The Effect of Automobile Insurance and Accident Liability Laws in Traffic Fatalities / Alma Cohen, Rajeev Dehejia.

Format:

Book

Author/Creator:

Cohen, Alma.

Contributor:

National Bureau of Economic Research.

Dehejia, Rajeev.

Series:

Working Paper Series (National Bureau of Economic Research) no. w9602.

NBER working paper series no. w9602

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2003.

Summary:

This paper investigates the incentive effects of automobile insurance, compulsory insurance laws, and no-fault liability laws on driver behavior and traffic fatalities. We analyze a panel of 50 U.S. states and the District of Columbia from 1970-1998, a period in which many states adopted compulsory insurance regulations and/or no-fault laws. Using an instrumental variables approach, we find evidence that automobile insurance has moral hazard costs, leading to an increase in traffic fatalities. We also find that reductions in accident liability produced by no-fault liability laws have led to an increase in traffic fatalities (estimated to be on the order of 6%). Overall, our results indicate that, whatever other benefits they might produce, increases in the incidence of automobile insurance and moves to no-fault liability systems have significant negative effects on traffic fatalities.

Notes:

Print version record

April 2003.