Methodology - The Social Cost of Road Crashes and Injuries June 2008 update

2. Methodology

Estimation of the social cost of road crashes and injuries requires two stages of analysis. The first stage involves estimating the total number of crashes and injuries, because not all crashes are reported and recorded in the official Traffic Crash Reports (TCRs). Counting the reported  numbers alone would underestimate the road safety risks and the potential benefits that might be achieved through intervention.

The second stage involves quantifying the impacts in monetary terms, taking into account the non-reported incidents. The average social cost obtained after adjusting for the level of non-reporting is referred to as the average social cost per reported incident.

2.1 Estimation of the number of injuries and crashes

Annual crash and injury data, hospitalisation data and Accident Compensation Corporation (ACC) new claims data from the Motor Vehicle Account were used to obtain the best estimates of the total numbers of road crashes and injuries.

Injury and crash conversion factors (defined as the ratio of estimated to reported numbers of injuries or crashes) were developed for estimating the total number of incidents, taking into account the level of non-reporting. To control for any regional variations, regional conversion factors were developed for serious injuries and crashes. Due to the lack of data, separate regional conversion factors for minor and property damage-only (PDO) crashes could not be determined. For more details, please refer to Appendix A.

Annual total numbers of reported injuries and estimated numbers of non-reported injuries for the years from 2001 to 2007 are shown in Table 2.1. The estimated total numbers of crashes and injuries for the years 2005 to 2007 are given in Table B1 (Appendix B).

* Estimates have been updated using latest data from Accident Compensation Corporation (ACC), New Zealand Health Information Services (NZHIS) and Traffic Crash Reports (TCRs).

2.2 Estimation of injury and crash costs

The social cost of a road crash or a road injury is defined as the total cost that occurs as a result of the road crash or the injury. Its value depends on the number of cost components estimated and the estimation methods adopted.

In New Zealand, the social cost of a road crash or a road injury includes the following components:

• loss of life and life quality
• loss of output due to temporary incapacitation
• medical costs
• legal costs
• property damage costs.

Most of these social cost components are either measurable or can be estimated in dollar terms. A ‘willingness-to-pay’ valuation technique is used to express pain and suffering from loss of life or life quality in dollar terms. Various methodologies have been developed to estimate the value of other social cost components (see Appendix A).

The average social cost per reported incident is obtained by dividing the estimated total social cost by the corresponding number of reported incidents. Assuming everything else remains constant, an increase in the number of reported incidents will decrease the average social cost per reported incident (since a smaller allowance for non-reported incidents is required).

The price indices used in updating the social cost components are included in Table B2 (Appendix B).

 
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