Public Sector Economics, Vol. 42 No. 1, 2018.
Original scientific paper
https://doi.org/10.3326/pse.42.1.3
On the road again: traffic fatalities and auto insurance minimums
Pavel A. Yakovlev
orcid.org/0000-0003-0447-1726
; Department of Economics and Finance, Duquesne University, Pittsburgh, USA
Christina M. Orr-Magulick
; Gordon Rees Scully Mansukhani, Pittsburgh, USA
Abstract
Prior research on policy-induced moral hazard effects in the auto insurance market has focused on the impact of compulsory insurance, no-fault liability, and tort liability laws on traffic fatalities. In contrast, this paper examines the moral hazard effect of a previously overlooked policy variable: minimum auto insurance coverage. We hypothesize that state-mandated auto insurance minimums may “over-insure” some drivers, lowering their incentives to drive carefully. Using a longitudinal panel of American states from 1982 to 2006, we find that policy-induced increases in auto insurance minimums are associated with higher traffic fatality rates, ceteris paribus.
Keywords
traffic fatalities; auto insurance; minimums; moral hazard
Hrčak ID:
195244
URI
Publication date:
8.3.2018.
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