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Indicators in the assessment of road safety measures. Problems and possible solutions.
Book Contribution - Chapter
The inclusion of road safety indicators in evaluation methods, depending on the method used, is not always obvious. The social cost-benefit analysis (SCBA), based on the Kaldor-Hicks compensation criterion, is often designated in the literature as the most appropriate evaluation method in the context of public (road safety) projects. According to this method, the project will be desirable if the benefits exceed the costs. It is quite easy to execute a SCBA when the benefits and costs are related to tradable goods. However, the biggest limitation of a SCBA is the fact that every single effect has to be translated into monetary terms, including the external effects which are difficult to convert. Several important indicators are in the external cost category. Therefore, this hampers the evaluation of road safety projects on the basis of a SCBA significantly. In this respect particular attention should be given to the value of human life, since the number of avoidable deaths is usually one of the main indicators in the context of road
safety. This report provides a comprehensive overview of the most common monetary valuation methods. Typically, on the grounds of economic prosperity the willingness-to-pay/accept (WTP, WTA) approach is often used when seeking non-tradable goods to estimate. This method is based on the preferences of the individual involved and can be used in the
valuation of environmental effects and for valuing a human life. There is a trade-off between environment/safety/health and consumer goods and services/money. There are 2 different approaches for estimating the monetary value of environmental or health effects, each consisting of different techniques. On one hand, we have the revealed preference techniques. The preferences are derived form actual, observed and marketbased information. For non-tradable goods, the preferences are indirectly obtained by the preferences of individuals who purchases tradable goods which are linked with the nontradable goods. There is a distinction between 'hedonic pricing methods' and 'the method of avoidance behavior'. The first methods look at the value of goods related to risk levels
in certain markets, such as a wage compensation for high-risk occupations. The second method looks at the value of consumption of goods in certain markets that can improve the safety/environment. For example, the trade-off between money and safety when buying an environmentally friendly car with ABS. On the other hand, there are also the stated preference techniques. In this case the preferences are derived directly through questionnaires. It makes a distinction between direct methods, where the WSL is calculated directly through 'contingent valuation' and indirect methods such as the 'standard gamble method' and the 'balance method'. Regarding the value of a statistical life, there is a growing consensus about the theoretical framework for economic prosperity to determine this value, but this value depends on other risk and population characteristics in relation to the planned measure. This means that this value is not universal and that this value will be different form project to project, which makes standard application in a SCBA extra difficult. Finally, there is a translation of external
environmental effects into monetary terms. A possible solution to the problems of monetary valuation methods is presented in the form of a Multi-Criteria Analysis (MCA) or more specifically a Multi-Actor Multi-Criteria Analysis (MAMCA). The MAMCA can combine a large number of monetarist and nonmonetarist effects in an orderly process. The MAMCA methodology has the advantage that the different effects should not necessarily be quantified and/or translated into monetary terms. Therefore the number of fatalities could be used as an indicator for mortality due to road accidents in the various alternatives. In addition, the MAMCA
methodology also involves the various stakeholders in the evaluation process. The
application of a MAMCA in the context of road safety is illustrated by a case study.
safety. This report provides a comprehensive overview of the most common monetary valuation methods. Typically, on the grounds of economic prosperity the willingness-to-pay/accept (WTP, WTA) approach is often used when seeking non-tradable goods to estimate. This method is based on the preferences of the individual involved and can be used in the
valuation of environmental effects and for valuing a human life. There is a trade-off between environment/safety/health and consumer goods and services/money. There are 2 different approaches for estimating the monetary value of environmental or health effects, each consisting of different techniques. On one hand, we have the revealed preference techniques. The preferences are derived form actual, observed and marketbased information. For non-tradable goods, the preferences are indirectly obtained by the preferences of individuals who purchases tradable goods which are linked with the nontradable goods. There is a distinction between 'hedonic pricing methods' and 'the method of avoidance behavior'. The first methods look at the value of goods related to risk levels
in certain markets, such as a wage compensation for high-risk occupations. The second method looks at the value of consumption of goods in certain markets that can improve the safety/environment. For example, the trade-off between money and safety when buying an environmentally friendly car with ABS. On the other hand, there are also the stated preference techniques. In this case the preferences are derived directly through questionnaires. It makes a distinction between direct methods, where the WSL is calculated directly through 'contingent valuation' and indirect methods such as the 'standard gamble method' and the 'balance method'. Regarding the value of a statistical life, there is a growing consensus about the theoretical framework for economic prosperity to determine this value, but this value depends on other risk and population characteristics in relation to the planned measure. This means that this value is not universal and that this value will be different form project to project, which makes standard application in a SCBA extra difficult. Finally, there is a translation of external
environmental effects into monetary terms. A possible solution to the problems of monetary valuation methods is presented in the form of a Multi-Criteria Analysis (MCA) or more specifically a Multi-Actor Multi-Criteria Analysis (MAMCA). The MAMCA can combine a large number of monetarist and nonmonetarist effects in an orderly process. The MAMCA methodology has the advantage that the different effects should not necessarily be quantified and/or translated into monetary terms. Therefore the number of fatalities could be used as an indicator for mortality due to road accidents in the various alternatives. In addition, the MAMCA
methodology also involves the various stakeholders in the evaluation process. The
application of a MAMCA in the context of road safety is illustrated by a case study.
Book: Steunpuntrapport Verkeersveiligheid
Series: Steunpuntrapport Verkeersveiligheid
Publication year:2009
Keywords:road safety, indicators, monetarizing intangible effects