Economic Costs and Financial Adversity

Motor vehicle crashes (MVCs) impose substantial economic costs worldwide. These include the human costs of premature mortality, the lost quality of life due to pain and suffering, and productivity and other social costs caused by MVCs. There are substantive debates about how best to measure these costs. Of arguably greater importance, though, are questions about the optimal ways of reducing the costs of MVCs. Advances in the fields of engineering, ergonmics and information technology—to name but a few—have been responsible for substantive reductions in the human toll of MVCs, and the private and public sectors have both played important roles. Continued innovation in this respect is important, but so is innovation in respect of the systems—such as injury insurance schemes, health care, disability management and employment—that can affect outcomes in the markets related to MVCs. In addition, the difficult task of optimising insurance and compensation systems to insure individuals against the costs of MVCs, while avoiding the unintended and unwanted consequences of indemnity—such as unsafe driving, higher-than-optimal use of insured services, incentives that discourage a return to employment, and so on—is important. This chapter provides a discussion of the economic cost of MVCs as well as economic aspects of (insurance) scheme design.