Decomposing the Relationship between Macroeconomic Conditions and Fatal Car Crashes during the Great Recession: The Role of Alcohol Consumption
26 Pages Posted: 9 Jan 2011 Last revised: 6 Apr 2011
Date Written: April 4, 2011
In this paper, we investigate to what extent and in what ways conditions related to the recession of 2007-2008 reduced fatal crashes. We hypothesize that the reduction in fatal automobile accidents operates through both the quantity of driving and changes in behaviors associated with driving. Using state-by-quarter fixed effects models, we find that increases in the unemployment rate significantly reduce fatal accidents. A decomposition of the fatal accident rate into accidents per mile traveled and miles traveled per capita reveals that higher unemployment is significantly associated with fewer accidents per mile, but lower personal income may play a larger role in reducing the number of miles traveled. We find that fatal accidents associated with alcohol consumption are more responsive to changes in the unemployment rate than are accidents overall, and we explore mechanisms through which consumers may reduce spending in part by consuming less alcohol associated with driving.
Keywords: Unemployment, Fatal Accidents, Macroeconomic Conditions, Alcohol
JEL Classification: E24, R41, I1
Suggested Citation: Suggested Citation