Highway crashes continue to claim the lives of thousands of Americans. Grim statistics underscore the need for better laws, stricter enforcement, and safer driving behavior. In 2006, approximately 43,300 persons died on the nation’s highways. Alcohol-related fatalities accounted for 41.4 percent of the total. The majority of passenger vehicle occupants killed in crashes were not wearing safety belts.
As a practical matter, it is important to recognize that most highway fatalities are preventable. Using current technology, highway fatalities could be substantially reduced by draconian laws against drunk driving, mandatory seat belts, and strictly enforced speed limits. Needless to say, popular opposition would be intense. Speed limits as high as 75 mph on major highways are popular because consumers derive significant economic and social benefits from swift automobile transportation. However, by failing to sharply reduce or eliminate highway fatalities, speed limit policy places a finite and measurable value on human life.
A. From an economic standpoint, explain how public policy sets a dollar value on human life. Is it efficient to do so?
B. Are there equity considerations one must weigh in judging the fairness of dollar estimates of the value of human life?