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The Optimum Speed Limit. Revised.

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Professional paper,

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In this paper, we describe an improved method of measuring the private and social benefits and costs associated with speed and give some simplified numerical examples. The examples illustrate that, without arbitrarily judging the value of human life, it is possible to 1 estimate the optimum speed limit 2 estimate the cost, per life saved, of a speed limit below the optimum, which can be compared with the cost of saving lives in other ways and 3 specify the types of information needed to improve estimates of the optimum. We have considered only the simplest case, in which all drivers are rational and informed. Further, drivers have the same parameters and, hence, would choose to go the same speed if there were no speed limit. Thus, we are abstracting from any variation in speed and the externalities that fast and slow drivers impose on each other. Our method involves using the speed individuals would go if unencumbered by a speed limit. For this, we need to observe how fast drivers go in places where a limit is absent. The optimum speed limit is then obtained by adjusting this private speed so that the marginal benefits of extra speed equal the social marginal costs rather than the private. We conclude on the basis of our analysis that even if everyone would go the same speed without a speed limit, there are externalites present that justify a speed limit and that the range of uncertainity about the optimal speed limit can be reduced drastically by paying close attention to driver behavior when there is no speed limit.

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  • Sociology and Law
  • Safety Engineering

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