The True Cost of Car Ownership: It's Worse Than We Thought

After writing a post where I tried to total up the true cost of car ownership, a number of readers noted that I underestimated the true cost to the health system and to the government. This turned out to be an understatement. My source in the original post was Todd Litman's 2015 study, Who Pays for the Roads, using information he took from a National HighwayTraffic Safety Administration (NHTSA) report, The Economic and Societal Impact of Motor Vehicle Crashes, from 2010. Litman wrote:

"In 2010, motor vehicle crashes imposed an estimated $292 billion in economic costs, according to the National HighwayTraffic Safety Administration(NHTSA). Private insurers picked up about 52 percent of those costs, with the remainder divided among crash victims, third parties and government. The cost of motor vehicle crashes to the government, in the form of health care expenditures, emergency response, forgone taxes, and other costs is estimated at $25 billion each year. This represents an additional tax burden of $216 per U.S.household, not counting the additional uncompensated costs imposed on Americans by vehicle crashes."

However, this leaves out a big chunk of money that is listed in the NHTSA report, the quality of life valuations. These are not direct medical costs, but what has been lost when people are injured or killed, the what-might-have-beens.

"When a life is lost prematurely in a motor vehicle crash, the victim loses all of his remaining life, and this can be quantified in terms of life years by comparing the victim’s age at death to expected remaining lifespan. However, when the victim is injured but survives, the loss to the victim is a direct function of the extent to which the victim is disabled or made to suffer through physical pain or emotional distress, as well as the duration through which these impacts occur."

There are a number of ways to use statistics to figure out the value of lost years of possibilities and opportunities; it is measured in what is called the quality-adjusted life year (QALY). According to the NHTSA, those QALY costs totaled $594 billion or an additional $2175 per year.

QALY estimates are controversial, which may be why Litman didn't include them. But they represent a real lost opportunity cost for individuals and the overall economy. They are true societal costs. As the NHTSA report notes,

"In the case of death, victims are deprived of their entire remaining lifespan. In the case of serious injury, the impact on the lives of crash victims can involve extended or even lifelong impairment or physical pain, which can interfere with or prevent even the most basic living functions. Assessing the value of these impacts provides a more complete basis for quantifying the harmful impacts of motor vehicle crashes on society."

I have revised the spreadsheet here to add those QALY costs, which I previously calculated per car. However, I have added a column dividing the indirect costs among a slightly larger number, the 331 million people in the United States. That's every American's share, whether they own a car or not.

So the next time a driver complains that cyclists don't pay their way, you can point out that every single one of them, and every pedestrian and even every child in a stroller is contributing on average $5,701 every year to support drivers and their infrastructure. They should be thanking you for paying taxes and not driving.