On small cars, safety and externalities

Posted by ScruffyDan on April 15, 2009 at 12:16 pm | Comments (4) | Trackbacks (0)

News that small cars are more dangerous has been everywhere since the Insurance Institute for Highway Safety issued a report that said:

That crash dummies in all three models tested — the Honda Fit, the Toyota Yaris and the Smart Fortwo — fared poorly in the collisions. By contrast, the midsize models into which they crashed fared well or acceptably… The institute concludes that while driving smaller and lighter cars saves fuel, downsizing and down-weighting is also associated with an increase in deaths on the highway.

That should hardly be a surprise. Bigger cars have more momentum and thus hit harder. What is interesting is the point Tim Lambert makes about externalities.

But whether a minicar is safer or not depends on your perspective. It’s more dangerous for the occupants, but it’s safer for the people in the bigger car… Of course, this benefit goes to other road users, so this suggests that there should be a tax break for minicars to encourage people to use them instead of bigger, more dangerous cars.

Or in other words, people who drive small cars create positive externalities for others, while drivers of larger cars create negative externalities. This may help explain the trend towards ever larger cars (at least while gas was cheap). The real question is what (if anything) should be done about it? Are tax breaks, like Lambert suggests, the way to go?

Trackbacks & Pingbacks

No trackbacks/pingbacks yet.

Comments

When I read that article this morning, my immediate thought was: Ha! Further argument to get the damn beasts off the road!

Comment by Chrystal Ocean on April 15, 2009 @ 12:49 pm

The only thing that will get those ‘damn beasts’ off the road will be high gas prices. Thankfully that is exactly where we are headed.

Comment by ScruffyDan on April 15, 2009 @ 5:32 pm

Small cars are still safer than bicycles if driven carefully, and defensively.

Comment by Saskboy on April 20, 2009 @ 10:09 am

Yes they are, but using the same argument as I did in my post one could argue that small car drivers impose externalities on bicyclists. In fact we can take it one step further and argue that bicyclists impose externalities on pedestrians.

No one said there was an easy solution to this issue.

Comment by ScruffyDan on April 20, 2009 @ 3:57 pm