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 a fine. Given 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 we use the contingent valuation method 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 of a zero willingness to pay, we use a spike model to capture this phenomenon. The study identifies some key influences on WTP such as personal income, the presence/absence of past violations, the risk tolerance of the driver, and the proportion of times spent on the roads where the driver was exceeding the speeding limit last year. On average, we find that freeway drivers in various locations in Taiwan were willing to pay between $US43 and $US51 for driving faster than the law allows.