Social cost-benefit analysis (CBA) offers a framework for societal decisions about drunk-driving policies. An effective drunk-driving policy reduces the extra fatal risks drunk drivers impose on others. This risk reduction can be valued as the expected number of lives saved multiplied by the dollar value of a statistical life. Drunk-driving policies create social costs because when resources are used to combat drunk-driving, they can not be used in the production of other goods and services. Complications considered include the distinction between private versus external benefits and costs, the roles of poor information and irrationality, constraints on public sector budgets, and what costs should be included. Social CBA can not make difficult policy decisions easy, but does help clarify the tradeoffs involved as policy makers pursue the worthy goal of improving traffic safety by reducing drunk-driving. (A)
Abstract