The Economics of Road Crash

By Ray Adrian Cadiz Macalalag

On a Monday morning, Bon enthusiastically left home for work. On his bicycle, he carried his backpack, lunchbox, and his dream of giving a brighter future to his only child and his wife, who chose to stay at home to raise him. They did not have enough money to pay for a house help, but it was in the couple’s plans once Bon finally got a raise from the promotion they hoped for before the election ban.

In a quick flash of a second, Bon’s dream was over. He lay lifeless on the road, blood gushing from the huge crack on his head. A pickup truck sideswiped him, and its driver, shaken, surrendered to the authorities. Although one of them was alive to live with the horror for the rest of his days, both shared the same fate in an economic lens – a huge loss for society.

Every life lost on the road leaves behind a cascade of economic and emotional devastation. Take the story of Bon, a hypothetical yet deeply relatable individual whose untimely death in a road accident unraveled the dreams he harbored for his family. While fictional, Bon’s tragedy mirrors the reality of thousands of road fatalities that occur each year, leaving families broken and societies bearing the burden of significant economic loss.

According to a willingness-to-pay model literature review by Transport for New South Wales in Australia, the global median economic cost of one death is PHP254 million (AUD7.03 million). In the Philippines, using a conservative human capital approach and income data from the Philippine Statistics Authority (PSA), the average Filipino’s lifetime earnings, adjusted for inflation, amount to PHP13.84 million. This stark figure highlights the enormous financial implications of losing a single productive life, let alone the 13,000 transport-related deaths reported in 2023.

But the economic impact is only part of the story. Each death profoundly alters the lives of those left behind. Families like Bon’s face the dual challenge of grieving and rebuilding their lives. His wife, once a homemaker, may now have to seek employment while raising their child. Meanwhile, the driver involved in the fatal crash often faces legal consequences and societal stigmatization, hindering their ability to reintegrate into society.

Road fatalities affect all layers of society. They deprive families of breadwinners, disrupt children’s futures, and reduce a nation’s overall productivity. From a societal lens, victims are not mere statistics; they are essential contributors to the economy – teachers, engineers, future leaders, or, perhaps, the next president.

Consider the recent high-profile case involving a busker. While public opinion diverges on the outcome, the deaths of a young woman and an infant highlight the tragic consequences of road accidents. The woman and child were not just individuals; they were potential contributors to the nation’s progress. Meanwhile, the driver’s life is irrevocably altered, affecting his career and personal aspirations.

Every road fatality is a wake-up call to do better. The economic costs alone should compel governments, communities, and individuals to take decisive action. Beyond the numbers, every victim is a person whose potential is lost forever, and every survivor carries the burden of tragedy. By investing in road safety, fostering compassion for affected families, and holding ourselves accountable, we can build a society where roads are not arenas of tragedy but pathways to shared progress.