To Save Gas, Consumers Accept More Safety Risk and Emit More Air Pollution
Some costs of switching to motor scooters
24 May 2008 in Regulatory Economics
The Wall Street Journal reports that at the same time consumer demand for low-mileage SUVs and trucks has plummeted in response to high gasoline prices, consumer demand for high-mileage motor scooters has intensified. This tradeoff is entirely predictable. Scooters are ubiquitous commuter vehicles in European cites, where because of high taxes gasoline prices have for years been as high as they are now in the U.S.
Consumers are making two less obvious (but just as predictable) trades to get higher gas mileage: increased risk of injury and death from motor vehicle crashes and more air pollution.
Jonathan Welch tells the story in the Journal (available to nonsubscribers for a limited time):
Sales of motor scooters, which are like a cross between a small motorcycle and a lightweight moped, have soared this year. After years of trying unsuccessfully to sell them based on their cool factor, retro styling and matching clothing and accessories, scooter makers are finding the vehicles' practicality is more of a draw.
It has been widely claimed that consumer demand for gasoline is highly price-inelastic, meaning that people do not change their consumption much when prices rise by a lot. This was most evident during the recent but short-lived debate over suspending the federal gas tax, about which we blogged here, here, and here. There seems to be a consensus among economists that consumer demand was so inelastic that suspending the gas tax 18.4 cents per gallon would have no perceptible effect on retail gas prices. Increased sales of motor scooters suggests that for some consumers demand is quite elastic after all.SAFETY RISKS
More interesting are the other tradeoffs consumers are demonstrably willing to make when they buy scooters. In addition to exposure to the elements and reduced comfort and carrying capacity, scooter buyers are accepting a large increase in safety risk. Welch cites statistics indicating that that the fatality risk among scooter drivers is (129 - 78) / 78 = 1.65 times greater than the fatality risk among car and truck drivers and occupants, with motorcycles coming in at (645 - 78) / 78 = 7.3 times higher fatality risk:
In 2005, the latest year with complete data, the death rate for scooter riders was 129 per million scooters registered, according to the Insurance Institute for Highway Safety, a research group funded by the insurance industry. That compares with a rate of 78 for cars and light trucks. The rate is significantly higher for motorcycles, however: 645.
These statistics (which differ significantly in magnitude from those collected by the National Highway Traffic Safety Administration) understate the actual difference in safety risk because cars are typically driven many more miles than are motorcycles and motor scooters. When controlling for differences in vehicle miles traveled, motorcycles have almost 30 times the average fatality risk.This is visible in the chart below, which was constructed from NHTSA data. Fatalities are shown in solid lines, magenta for all highway fatalities and blue for motorcycles. Fatality rates per 100 million vehicle miles traveled are shown with dotted lines. Note that the fatality rate for motorcycles has long exceeded 20 times the fatality rate for all vehicles, and it has approximately doubled since the mid-1990s.
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Economists attempt to make different risks comparable by normalizing them in dollars based on individuals' willingness to pay. That way, we can compare the benefits of reduced gasoline consumption with the costs of increased fatality risk. A common value for saving a statistical (that is, random and unidentified) life is about $5 million. (Higher values could be used; they would make the case against motor scooters stronger. In any case, no single value is "correct." It depends on the individual who is making the tradeoff. For some people, $5 million is way too low because they routinely pay much more than $5 to avoid one in one million fatality risks. For others, however, $5 million is way too much; they pay much less than $5 to avoid such risks.)
The chart below shows that when this conversion is performed, average overall motor vehicle fatality risk is about $0.07 per mile but average motorcycle fatality risk is more than $2 per mile -- about the same magnitude as the entire run-up in gasoline price. With gasoline costing $4 per gallon, feeding a 20 mpg car or truck costs ($4 ÷ 20 =) $0.20 per mile, and running a 60 mpg scooter costs only ($4 ÷ 60 =) $0.07 per mile. That's a savings of $0.13 per mile, which superficially ought to be very attractive. But each scooter-mile is accompanied by a higher fatality risk ranging from $0.12 per mile (using the Insurance Institute's 1.65 risk multiple) to $1.93 per mile (using NHTSA's 28-fold risk multiple for motorcycles), both assuming a $5 million value for a statistical life (VSL).
Even under Insurance Institute scenario, which almost certainly understates scooters' true fatality risk, the $0.13 per mile savings in fuel is wiped out by the $0.12 per mile cost from increased risk of death. (We've ignored injuries; had we included them, the comparison would have been much less favorable to scooters.)
Individuals may rationalize a decision to switch to a scooter by assuring themselves that their fatality risk is much less than the average. This rationalization is unlikely to be empirically justified. First, only half of all scooter drivers can have below-average fatality risks. Second, new scooter drivers probably face higher than average fatality risks due to their inherent inexperience.
ENVIRONMENTAL RISKS
Also interesting are the environmental tradeoffs being made by consumers switching from cars and SUVs to scooters. Compared to cars and trucks -- including SUVs -- motor scooters and motorcycles are high polluters. Welch writes:
The Environmental Protection Agency says even the typical sport-utility vehicle is 95% cleaner than the typical motorcycle.
Thus, consumers who switch to scooters increase their motor vehicle air pollution by a factor of 20. Their new passion for fuel-efficiency, which may be motivated by the price of gasoline or concern about greenhouse gas emissions, appears to be trumping concern about tropospheric air pollution.
NOTE. This post has been updated. We replaced a table that was hard to read because of its width with the charts you see above.
NHTSA Data
Fatality Counts: Department of Transportation, National Highway Traffic Safety Administration, Traffic Safety Facts, 2006 Data. DOT HS 810 809, updated March 2008. Table 1.
Fatality Rates per 100 Million Vehicle Miles Traveled: Department of Transportation, National Highway Traffic Safety Administration, Traffic Safety Facts: 2005, DOT HS 810 620. Table 1.
Value of Fatality Risk per Mile
$/mile = fatality rate per 108 miles ÷ 100 x $5 million per statistical life saved.
Value of Gasoline Savings
Gasoline Cost per Mile, $4 per gallon, 20 mpg: $4 ÷ 20 = $0.20.
Gasoline Cost per Mile, $4 per gallon, 60 mpg: $4 ÷ 60 = $0.07.
Gasoline Savings per Mile, 20 mpg to 60 mpg: $0.20 - $0.07 = $0.13.
