Saturday, September 25, 2010

Economics of Speeding Tickets

I once heard an economist describe a speeding ticket as a speeding tax. You speed to save time and in exchange you pay a fee. It's certainly not how the issue is usually described, but it is technically true. It rang even more true when I came across a company, TicketFree, that offered ticket insurance. You pay an annual fee in exchange for being reimbursed for a fixed amount on moving violations. Though this raises moral hazard concerns, the idea reveals what I initially mentioned. Speeding isn't a moral issue, it's an economic one. This was shown even more clearly when recently a Nevada gubernatorial candidate suggested allowing citizens to pay $25 a day to drive up to 90 mph. He predicts it would help raise $1 billion a year in new state revenue. As unusual as this is, I'm not sure it's much different than what is currently happening. You speed you pay. Instead, you pay you speed.


  1. I am not sure how others thinks ...but I personally consider that the time we sit behind the wheels there is a moral responsibility that we need to adhere to . We can't just hit two people on roads to save time ...Also, don't you think that if it is told that we can pay x amt and then drive in any speed on roads,people will drive more faster just because they have spent some money to get this special right . And don't forget the emancipation from the guilt of wrong doing by legalizing speeding

  2. Good point Kaushik. I think I was wrong about it not being a moral issue at all. There are certainly spillovers we need to consider. Also, the actually morality of breaking laws in general is not something to ignore. Let me rephrase one of my sentences:

    "Speeding isn't JUST a moral issue, it's an economic one."

    Thanks for setting me straight.


You are the reason why I do not write privately. I would love to hear your thoughts, whether you agree or not.