Road Safety Manual
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1.3 Socio-economic costs of road traffic crashes

Evaluating costs and the value of injury prevention

Evaluation of the direct and indirect socio-economic costs of the outcomes of road traffic crashes is important. This allows measurement of the burden that road traffic crash injury imposes on society, and highlights the return on investment in road safety and the relative benefits and costs of different policy options in the allocation of resources1

Inadequacies in data collection, serious under-reporting of road traffic injuries, and the lack of an adopted global method in valuing the prevention of death and serious injury, do not allow precise estimates to be made of the socio-economic value of their prevention in LMICs. However, approximate and conservative estimates have been made at global and regional levels. In many HICs, effective practice provides more reliable estimates involving periodic updating of economic values for preventing different injury severities using the willingness to pay method (see Prioritisation & Assessment for further discussion).

Global estimates

It was estimated over a decade ago that the average annual socio-economic cost of road traffic crashes represents 1% of GNP in low-income countries, 1.5% in middle-income countries, and 2% in high-income countries (Jacobs et al., 2000)2 3. While reflecting a mixture of direct economic costs and indirect costs, these remain the best estimates of average costs for different country settings. However, the global costs are likely to be significantly higher, especially if under representation of deaths and injuries in available statistics and the social costs of pain and suffering are fully accounted for. More recently, the International Road Assessment Programme has calculated that serious road trauma now costs the world more than US$1.5 trillion per year (iRAP, 2012).

Regional and national estimates

Few estimates have been made of the socio-economic costs of injury at the regional level, particularly in low- and middle-income countries where data collection and analysis is not systematically carried out. Estimates for the European Union (EU27) range from €134 billion to €172 billion; with an annual cost equivalent to around 2% of GDP over the last decade (ETSC, 2011). Considerable variations in socio-economic valuations are reported for different countries. A survey of OECD countries suggested that the socio-economic cost of road crashes using different methods of evaluation amounted to between 1.5–5% of GDP (OECD, 2008). In Africa, the International Road Assessment Programme estimates indicate annual costs of up to 7% of GDP (McInerney, 2012).

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Who bears the cost?

The large burden of costly injuries is borne by society in general. However, a large part of the burden is particularly within the health sector in terms of costs to the emergency medical system, with employers in terms of premature loss or disablement of the world’s most economically active citizens, and with households in terms of loss of the main wage earner. A summary of some of those directly bearing the cost of road injury and death is provided below:

  • Health system: In LMICs, road traffic-related injuries represent a particularly heavy drain on emergency medical system resources. For example, in India, road traffic injury patients represent between 20–50% of emergency room registrations, 10–30% of hospital admissions and 60–70% of people hospitalised with traumatic brain injury (Gururaj, 2008). Despite continuing progress in HICs, involvement in road crashes continues to be a leading cause of death and hospital admission, and a significant drain on emergency medical systems. For example, road traffic injury is the leading cause of hospital admission for citizens of the European Union aged 45 years or below (European Commission, 2009)
  • Employers: Work-related road crashes and injuries present substantial costs for employers (DaCoTa, 2012b). The real costs of road crashes to organisations are nearly always significantly higher than the resulting insurance claims (ORSA, 2011). Crash costs include lost work time, lost orders and production losses; emergency medical costs; vehicle repair and maintenance costs; damage to employer reputation – especially when vehicles bearing the company name are involved; and environmental costs due to spillages of dangerous substances.
  • Households: Research shows that road traffic crashes have disproportionate costs for low income households (Aeron-Thomas et al., 2004; Graham et al., 2005). The loss of the major family wage earner as a result of a road traffic crash can push households into poverty, and limit the ability of victims to cope with the consequences. Costs can include immediate and long-term costs associated with medical treatment and care, and the value of lost earnings where a family member has to give up paid work and care for the crash victim. The financial impact on families has been shown to result in increased financial borrowing and debt, and even a decline in food consumption (WHO, 2013a).

A high price in socio-economic terms is being paid for motorised mobility in all countries of the world. In particular, road traffic injuries in LMICs are a financial drain they can ill afford, which inhibits their desired social and economic development (FIA Foundation for the Automobile and Society, 2005). Road safety investment in both LMIC and HICs needs to be scaled up to match the high socio-economic values of preventing death and serious injury in road crashes (WHO, 2009; DaCoTa, 2012c).

  • 1.Note that road safety policy is not always best directed by cost-benefit analyses. Important considerations that may justify departing from the policy priorities implied by cost-benefit analyses include the aim of reducing disparities in risk, thus giving high priority to measures benefiting pedestrians and cyclists; or the need to reduce speed give priority to those measures that provide the largest reductions in the number of road deaths and serious injuries, which may not always be the most cost-beneficial (DaCoTa, 2012a)
  • 2.According to the World Bank, gross domestic product (GDP) is calculated as the value of the total final output of all goods and services produced in a single year within a country's boundaries. Gross National Product (GNP) is GDP plus incomes received by residents from abroad minus incomes claimed by non-residents
  • 3.Note that costs are calculated differently, with some including direct economic costs and others also including indirect costs comprising a valuation for pain, grief and suffering
Reference sources

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