It’s not uncommon to hear gripes of how traffic tickets, red light cameras, and the like are merely intended to boost revenues for cash-hungry towns. An interesting new paper from Michael D. Makowsky and Thomas Stratmann, looking at municipalities in Massachusetts (where the majority of tickets given by towns go to out-of-town drivers, particularly when towns are strapped, as indicated by their move to override the property tax cap) suggests that the revenue imperative in itself can help make the roads safer.
They write: “This paper shows that traffic fines reduce the number of car accidents and related injuries. We address the endogeneity problem that remains after using town and time effects by estimating the fixed effects model with instrumental variables. Our instrument is whether a town asked for more money through an override referendum and it’s interaction with stopped out of town drivers. Using panel data, we find that more tickets are issued when a town has asked for an override referendum, and that tickets issuance increase the more out of town drivers that are stopped, lending support to the tax exporting hypothesis while controlling for town fixed effects. Using these estimates, we find that tickets are a far more effective reducer of car accidents and automobile accident related injuries than ordinary least square estimation would indicate.”
Also of interest: “We find that in town with financial distress police officers are more likely to issue a ticket than a warning to out of town drivers.” (a finding that essentially jibes with what they concluded in another good paper, Makowsky, M. D. and T. Stratmann (2009). “Political Economy at Any Speed: What Determines Traffic Citations.” American Economic Review 99(1).
(via Marginal Revolution)
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