Monday, January 25, 2010

Rain CUTS traffic deaths

Counterintuitive, but that's what the evidence assembled by Andrew Leigh suggests.

He uses it to argue that the true cost of drought is higher than commonly realised.

Precipitation, Profits, and Pile-Ups

Andrew Leigh, Centre for Economics Policy Research Discussion Paper 629

In considering the economic impacts of climatic changes, economists frequently use annual national income as a proxy for social welfare. I show that such studies suffer from a significant bias, arising from the fact that such models typically ignore changes in mortality rates. Using panel data from Australia, I show that rainfall lowers traffic deaths, suggesting that the standard approach may underestimate the true economic cost of droughts.

Precipitation, Profits, And Pile-Ups

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