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Put your FTSE down: Wealth shocks and road traffic collisions.
1University of Bath, Bath, BA2 7AY, United Kingdom.
Social Science & Medicine (1982)
|November 7, 2022
Summary
Stock market fluctuations do not linearly impact road traffic collisions. However, significant absolute changes in stock returns show a V-shaped effect on accident rates, a pattern also observed with house prices.
Area of Science:
- Economics
- Transportation Safety
- Behavioral Finance
Background:
- Understanding the socioeconomic determinants of road traffic safety is crucial.
- Previous research has primarily focused on factors like road infrastructure and driver behavior, with limited exploration of wealth indicators.
Purpose of the Study:
- To investigate the relationship between stock market performance and road traffic collisions.
- To examine the impact of house prices on road accidents.
- To determine if wealth fluctuations influence driving behavior and accident frequency.
Main Methods:
- Analysis of over 2 million road accident records in Great Britain.
- Econometric modeling to assess the correlation between stock market returns and accident data.
- Application of falsification tests to validate findings.
- Similar analysis was conducted for monthly house price changes.
Main Results:
- No linear relationship was found between stock prices and road crashes (fatal or otherwise).
- A significant V-shaped relationship exists: accidents increase with both large positive and negative absolute changes in stock market returns.
- No linear impact of monthly house price changes on accidents was detected.
- A symmetric V-shaped effect was observed for slight and serious accidents concerning house price changes.
Conclusions:
- Economic volatility, as reflected in stock market returns, influences road safety.
- The impact of wealth indicators on road accidents is non-linear, suggesting a threshold effect where extreme market movements are associated with increased collisions.
- The findings suggest that drivers may alter their behavior in response to significant financial gains or losses, impacting road safety.
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