Should Drivers Be Allowed to Use Cell Phones While Driving - Lab Report Example

 Dear Sir/Madam, Ref: Report on the cost-benefit analysis of a ban on the use of mobile phones when driving The attached report that was requested by your company in a letter dated………to… ( name of student)…………, describes our findings on the cost-benefits analysis of a ban on the use of mobile phones when driving. This report was designed in to discuss the cost-benefit analysis and the report has been presented in three sections: The cost of the ban The benefits likely to be derived from the ban The net benefit of the ban Conclusion The report has relied on secondary data that have been listed at the end of the report. We would be glad to discuss this report with you and clarify any areas that you may wish. Thank you. Yours faithfully Should drivers be allowed to use cell phones while driving? Introduction In the recent past, there has been growing concern about the safety of using mobile phones while driving. The increasing use of mobile phones in vehicles is part of a larger trend related to the introduction of technologies that could divert attention from driving. A recently published National Highway Traffic Safety Administration (NHTSA) survey reports that 44 percent of drivers have a phone with them when they drive, 7 percent have e-mail access, and 3 percent have facsimile capabilities. Those numbers are likely to increase. Other technologies that increase possible distractions will also be added to new vehicles, such as easily accessing the internet, getting directions electronically, and receiving real-time information on traffic patterns. Problem With the growing use of modern mobile telephony among the world population, there has been fear of carelessness among users especially when driving. The fear is further compounded by the fact that the majority of mobile telephone users are the youthful generation. Another worrying aspect is that the growing middle class, whose population is also youthful. The growing middle class is associated with the increase in the number of vehicles on the roads. The youth have been described as relatively careless as compared with their older counterparts. The significant costs of mobile phone usage while driving is the increased risk of vehicle accidents, some leading to serious injury or death. It is estimated that up to 41,000 people die in vehicle accidents each year in the United States, with a bigger percentage being caused by drivers who use their mobile phones while driving. These concerns have led to increased call for a ban on the use of mobile phones while driving. This paper is intended to provide a cost-benefit analysis of a ban on mobile phone while driving. Findings According to Cohen & Graham (2003), if there is total compliance to a ban on the use of mobile phones while driving, both the benefits and costs of using mobile phones while driving would be eliminated, therefore resulting to a zero-sum game. They also argue that the proportion of property-damage-only crashes, injuries and fatalities attributed to mobile phone usage are equal. Their study further argues that incremental crash risk is proportional to the time spent on the phone. This third argument is consistent with the hypothesis that mental distraction associated with phone conversation is the main contributor to crash risk, rather than other factors like physical interference with the driving task resulting from dialing. Cost of a ban The cost-benefit analysis of a ban requires that the cost to mobile phone users, the cost to producers, and the economic benefits associated with a reduction in accidents be estimated. If mobile phone service is provided at constant marginal costs, the costs of a ban to mobile phone users are the welfare loss to consumers. Industry-wide demand functions for mobile phone service allow economists to approximate the economic loss to consumers from a general ban. The proportion of total mobile phone revenues arising from calls occurring in vehicles multiplied by the total amount that consumers affected would have to be compensated yields an estimate of the cost consumers would incur from prohibiting mobile phone use by drivers. A survey conducted by the Yankee Group estimates that consumers spend 60 percent of their mobile phone time while driving. This estimate would imply that, for consumers to remain indifferent between a ban and no ban, they would need to be paid about $25 billion if they were not allowed to use their mobile phones while driving. Benefits of a Ban Economists can measure the costs of mobile phone use by drivers in terms of the lost lives, property damage, and injury costs of accidents associated with driver use. Collisions are caused by several contributing factors, so it is difficult to attribute all the costs to a single factor, such as the use of a mobile phone. In estimating the cost, it is assumed that drivers using mobile phones do not take into account any of the accident risks. If drivers did take account of some or all of these risks, the demand curve would reflect that. However counting them would bias the cost-benefit analysis in favor of a ban. The best estimate of accidents and fatalities should be based primarily on the available data from actual accident reports from the state organs. It is however difficult to ascertain, even from the actual reports, the number of actual accidents caused due to use of mobile phones while driving. For the purposes of this analysis, we will assume that those accidents are actually caused by drivers’ use of mobile phones. The lowest estimate is that fewer than 3 in every 10,000 accidents were related to driver mobile phone use in 1999. The highest estimate from state data is that mobile phones were associated with 1 in every 1,000 vehicle accidents. Weighting the four estimates equally–two from state data and two from national data–yields an estimate that 2 out of every 1,000 accidents were associated with driver mobile phone use. The state and national data imply that about 80 fatalities out of 41,000 national fatalities each year are associated with mobile phone use in cars. If only 3 in every 10,000 accidents are related to driver mobile phone use, then only 10 fatalities a year are associated with mobile phone use in cars. We will use that estimate as our lower bound. If we assume that mobile phones increase the risk of minor accidents, injury accidents, and fatal accidents equally, our estimates suggest between 10 and 1,000 fatalities are associated with or caused by mobile phone. Drawing heavily on a study by NHTSA (2005), which places monetary the economic costs of motor vehicle accidents it estimated that traffic accidents result in annual losses of about $170 billion. By chance, the total numbers of crashes and fatalities in 2005 were almost exactly the same as projections for 2009. Thus, the 2005 data offer a reasonable approximation of economic costs of accidents in 2005. The $170 billion figure represents the present value of lifetime economic costs for 41,000 fatalities, 5.2 million non-fatal injuries, 3.7 million uninjured occupants, and 27 million damaged vehicles. These accidents include both police-reported and unreported accidents. Most of the $170 billion in NHTSA’s calculation stems from lost productivity in the workplace and direct medical expenses. NHTSA’s measures of costs take account of only direct costs but do not consider what an individual would be willing to pay to reduce mortality and morbidity risks( Michael 2009). If we use Viscusi’s 1993 willingness-to-pay estimate of $5 million per statistical life, adjusted to $6.6 million to account for inflation, NHTSA’s estimate would increase from $170 billion to $410 billion. If willingness to pay to prevent injuries (morbidity) were taken into account, NHTSA’s estimate would increase to $630 billion. That amount is the best estimate of the total annual cost of motor vehicle accidents. Estimating that mobile phone use contributes to just under 0.74 percent of total accidents, we calculate the costs of drivers’ mobile phone use to be $4.6 billion per year (0.0074 times $630 billion). About half of this $4.6 billion is attributable to the 300 estimated fatalities associated with driver use of mobile phones, while the other half represents the costs associated with more minor accidents in which mobile phones were a contributing factor. Net Benefits of a Ban On the basis of the preceding cost and benefit estimates, national legislation banning mobile phone use by drivers would impose annual net costs of about $20 billion ($25 billion in costs minus $4.6 billion in benefits). Indeed, the costs of a ban are more than five times greater than the benefits. These results are summarized in the first part of Table 2 as our best estimate. A great deal of uncertainty exists in many of the parameter values used in our model. To account for key uncertainties, we considered a wide range of parameter values for the number of lives saved, the amount of time drivers spend using a mobile phone, and the price elasticity of demand. A range of 10 to 1,000 is used for lives saved, based on a lower bound from NHTSA’s study of North Carolina crash narratives and an upper bound from an extrapolation from Redelmeier and Tibshirani’s estimate of relative risk. Hausman’s estimate for price elasticity applies to all mobile phones, not only phones in vehicles. To account for that additional source of uncertainty, we used a range of –0.17 to –0.84 for price elasticity, based on two of Hausman’s standard error estimates. A range of 40 percent to 70 percent was used for the percentage of time mobile phones are used by drivers. The lower-bound estimate assumes passengers use mobile phones proportionally to drivers while our best estimate assumes that passengers rarely use phones. The qualitative nature of our ranges does not allow us to provide precise confidence intervals. To present this uncertainty, we first calculated the minimum and maximum costs, benefits, and net benefits by choosing the most extreme values for all parameters simultaneously. The results are presented in the last column of Table 1. For example, the benefits of a ban range from at least zero to $21 billion, which primarily reflects the large uncertainty in the number of fatalities associated with mobile phone use. This approach creates the largest plausible ranges, although it is unlikely that the costs, benefits, or net benefits are near the ends of those ranges. Such a result would require unlikely values for all our estimates simultaneously. For that reason, the ranges presented in Table 2 overstate the uncertainty in our results. Another approach to illustrating the sensitivity of the results is shown in Figure 1, which shows the effect of varying one parameter at a time. By varying each parameter, we are able to determine the most important uncertainties. We use a plausible range for each key variable and calculate the corresponding range of net benefits. Varying the price elasticity of demand yields net cost estimates ranging from $14 billion to $73 billion. Varying fatality and injury estimates also generates a large range for net costs, but even if mobile phones cause 1,000 fatalities a year, a ban would still result in net costs of $9 billion annually (Henrikson). Only when extremely conservative estimates are used for both the number of fatalities and the price elasticity of demand do we calculate positive net benefits. Because that result requires extreme assumptions for two variables simultaneously, we feel that it is extremely unlikely for the benefits of a ban to exceed the costs (Hahn, Tetlock, and Jason 49). We found that for most plausible ranges for parameter values, a ban on mobile phones while driving cannot be justified for the United States on narrow grounds of economic efficiency. Table 1(a). Cost-benefit analysis of ban on use of mobile phones when driving Best estimate Billion $ Range Billion$ Benefits 4.6 0.1-21 Costs 25 10-87 Net benefits (20) (87)-6.8 Table 1 (b). Cost-benefit analysis of mandate to use of hands-free devises when driving Best estimate Billion $ Range Billion$ Benefits 0.69 0-6.3 Costs 1.4 0.1-7.6 Net benefits (0.71) (0.76)-6.2 Conclusion This report therefore concludes that the use of mobile phones while driving should not be banned for the following reasons: Mobile phone use in vehicles provides substantial benefits to users but does not appear to contribute to a large number of serious accidents. Next, we make calculations addressing a more difficult issue—whether particular regulations mandating mobile phone innovations would represent a relatively low-cost way of reducing accidents. As an example, we consider the case of mandating a hands-free device that is similar to a phone headset used in office environments. While the results are not as clear-cut as a ban, they suggest that such regulation is probably not warranted on benefit-cost grounds. Works cited "EDITORIAL: Texting while Driving should be Banned." McClatchy - Tribune Business NewsABI/INFORM Complete. Jul 31 2009. Web. 5 Dec. 2012 . Broom, Jack. "Ban on use of Handheld Cellphones while Driving Starts Tuesday." McClatchy - Tribune Business NewsABI/INFORM Complete. Jun 26 2008. Web. 5 Dec. 2012. Driving Under the (Cellular) Influence: The Link between Cell Phone use and Vehicle Crashes. Rochester, Rochester: 2008. ABI/INFORM Complete. Web. 5 Dec. 2012. Hahn, Robert W., Paul Tetlock, and Jason Burnett. "Should You be Allowed to use Your Cellular Phone while Driving?" Regulation 23.3 (2000): 46-55. ABI/INFORM Complete. Web. 5 Dec. 2012. Henrikson, John. "A Few More Answers on New Cell Phone Law." McClatchy - Tribune Business NewsABI/INFORM Complete. Jun 14 2010. Web. 5 Dec. 2012. Joshua Cohen and John Graham. A Revised Economic Analysis of Restrictions on the Use of Cell Phones While Driving. Risk Analysis,2003, 23.1 (2003): 5-17. Lennon Nilsson. “Behavioral Research in an Advanced Driving Simulator: Experiences of the VTI System: In Proceedings of the Human Factors and Ergonomics Society 37th Annual Meeting, 2003:612. Oklahoma Department of Public Safety, Highway Safety Office. Lester Lave. The Strategy of Social Regulation: Decision Frameworks for Policy. Washington, D.C.: Brookings Institution, 2001. Lexington Battele: Area Travel Data Collection Test. Final Report to Federal Highway Administration, 2005. Web. Accessed on 5 December, 2012. Michael Horswill and Frederick .P. McKenna. “The Effect of Interference on Dynamic Risk-taking Judgements. British Journal of Psychology 90,2009 Read More