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Group 4 | Presentation on June 20, 2012 | 1TERMPROJECT
TERM PROJECT:
Determinants of Fatal Car Accidentsin the United States
MBA 555: Managerial Economics
Presentation on June 20, 2012
Group 4: Henning Andrees, Chelsey Hawes, Martin Kumke, Paula Monteiro, Charly von Wiedersperg
Group 4 | Presentation on June 20, 2012 | 2TERMPROJECT
Agenda
1. Introduction
2. Research History
3. Data and Variables
4. Econometric Model
5. Results
6. Policy Implications
7. Summary and Conclusion
Group 4 | Presentation on June 20, 2012 | 3TERMPROJECT
INTRODUCTIONCar Fatalities Are Devastating to Society
Car crashes are the leading cause of death in ages 5–34 in the US
2.3 million adults treated in the ER as a result of crashes
$41 billion in medical and loss of labor costs
32,788 traffic fatalities in 2010
Causes: aggressive driving, alcohol, weather, equipment failure 0
0.00005
0.0001
0.00015
0.0002
0.00025
0.0003
0.00035Fraction of U.S. motor vehicle
deaths relative to total population
1 death per 10,000 people per year
Examining the determinants of fatal car accidents in the US
STUDY OBJECTIVE
Group 4 | Presentation on June 20, 2012 | 4TERMPROJECT
RESEARCH HISTORYMany Models Have Been Developed over the Years
Loeb (1987)– Drinking beer, age, speed, vehicle inspection
O’Donnell et al. (1996):– Age, speed, alcohol, vehicle type, seating position
Fridstrom (1999):– Impact of multiple variables on severity of accidents
Ulfarsson et al. (2002):– Impact of gender and type of vehicle on car accident severity
Milton (2006):– Weather, traffic, road conditions, curves
Group 4 | Presentation on June 20, 2012 | 5TERMPROJECT
HYPOTHESESTesting Hypotheses in Four Different Categories
H1 The number of fatal car accidents is explained by …weather and climatic conditions.
H2 The number of fatal car accidents is explained by … the degree of drug and alcohol use.
H3 The number of fatal car accidents is explained by … demographic factors.
H4 The number of fatal car accidents is explained by … driving-related factors.
Group 4 | Presentation on June 20, 2012 | 6TERMPROJECT
DATA AND VARIABLESDiverse Variables Based on Hypothesis Categories
1: Weather and climate Temperature (average) Precipitation (annual) Snowfall (annual) Wind speed (average) Time between sunrise and sunset
3: Demographic factor Average age Sex ratio (male/female) Student population (percent) Number of foreign born (percent) Median income Average family size Population density
2: Drug and alcohol use Beer consumption (per capita) Cigarette use (percentage) Prescription drugs sold (kg per capita)
4: Driving-related factors Number of motor vehicles (per capita) Driving age (full license) Interstate miles (per vehicle) Speed limit (mph) Fine for speeding Suspension for drunk driving Police officers (per capita)
Number of fatal car accidents per 100,000 inhabitants DEPENDENT
INDEPENDENT
Group 4 | Presentation on June 20, 2012 | 7TERMPROJECT
Narrow down the significant variables
METHODOLOGYMultiple Steps to Create the Best Production Model
Basic Assumption:Cobb-Douglas Production Function:
1 2Q L K
Stepwise
Test for regression assumptions Eliminate variables with multicollinearityOLS
No regression parameter for interceptNo Intercept
BEST MODEL:No intercept multiplicative model
DATA: Cross-
sectional 50 states of
the USA Year: 2010 23 variables
SOFTWARE: WinORS
Group 4 | Presentation on June 20, 2012 | 8TERMPROJECT
ECONOMETRIC MODELCobb-Douglas Production Function
Variable Description Parameter Estimate
FA Fatal Car Accidents per 100,000 People DEPENDENT
T Average Annual Temperature 1.309
C Percent Cigarette Use in Adults 18+ 0.296
A Average Age 0.699
FB Number of Foreign Born in Percent –0.169
V Number of Motor Vehicles per Person 0.442
D Drive Age (Full License) –1.994
M Interstate Miles per 1,000 Vehicles 0.250
E Law Enforcement Employees per 1,000 People 0.298
0 1.309 0.296 0.699 0.169
0.442 1.994 0.250 0.298
Ln FA Ln Ln T Ln C Ln A Ln FB
Ln V Ln D Ln M Ln E
Group 4 | Presentation on June 20, 2012 | 9TERMPROJECT
RESULTSIs the Model Trustworthy?
F-Value 2,473.843
P-Value 0.00001
R² (adjusted)99.753%
EXPLANATORY POWER
AUTOCORRELATION
Does not exist in Ln model (No Durbin Watson)
Average VIF 2.302MULTICOLLINEARITY
Group 4 | Presentation on June 20, 2012 | 10TERMPROJECT
Average Annual Temperature 0.00001
Cigarette Use in Adults 18+ (%) 0.02066
Average Age 0.02066
Number of Foreign Born (%) 0.00379
Number of Motor Vehicles per Person 0.00500
Driving Age (Full License) 0.00011
Interstate Miles per Vehicle 0.00011
Law Enforcement Employees per Person 0.00001
RESULTSIs the Model Trustworthy?
STATISTICAL SIGNIFICANCE P-Value
Group 4 | Presentation on June 20, 2012 | 11TERMPROJECT
RESULTSIs the Model Trustworthy?
HOMOSKEDASTICITY
White’s Test: 48.221
P-Value: 0.30597
Group 4 | Presentation on June 20, 2012 | 12TERMPROJECT
RESULTSIs the Model Trustworthy?
NORMALITY
Correl. For Normality: 0.9935
Critical Value: 0.9840
Group 4 | Presentation on June 20, 2012 | 13TERMPROJECT
RESULTSNo Hypothesis Has Been Rejected
H1 The number of fatal car accidents is explained by … weather and climatic conditions.
NOT REJECTED
H2 The number of fatal car accidents is explained by … the degree of drug and alcohol use.
NOT REJECTED
H3 The number of fatal car accidents is explained by … demographic factors.
NOT REJECTED
H4 The number of fatal car accidents is explained by … driving-related factors.
NOT REJECTED
Group 4 | Presentation on June 20, 2012 | 14TERMPROJECT
-1
1
0
-2
CONCLUSIONSElasticities Explain Impact on Fatal Car Accidents
ELASTICITY
Interstate Miles per Vehicle
Average Annual Temperature
Average Age
Number of Foreign Born
# of Motor Vehicles per Person
Cigarette Use in Adults 18+
Driving Age (Full License)
Law Enforcement Employees
Group 4 | Presentation on June 20, 2012 | 15TERMPROJECT
POLICY IMPLICATIONSHow to Survive in the US
MOVE TO A COLD
STATE…
… WHERE YOUNG PEOPLE LIVE
TOGETHER …
… WITH LOTS OF IMMIGRANTS
…
… TOO COOL FOR COPS …ALAS
KA
MAINE
UTAH
CALIFORN
IA
… AND NO ONE
SMOKES!
TEXA
S
Group 4 | Presentation on June 20, 2012 | 16TERMPROJECT
SUMMARY AND CONCLUSIONSHow to Survive in the US
ALASKA
MAINE
UTAH
CALIFORN
IATEXA
S
Whatever you do:
Leave Rhode Island;
wicked dangerous!
And move to:
Group 4 | Presentation on June 20, 2012 | 17TERMPROJECT
Thank you for your attention!
Determinants of Fatal Car Accidents in the United States
Group 4 | Presentation on June 20, 2012 | 18TERMPROJECT
References
Injury Prevention and Control: Motor Vehicle Safety. Centers for Disease control and Prevetion. http://www.cdc.gov/motorvehiclesafety/
Traffic safety facts: Crash Stats. US department of Transportation: National Highway Traffic Safety Administratio; 4/11. http://www-nrd.nhtsa.dot.gov/Pubs/811451.pdf
Loeb,P. The Determinants of Automobile Accidents. Journal of Transport Economics and Policy; London School of Economics and Political Science. 21(3);1987:279-287
O’Donnell, C.J.Connor D. Predicting the severity of vehicle accident injuries using models of ordered multiple choice. Accident and Analysis Prevention; 28(6);1996:739-753
Fridstrom,L. Econometric models of road use, accidents, and road investment decisions. Institute of Transport Economics.1999:1-292
Ulfarsson, G; Mannering, F. Differences in male and female injury severity in sport utility vehicle, minivan, pickup, and passenger car accidents. Accident Analysis and Prevention. 36(2);2004:135-147
Milton, J; Shankar, V; Mannering, f. Highway accident severities and the mixed logit model: An explanatory empirical analysis. Accident Analysis and Prevention. 40(1);2008:260-266