What is the Size of the Automobile Safety Problem?
Part of the problem relates to auto congestion. Externalities appear to be substantial in traffic-dense states: in California, for example, we find that the increase in traffic density from a typical additional driver increases total statewide insurance costs of other drivers by $1,725–$3,239 per year. High–traffic density states have large economically and statistically significant externalities in all the statistical models used. In contrast, the accident externality per driver in low-traffic states appears quite small (Abstract).
