Freeway drivers' willingness to pay for speeding fines

Abstract

Taiwanese drivers, like most drivers, often exceed the legal speed limit and expose themselves to the risk of fine. Although the propensity to exceed the legal speed limit is common in many counties, it is of interest to understand the amount that drivers are willing to pay for driving faster than the law permits. This may provide useful guidance on the extent to which current fines are adequate as a deterrent to speeding. In this paper, the contingent valuation method (CVM) is used to measure drivers' preferences and to estimate econometric models to determine Taiwanese drivers' willingness to pay (WTP) for driving faster than the law allows. Given the high incidence on a zero WTP, a spike model is used to capture this phenomenon. The study identifies some key influences on WTP such as the personal income, the presence/absence of past violations, the risk tolerance of the driver, and the proportion of time spent on the roads where the driver exceeded the speeding limit last year. On average, the freeway drivers in various locations in Taiwan were willing to pay between $43 and $51 for driving faster than the law allows.

Keywords:

• Contingent valuation method
• Willingness to pay
• Speeding behavior
• Spike model

Notes

† $1 is equivalent to $32 NT (Central Bank of the Republic of Taiwan, 2008).

‡ Becker (1968) defines the expected penalty as the probability of being caught multiplied by the level of severity (e.g. the fine).

§ There are different ranges of fines for speeding in Taiwan. Driving at a speed of 20 km h⁻¹ higher than the speed limit is the first range; 20–40 km h⁻¹ higher is the second range, and so on. In this study, only the first range of speeding is aimed to investigate drivers' WTP speeding fines.

** Socioeconomic variables are treated as alternative specific variables, and are included in only one of the two utility expressions; otherwise, the model is not identified.

†† The current fine ($94) is based on situations in which speeding does not exceed the posted speed limit by more than 20 km h⁻¹ (the first range of fine). More than 20 km h⁻¹ is not within the authors' study scope.

‡‡ Directorate General of Budget, Accounting and Statistics.

§§ Compared with another study by Jou and Wang (2012), the average WTP for a speeding fine was $23 for motorcyclists. Currently, the actual fine for exceeding the speed limit by 20 km h⁻¹ is $40.