A considerable part of the total social road safety costs consists of human losses. This is damage in the form of suffering, pain, sorrow, and loss of the joy of living of the casualties as well as their family and friends. It is important for policy and its supporting research to be able to attach a value to this damage in terms of money. Detailed study has been made in the Netherlands of the valuation of human costs in fatal crashes. That study estimated the value of a ‘statistical’ life (VOSL) which mainly consists of human losses, at € 2.2 million ± € 0.3 million. This amounts to nearly € 1.8 million ± € 0.3 million in human losses. Taking inflation into account, the value of a statistical life amounted to € 2.6 million in 2009.

Summary

A considerable part of the total social road safety costs consists of human losses. This is damage in the form of suffering, pain, sorrow, and loss of the joy of living of the casualties as well as their family and friends. It is important for policy and its supporting research to be able to attach a value to this damage in terms of money. Detailed study has been made in the Netherlands of the valuation of human costs in fatal crashes. That study estimated the value of a ‘statistical’ life (VOSL) which mainly consists of human losses, at € 2.2 million ± € 0.3 million. This amounts to nearly € 1.8 million ± € 0.3 million in human losses. Taking inflation into account, the value of a statistical life amounted to € 2.6 million in 2009.

Background

Crashes lead to all sorts of social costs, such as material damage, loss of production, and medical costs, but also human costs. Human costs consist of loss in the quality of life for casualties and their family and friends. These are costs in the form of suffering, pain, sorrow, and loss of the joy of living. These costs are separate from material costs such as not being able to consume anymore, etc. Various studies indicate that the human losses resulting from crashes, for both fatalities and injured, are a substantial part of the total social costs of road safety. Therefore, knowledge about human costs is important for policy and its supporting research. This includes research into road safety costs and cost-benefit analyses. Following various other countries, a detailed study was made in the Netherlands of monetizing the human costs of (only) fatal car crashes. This fact sheet presents a summary of this knowledge.

Why should we monetize human losses?

There are at least three reasons to express human losses due to road crashes in monetary terms.

The first reason is that the efficiency of traffic and road safety measures is increasingly determined by using cost-benefit analyses. In these analyses, safety effects, including human losses, are expressed in monetary values as much as possible (see SWOV Fact sheet Cost-benefit analysis of road safety measures). This makes it possible to weigh the saving of road crash casualties against the costs of measures and their effect on, for example, mobility and pollution.

The second reason is that human losses are a large cost item in the total of road crash costs. Information about road safety costs is used in the preparation and assessment of national road safety policy. It offers possibilities of comparing the cost of road crashes with other social costs, such as those of traffic jams or pollution (see SWOV Fact sheet Road crash costs). The third reason is that a fuller picture of the costs of a specific crash can be obtained if the human costs are also known. This can be important for insurance claims. The Netherlands does not (yet) have this possibility, but in other countries estimates of human costs are sometimes used for this purpose (Smith, 2000).

How does valuation work?

The term VOSL In order to standardize the valuation of safety, including human losses, the concept Value of a Statistical Life (VOSL) was developed. This ‘statistical human life’ can be illustrated by the following example. A risk of a fatal crash of for instance 7 in 100,000 means that, statistically, 7 of every 100,000 people will die in a road crash each year. A decrease of the risk from 7 to 4 road deaths per 100,000 means that on a population of 100,000 inhabitants 3 ‘statistical lives’ are saved. The ‘willingness-to-pay’, which is the amount that people are prepared to pay for a certain decrease in crash rate, is used to determine the value of the decrease in crash rate. This concept originates from the economic theory of welfare, and makes it possible to put a price on risk reduction and thus on the saving of ‘statistical’ human lives. Suppose that people are willing to pay € 60 for a crash rate reduction from 4 per 100,000 to 7 per 100,000. In that case 100,000 people are collectively prepared to pay 100,000 x 60 = € 6 million for an expected decrease from 7 to 4 fatalities. The VOSL is then €6 million ÷ 3 saved statistical lives = € 2 million per statistical life.