perhaps time for us all to ponder what we might individually do to not fuel an already intense consumption spiral in the United States.
Amitrajeet A. Batabyal is the Arthur J. Gosnell professor of economics at the Rochester Institute of Technology. These views are his own.