348/2017 Miguel Almunia and Gonzalo Gaete

Traffic accidents cause more than one million annual deaths worldwide and yield substantial economic costs to society. This paper studies the effects of a penalty points system (PPS) introduced in Spain in 2006. We find a 20% decrease in cumulative road fatalities in the five years after the reform, compared to a synthetic control group constructed using a weighted average of other European countries. Using estimates of the value of a statistical life, we calculate that the PPS yielded a net economic benefit of €4.6 billion ($6 billion) over this period, equivalent to 0.43% of Spain's GDP.

Culture and Development