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On the road again: traffic fatalities and auto insurance minimums
Pavel A. Yakovlev* 
Christina M. Orr-Magulick*
Christina M. Orr-Magulick
Affiliation: Gordon Rees Scully Mansukhani, Pittsburgh, USA
 0000-0001-8420-0648
Article | Year: 2018 | Pages: 45 - 65 | Volume: 42 | Issue: 1 Received: May 22, 2017 | Accepted: November 15, 2017 | Published online: March 8, 2018
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FULL ARTICLE
FIGURES & DATA
REFERENCES
CROSSMARK POLICY
METRICS
LICENCING
PDF
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State
|
Per
Person Liability
|
Per
Accident Liability
|
Property
Liability
|
State
|
Per
Person Liability
|
Per
Accident Liability
|
Property
Liability
|
|
Alabama
|
20
|
40
|
10
|
Montana
|
25
|
50
|
10
|
|
Alaska
|
50
|
100
|
25
|
Nebraska
|
25
|
50
|
25
|
|
Arizona
|
15
|
30
|
10
|
Nevada
|
15
|
30
|
10
|
|
Arkansas*
|
25
|
50
|
25
|
New
Hampshire
|
25
|
50
|
25
|
|
California
|
15
|
30
|
5
|
New
Jersey
|
15
|
30
|
5
|
|
Colorado
|
25
|
50
|
15
|
New
Mexico
|
25
|
50
|
10
|
|
Connecticut
|
20
|
40
|
10
|
New
York*
|
25
|
50
|
10
|
|
Delaware*
|
15
|
30
|
10
|
North
Carolina
|
30
|
60
|
25
|
|
Florida
|
10
|
20
|
10
|
North
Dakota
|
25
|
50
|
25
|
|
Georgia*
|
25
|
50
|
25
|
Ohio
|
13
|
25
|
8
|
|
Hawaii
|
20
|
40
|
10
|
Oklahoma*
|
25
|
50
|
25
|
|
Idaho
|
20
|
50
|
15
|
Oregon
|
25
|
50
|
10
|
|
Illinois
|
20
|
40
|
15
|
Pennsylvania
|
15
|
30
|
5
|
|
Indiana
|
25
|
50
|
10
|
Rhode
Island
|
25
|
50
|
25
|
|
Iowa
|
20
|
40
|
15
|
South
Carolina*
|
15
|
30
|
10
|
|
Kansas
|
25
|
50
|
10
|
South
Dakota
|
25
|
50
|
25
|
|
Kentucky
|
25
|
50
|
10
|
Tennessee
|
25
|
50
|
10
|
|
Louisiana
|
10
|
20
|
10
|
Texas
|
20
|
40
|
15
|
|
Maine
|
50
|
100
|
25
|
Utah*
|
25
|
50
|
15
|
|
Maryland
|
20
|
40
|
10
|
Vermont
|
25
|
50
|
10
|
|
Massachusetts*
|
20
|
40
|
5
|
Virginia
|
25
|
50
|
20
|
|
Michigan
|
20
|
40
|
10
|
Washington
|
25
|
50
|
10
|
|
Minnesota*
|
30
|
60
|
10
|
West
Virginia
|
20
|
40
|
10
|
|
Mississippi*
|
25
|
50
|
25
|
Wisconsin
|
25
|
50
|
10
|
|
Missouri
|
25
|
50
|
10
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Wyoming
|
25
|
50
|
20
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* States that changed auto insurance minimums during the 1982-2006 period according to our research.
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Variable
Name
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Variable
Description
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Mean (Std. Dev.)
|
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Traffic fatality rate
(FARS, 2009)
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Traffic fatalities divided by
state population measured in thousands.
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0.18
(0.06)
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Auto insurance minimum
(State-by-State Insurability Requirements, 2009)
|
Per accident minimum
liability amount (in thousands of dollars) adjusted for inflation using GDP
deflator.
|
59.36
(23.53)
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|
Young population share
(Ponicki, 2004)
|
Share of people 18-24 years
of age in state population.
|
0.11
(0.01)
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|
Old population share
(Ponicki, 2004)
|
Share of people 65 and older
in state population.
|
0.12
(0.02)
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|
Minimum drinking age
(Ponicki, 2004)
|
Minimum legal drinking age
for spirits in years.
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20.59
(0.93)
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Gasoline price
(EIA, 2009)
|
Per gallon gasoline price in
constant dollars.
|
1.90
(0.41)
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Income per capita
(BEA, 2009)
|
Real GDP/total population (in
thousands).
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39.74
(10.38)
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Population density
(U.S. Census Bureau, 2009)
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Total population/square mile
of land.
|
0.17
(0.24)
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Alcohol consumption
(The Beer Institute, 2008)
|
Alcohol consumption in gallons
per capita for state population over the age of 17.
|
2.39
(0.56)
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|
Precipitation
(NCDC, 2017; 2017a)
|
Average weighted annual rain
and snow fall in inches.
|
3.09
(1.26)
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Air temperature
(NCDC, 2017; 2017a)
|
Average weighted annual air
temperature in Fahrenheit.
|
52.50
(7.61)
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Speed limit
(IIHS, 2017)
|
Average (rural and urban)
speed limit in miles per hour.
|
60.03
(6.15)
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|
Crime rate
(Bureau of Justice Statistics, 2017)
|
Overall crime rate.
|
0.05
(0.01)
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Primary seatbelt law
(NHTSA, 2009)
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Dummy variable: 1 if state
has a primary seatbelt law, 0 if otherwise.
|
0.22
(0.42)
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Compulsory insurance
(Cohen and Dehejia, 2004)
|
Dummy variable=1 if state has
compulsory insurance (0 otherwise).
|
0.73
(0.44)
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No-fault liability
(Cohen and Dehejia, 2004)
|
Dummy variable=1 if state has
no-fault liability law (0 otherwise).
|
0.28
(0.45)
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1 FARS (2009) 2 Ponicki (2004) 3 EIA (2009) 4 BEA (2009) 5 U.S. Census Bureau (2009) 6 State-by-State Insurability Requirements (2009) 7 The Beer Institute (2008) 8 NCDC (2017, 2017a) 9 IIHS (2017) 10 Bureau of Justice Statistics (2017) 11 NHTSA (2009) 12 Cohen and Dehejia (2004)
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Estimator
standard error
|
FE OLS
|
GMM robust
|
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Clustered
|
Driscoll-Kraay
|
Weighted
|
|
Auto insurance minimum
|
0.096*
|
0.096***
|
0.109***
|
0.108**
|
|
(0.052)
|
(0.026)
|
(0.026)
|
(0.051)
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Compulsory insurance
|
0.01
|
0.01
|
0.019**
|
-0.005
|
|
(0.017)
|
(0.012)
|
(0.008)
|
(0.014)
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No-fault liability
|
0.023*
|
0.023***
|
0.023***
|
0.013
|
|
(0.012)
|
(0.004)
|
(0.006)
|
(0.013)
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|
Primary seatbelt law
|
-0.009*
|
-0.009***
|
-0.005**
|
-0.000001
|
|
(0.005)
|
(0.003)
|
(0.002)
|
(0.003)
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|
Speed limit
|
0.132
|
0.132**
|
0.179***
|
0.170**
|
|
(0.123)
|
(0.059)
|
(0.047)
|
(0.084)
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|
Minimum drinking age
|
0.179
|
0.179**
|
0.062
|
0.242
|
|
(0.230)
|
(0.088)
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(0.117)
|
(0.331)
|
|
Alcohol consumption
|
0.766***
|
0.766***
|
0.765***
|
0.610***
|
|
(0.093)
|
(0.091)
|
(0.050)
|
(0.109)
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|
Income per capita
|
0.870***
|
0.870***
|
0.676***
|
0.603***
|
|
(0.169)
|
(0.090)
|
(0.076)
|
(0.101)
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Gasoline price
|
0.238
|
0.238
|
0.238
|
-0.234
|
|
(0.351)
|
(0.184)
|
(0.181)
|
(0.224)
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|
Population density
|
-0.053
|
-0.053*
|
-0.058*
|
-0.070
|
|
(0.086)
|
(0.027)
|
(0.035)
|
(0.053)
|
|
Young population share
|
0.07
|
0.07*
|
0.00737
|
0.139*
|
|
(0.088)
|
(0.036)
|
(0.041)
|
(0.078)
|
|
Old population share
|
-0.082
|
-0.082*
|
-0.044
|
-0.177**
|
|
(0.110)
|
(0.043)
|
(0.048)
|
(0.088)
|
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Crime rate
|
0.0581
|
0.0581
|
0.055**
|
0.007
|
|
(0.044)
|
(0.037)
|
(0.026)
|
(0.036)
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Precipitation
|
-0.085***
|
-0.085***
|
-0.078***
|
-0.087***
|
|
(0.019)
|
(0.019)
|
(0.018)
|
(0.020)
|
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Air temperature
|
-0.125
|
-0.125
|
-0.258*
|
-0.008
|
|
(0.158)
|
(0.165)
|
(0.151)
|
(0.179)
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Lagged dependent variable
|
--
|
--
|
--
|
0.344***
|
|
(0.051)
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R-squared
|
0.62
|
0.62
|
0.95
|
--
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*** Indicates significance at 1%, ** at 5%, and * at 10%. Dependent variable: traffic fatality rate. The reported coefficients are elasticities computed as d(lny)/d(lnx) at variables’ means (dummies are treated as continuous variables for calculating the means). All models include state and year fixed effects, but their coefficients, along with a constant, are not reported. Due to the lack of consistent annual precipitation and temperature data, Alaska and Hawaii are excluded from the sample, resulting in 48 contiguous states over 25 years or 1,200 observations.
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March, 2018
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