Investigation into Impact of Fluctuations in Gasoline Prices and Macroeconomic Conditions on Road Safety in Developed Countries

Abstract

In most developed countries, the total number of road fatalities peaked in the 1970s. Although the data for road fatalities show a distinctive downward trend, a secondary signal that is more cyclical in nature is also evident. These cyclical variations closely track macroeconomic conditions (usually represented by the unemployment rate) and gasoline prices. While the relationship between transportation safety and unemployment and gasoline prices has been investigated, studies have looked at these variables in isolation from other important factors that affect traffic safety. Accordingly, the authors have developed a comprehensive conceptual model that considers a wide array of factors influencing traffic safety and uses this framework to inform an empirical model. For the study of variation across both time and location, a panel data model was employed, with observations for 16 industrialized countries between 1990 and 2010. In the panel model, the dependent variable was fatality per population, and gas price, unemployment, health index, mobility, and vehicle ownership were the independent variables. The results revealed a significant inverse relationship between gas prices and the road fatality rate after controlling for vehicle miles traveled. The elasticity analysis indicated that a 10% decrease in gasoline prices resulted in a 2.19% increase in road fatalities. Likewise, a 10% decrease in unemployment rate resulted in a 0.65% increase in road fatalities. Also, the results implied that the health index had the highest impact on road fatality rates. Overall, these results provide a better understanding of the underlying causes of periodic variations in road fatalities.