Heterogeneity of the Accident Externality from Driving

Heterogeneity of the Accident Externality from Driving

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Article ID: iaor201522207
Volume: 81
Issue: 4
Start Page Number: 735
End Page Number: 756
Publication Date: Dec 2014
Journal: Journal of Risk and Insurance
Authors: , ,
Keywords: accident
Abstract:

This article examines the accident externality from driving in terms of loss probability and severity by using a unique individual‐level data set with more than 3 million observations from Taiwan. Two types of accident externality are, respectively, measured: the average number of kilometers driven per month per vehicle and the total number of speeding tickets per month. For both variables, we find significant evidence to support the existence of the accident externality. Moreover, we find that the accident externality is heterogeneous in terms of the vehicles’ characteristics.

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