Quantitative Analysis of the Social Costs of Road Traffic Crashes Literature

Despite recent improvements in tackling road safety challenges, particularly in developed countries, road traffic crashes account for 1.35 million deaths annually and cost over 65 us$ billion. This paper reviews the existing socio-economic costs literature, highlights research gaps, and draws attention to the lack of analysis in developing countries, which account for 90% of the fatalities. We rely on both simple descriptive analyses and formal econometric analyses. Our descriptive results show an upward trend over the recent years, mostly in high and middle-income countries. The paper focuses on the differences in estimating the socio-economic costs of road traffic crashes using two popular methodologies, the willingness-to-pay (wtp) and the human capital (hc). Our econometric analysis shows that papers that use wtp tend to compute the impact as a percentage of gdp that is on average ̃1% higher than those that use the hc approach. Likewise, studies using the human capital method tend to underestimate the total socio-economic costs by a factor of two compared to the cost derived from the wtp approach; this gap then reduces substantially when accounting for population density, countries' income levels, and road safety outcomes. Further, the paper stresses the underreporting problem and the inexistence of a mechanism to reasonably account for it in socio-economic costs calculations. The paper concludes by advocating for more studies focusing on low and middle-income countries using a combination of common approaches with other valuation methods.