Road traffic injuries are the eighth leading cause of death globally, and the leading cause of death for young people aged 15-29. Approximately 1.24 million people were killed on world’s roads in 2010 and the cost of dealing with the consequences of traffic accidents runs up to billions of dollars (World Health Organization, 2013).
In recent years, many studies have identified the growing importance of road crashes as cause of death and researchers were trying to calculate costs of these accidents. There is no standard method of accident evaluation which all researchers would agree upon; Hills & Jones-Lee (1983) identified six methods which can be used to calculate cost of road accidents. These methods are:
GROSS OUTPUT (OR HUMAN CAPITAL) APPROACH. This method separates an accident cost into two parts: cost due to loss or diversion of current resources (cost of vehicle damage, medical treatment, police and administration cost) and cost due to loss of future output (average future wages discounted to present day value).
NET OUTPUT APPROACH. It differs from the above in that the victim’s future consumption is subtracted from the gross output figure.
LIFE-INSURANCE APPROACH. This method links directly cost of an accident to price which typical individuals in a given society are willing to pay for their life insurance.
COURT AWARD APPROACH. This approach calculates the sums awarded by courts to the surviving dependents of those killed or injured as a result of crime as these indicate the cost that society associates with road accidents.
IMPLICIT PUBLIC SECTOR VALUATION APPROACH. This method determines the costs and values that are implicitly placed on accident prevention in safety legislation.
WILLINGNESS TO PAY APPROACH. This approach is based on the assumption that decisions made in public sector should reflect the preferences of individual citizens. The value of an improvement in road safety is the amount of money that the society would be willing to
pay for it. Conversely, value of a measure which increases risk is calculated as the sum which the society would be willing to pay for.
These six approaches produce different results. Hills & Jones-Lee (1983) emphasize that selection of the most appropriate method depends on the objectives of a specific research. The two most common objectives are economic (reduction of accident costs and maximization of national output) and social (reduction of injuries and fatalities). The only two methods that appear to be relevant to these two objectives are the gross output approach and willingness to pay approach.
The monetary value of accidents in any country can be expressed as percentage of gross national income and then compared with other methods, studies or countries. Following table summarizes findings of several scholars who carried out accident evaluations in numerous countries.
Table 1 Estimated cost of accidents as percentage of GNI in various countries
Country Cost (% of GNI) Year Reference
United States 0.8% 2 2005 Naumann et al. (2010)
Australia 2.7% 3 2003 Connelly & Supangan (2006)
United States 2.3% 4 2000 Blincoe et al. (2002)
2 Motor vehicle–related fatal and nonfatal injury costs exceeded $99 billion in 2005; GNI was 13,201,010,773,229 current USD (World Bank, 2013a).
3 Annual cost of road traffic crashes in 2003 was approximately $17 billion AUD; mean AUD-USD conversion rate in 2003 was approximately 0.66 (Trading Economics, 2013); GNI was 421,114,021,215 current USD (World Bank, 2013a).
4 The total economic cost of motor vehicle crashes in 2000 was $230.6 billion; GNI was 9,898,800 million current USD (World Bank, 2013a).
5 In 2000 more than 50 million Americans experienced a medically treated injury resulting in lifetime costs of
$406 billion; GNI was 9,898,800 million current USD (World Bank, 2013a).
6 Cost of traffic accidents in Jordan in 1996 was 146.3 million USD; GNI was 6,766,239,409 current USD (World Bank, 2013a).
New Zealand 4.4% 1991 Elvik (2000)
Norway 2.3% 1995 Elvik (2000)
Sweden 2.7% 1995 Elvik (2000)
United Kingdom 2.0% 1990 Elvik (2000)
Median 2.3%
Results differ substantially depending on the method used, sources of data and exact items included in the estimations. Most studies contain variety of components which some of them are difficult to estimate. Emergency care costs, ambulance and transport costs, long-term care costs, repair and material costs, administrative costs, police, firefighters and road assistance costs, legal costs, and sick leave and productivity losses are some of the indicators which can be assigned monetary value relatively easily. Inversely, intangible items like adaptation to disability, travel delay, or pain, grief and suffering are very difficult to measure in any currency (Transport Research Laboratory, 1995).
Although the rates varied between 0.8% and 4.4%, the average burden for a country’s economy was about 2.3% of gross national income. There had been no comparable study conducted in Taiwan so far but by applying the average accident costs obtained from other countries the cost of road accidents in Taiwan is estimated to 284 billion TWD7 (9.4 billion USD) annually.
Nevertheless, given the high number of fatalities per capita (as discussed in chapter 2.3.3 Fatalities) as compared with countries presented in the table above, the cost might as well be considerably higher.
An essential part of accident costs calculation is differentiation of severity of on an accident, i.e., whether an accident was fatal, involved an injury or only material damage had occurred.
As demonstrated by Al-Masaeid, Al-Mashakbeh, & Qudah (1999), Trawén, Maraste, & Persson (2002), Blincoe et al. (2002), and García-Altés & Puig-Junoy (2011), fatal accidents are substantially more costly particularly due to the lost output. The economic loss increases with the length of the period which is being averted, in other words, the younger person dies, the greater the financial loss. Young men aged 18-24 are frequent victims in Taiwan, especially in motorcycle and automobile accidents. Hence, the mitigation of fatalities should be an objective
7 12,333,970 million TWD [GNI at current prices in 2012 (Directorate General of Budget, Accounting and Statistics, Executive Yuan, 2013)] × 2.3% = 283,681 million TWD
on national resource planning level as it not only leads to significant economy benefits but the humane factor should be also taken into consideration.
It is crucial to examine the state of infrastructure, amount and composition of vehicles as well as effective laws and policies in order to select measures which are the most suitable for Taiwan.