Are higher highway speed limits worth it?

By Bill Holloway
A recent study indicates that raising speed limits on non-limited access highways from 55 to 65 miles per hour is likely to have a negative benefit-cost ratio when crash injury and fatality costs are fully accounted for. The analysis, which focused on non-limited access highways in Michigan, evaluated the costs and benefits associated with required infrastructure upgrades, travel time benefits, fuel costs (due to lower fuel economy), and costs associated with increased crash frequency and severity.
The largest determinant of whether increasing speed limits would be a net positive or negative is the cost associated with increased crash frequency and severity. Using the National Safety Council’s purely economic cost for fatalities and injuries, which includes “wage and productivity losses, medical expenses, administrative expenses, motor vehicle damage, and employers’ uninsured costs,” results in positive estimates of total net benefits. However, when net benefits are calculated using comprehensive crash costs, which include physical and emotional costs of crash injuries and fatalities (based on people’s willingness to pay for increased safety), estimated net benefits are negative—even in the low fuel price, low infrastructure cost scenarios. This is a result of the large gap between economic and comprehensive costs of injuries and fatalities. The researchers estimated the economic cost of a fatal crash at $1.76 million, versus a comprehensive cost of $5.41 million. Both of these figures are substantially lower than the economic value of a statistical life suggested by USDOT guidance.
The Insurance Institute for Highway Safety estimates that since 1993 increased highway speed limits have led to an additional 33,000 deaths beyond what would have been expected if speed limits had not been raised. On an annual basis, IIHS estimates that these elevated speed limits claim roughly the same number of lives that are saved by airbags.
Bill Holloway is a Transportation Policy Analyst at SSTI.