Safer Roads Owing to Higher Gasoline Prices:

How Long It Takes

by
Guangqing Chi, PhD, Willie Brown, MS, Xiang Zhang, PhD, and
Yanbing Zheng, PhD

By:
Cheryll Myra Mercado

In partial fulfillment of the requirements in MGT 209

Second Semester SY 2017 – 2018
Summary

Several studies have been conducted showing the negative relationship between gasoline price
and traffic fatalities. This particular study, conducted by Chi, et. al. has proven the same and
aimed to determine the time it takes for the rise in gasoline prices to affect traffic crashes. The
study was conducted in Mississippi with data of traffic crashes from April 2004 to December
2012.

Economic condition is a big factor in traffic crashes, that is, when the economy grows and when
per capita income is higher, people tend to drive more and with less reserve. On the other hand,
when the economy declines, people tend to use their cars less frequently or are more
conservative in driving. The authors mentioned three links between economy and traffic safety.
These are income, unemployment rates, and gasoline prices. Several studies relate gasoline
prices to safer roads. A rise in gasoline price discourages people to drive and switch to other
modes of transportation such as car-pooling or public transportation. Others drive in a more fuel-
efficient manner resulting in improved traffic safety. However, this study hypothesized that the
effect of an increased gasoline price to traffic fatalities is not immediate and that the effects vary
across the different demographics.

Using statistical analysis, the authors were able to determine that the negative correlation
between gasoline prices and traffic crashes are strongest on the eighth to tenth month after a
change in gasoline price. They also noted that there are indeed different effects on the different
demographics. Overall, they found that traffic crashes are affected nine to ten months after a
change in the price of gasoline with some exceptions. For drivers aged 16 to 19 years, increase in
gasoline price has an immediate effect. Drivers aged 25 to 34 years appeared to be unaffected by
the changes in gasoline prices, while it was noted that the 75 years old and older have the
strongest and longest lagged effect observed from the ninth month up to the thirteenth month.

The findings of the study suggest that decision-makers and planners can improve traffic safety by
increasing gasoline taxes.

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Review

Examining road safety is relevant especially in both public health and economic perspectives.
Determining the factors affecting road safety can aid decision-makers in implementing rules for
improvement in traffic.

In this article, the authors investigated the effects of changes in gasoline prices to the traffic
fatalities and measured how long it takes to effect. The results are helpful and can be explored by
government decision-makers. Raising the price of gasoline has several positive upshots. Because
of the results of the study, the authors stated that decision-makers can improve traffic safety by
raising the price of gasoline or imposing a higher tax. The increased revenue can be allocated in
the improvement of mass transit systems which would consequently reduce traffic crashes. Also,
the authors made a good point that lower demands for gasoline due to an increased price or tax
would lower carbon emissions and slow global warming. Moreover, this may also result to
further research on renewable energy sources. However, I also agree that raising the price of
gasoline or imposing a higher tax should be studied carefully as this might result to a big
disparity in the purchasing power of consumers.

The study was conducted using statistical analysis with the objective of finding the association
between gasoline prices and traffic crashes. Based on the data collected, the authors stated that
both traffic crashes and gasoline prices have trend and seasonal variations. They used a multiple
seasonal smoothing method called BATS to deseasonalize the data then calculated the Pearson
correlation. This is a suitable approach because of the seasonality of the data. And because they
want to measure the strength of association between gasoline prices and traffic crashes within a
time period, using Pearson correlation was also the appropriate test to use. It was determined in
the study that the association between the two variables—price of gasoline and traffic crash—
were strongest eight to ten months after a change in price of gasoline.

The same approached was used by Ros (n.d.) in his research determining the correlation between
road traffic and several economic variables such as fuel price, income, and GDP in the
Netherlands. He used Pearson correlation to measure the strength of the linear relationship

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between the variables. In his research, the strongest correlation found was between traffic
intensity and income.

The results of the study conducted by Chi et.al. are consistent with other studies. In particular,
the study done by Burke and Nishitateno (2014) indicates that countries with low gasoline prices
have among the highest road death rates, while those countries with high gasoline prices have
lower traffic-related death rates. This study indicated that the response of road deaths to gasoline
prices is inelastic.

Chi et. al., in their Mississippi study measured an elasticity of -0.154 and used this to measure
the number of traffic crashes that would occur if the prices of gasoline remained low and not
occur if the price remained at a high. The results showed that an increase of 5.7% traffic crashes
would have occurred, while there would have been a decrease of 7% if the price remained high.

While statistics showed a strong correlation between road safety and high price of gasoline, the
authors were right to consider other variables contributing to traffic fatalities such as
unemployment rate. If the individual is unemployed, ownership of a car may not be considered at
all. Negligence in obeying traffic law, specifically the use of seat belts, was also identified as a
control variable. Being intoxicated also impinge on road safety which is why alcohol
consumption was also a control variable. And lastly, the climate.
What is the contribution of the study in advancing knowledge in the field? Provide your own
insights on the value/application of the research.
The results of the study, and as supported by other similar studies, are beneficial and noteworthy
in traffic safety in general. It can indeed be used to apply certain policies specifically to the
different demographics. Economic factors are at play in the results of this study in which the
effect of a higher gasoline price was immediate for adolescents (group aged 16 to 19) simply
because they do not earn as much or are not yet employed at all. So a rise in gasoline price would
immediately lower the demand from this group, indicating income as a determining factor. Their
response to the gasoline price is elastic. The results also revealed that whether the price of
gasoline is high or low, adults (those aged between 25 to 34) are not affected. This is because at
this life stage, people are more driven to earn and wants to maintain a certain lifestyle. Their

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response is inelastic. It would be interesting to learn what factors would affect this result. It
would be interesting to note which age group contribute more to the worsening of traffic
conditions and create conclusions from there.

It is also better to measure not just the traffic fatalities but the condition of the traffic itself, such
as the volume and congestion of roads. This happened in the Philippines when the price of
vehicles became relatively low allowing more middle class to purchase cars. According to The
Economist (Slowly Does It, 2016), the increased number of car ownership coupled with
inefficient traffic policies resulted in terrible, unusual traffic in Manila.

The current tax reform bill imposing higher tax on vehicles and fuel is an application of solving
traffic safety or condition in general. The effect, as may be in the study by Chi et al, will be felt
in later. It would be a good situation to monitor if demand for car would decline because of this
and if it would have significant impact on road safety.

References

Burke, P.J., Nishitateno, S. (August 2014). Gasoline Prices and Road Fatalities: International
Evidence. Australian National University. Retrieved from
https://dev.crawford.anu.edu.au/acde/publications/publish/papers/wp2014/wp_econ_2014_18.pd
f.

Haug, M.G. (n.d.). Measure of association. Encyclopedia Britannica. Retrieved from

https://www.britannica.com/topic/measure-of-association

Ros, K. (n.d.). Road Traffic Correlations with Economic Variables: The Big Data Perspective.
University of Twente. Retrieved from
http://referaat.cs.utwente.nl/conference/27/paper/7621/road-traffic-correlations-with-economic-
variables-the-big-data-perspective.pdf.

Slowly does it. (February 2016). The Economist. Retrieved from

https://www.economist.com/news/asia/21693631-rising-car-ownership-and-appalling-transport-
policies-block-roads-slowly-does-it.