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Tuesday, April 5, 2011

How Much Are You Worth?

I had the chance to read over a study of Vehicle Inspection Programs this week. In summary, the state of Pennsylvania did an evaluation of their existing annual vehicle inspection process to ask:

• Do inspections reduce the number of fatality or injury accidents?
• Does the inspection period influence the level of accident reduction?
• Do inspections influence the mechanical condition of cars?
• Are vehicles in states with mandatory inspections in better mechanical condition?

Pennsylvania concluded that their inspection program is cost-effective (without necessarily answering the 4 questions above). How did they determine this?

Much of their statistical work goes far beyond the level of elementary math I assume we all share, but we can do some pondering on the topic. Here are the some numbers presented:
  1. 11 million inspections performed annually
  2. 16,000 inspection stations
  3. Average cost of inspection between $16-23 with average of $20
  4. Vehicle owner time spent on inspection is valued at $9-34 with an average of $17
  5. Inspections result in 114 fewer crashes a year, and 127 deaths saved
  6. A person in the USA is worth 5.8 million dollars
  7. Cost of the actual repairs was not considered worth tracking
Let's do a few math problems.

Cost of the inspections:

11,000,000 inspections x ($20 fee paid + $17 lost time) = $407,000,000

Revenue to inspectors:

11,000,000 x $20 fee = $220,000,000 ÷ 16,000 = $13,750 per inspection station

Value of a life equals:

$407,000,000 ÷ 127 lives = $3,204,724.41 or the value of a life lost in a car accident is $3.2 million.

How do they determine the value of a human life? Pennsylvania says that if we are each worth $5.8 million (see the study link above), when we die in an accident, we have lost 39 years that we would have otherwise lived, out of a life expectancy of 75-80 years.

If we can find a solution for the problem (3.2/5.8 ) = (39/x) we can find out how old they assume the average killed driver is. I come up with 41-44 years of age.


Pennsylvania's study concluded the cost of accidents range from $737 million to $1084 million and the cost of the inspection program equals $267 million to $621 million, therefore the inspection program is worth continuing.

Other thoughts:

There are many things that could be argued about in this analysis. But I'd just make one point - 20 states have some sort of safety inspections, and 30 states do not. Vehicle inspections have been done with varying levels of effectiveness since 1926. The issue has been studied for a LONG time.

The AAA in 1967 found no proof that vehicle inspection is effective in reducing accident or death rates. NHTSA in 1989 decided there was no evidence that inspections reduce crashes. Pennsylvania in 1981 concluded that accident rates of vehicle with annual, semiannual, and no safety inspection programs were equal. Norway in 1992 found no statistically significant differences in accident rates between the three groups.

Folks, walk around your car, check the tires, lights, and wipers - and fix them if they need fixing! And drive safely. You are worth $5.8 million!

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