The Economics Of Speeding: Why Government Regulation Sucks


November 3, 2014 by Liberty

The saddest part about this article is that it ended up proving my point so much more than I could have possibly planned. I originally ran a rough draft of these numbers on a scrap piece of paper. Those numbers I originally used were just wild guesses from the quite funky recesses of my brain. Those numbers significantly underestimated the true extent of the problem.

The fundamental question I was trying to answer was this: Does government regulation work? Anyone that’s been reading this blog (for about as long as it takes to read the title of it) can probably guess that I don’t believe regulation works. That being said, I was looking for for new ways to look at the question. That is when I noticed this opportunity.

Government regulation of traffic speeds could be one of the most interesting opportunities to estimate regulation’s effect. The data on this subject is virtually endless. The obvious question that popped out is this: Is speeding economically efficient despite the regulation?

How Efficient Is Speeding

This is not all that difficult a question to get a basic answer to. (That’s all I’m going to be looking into. I’m sure people much smarter than me could come up with much better answers.) By looking at the average commute time, the average hourly pay, the average ticket cost, the odds of getting caught, and the average speed, you can estimate how valuable speeding is when including the risk of getting a ticket.

Most of these numbers are easy to find. Statistics show the average person commutes for 25 minutes each way. The average wage is around $24 an hour in the United States. (Rounded down for simplicity.) The average ticket costs around $150.

The average speed I used was 60 miles per hour. This could actually dramatically change the results but no reasonable number would nullify them. I used highway speeds because speeding is much more difficult in red light filled areas. That would make the results mostly a guess.

What do all these numbers show?

By going 5 miles per hour over the speed limit, the average person would save a hair less than 4 minutes a day.

That doesn’t sound like much but it adds up quite well with 20 work days a month and 12 months a year. It adds up to 920 minutes a year. That’s 15 and 1/3 hours. Multiply that by the average hourly wage and you get $368 dollars gained from speeding (and, of course, working the extra 4 minutes daily.)

Now assuming the average person got a speeding ticket once a year, that would offer a hefty profit of over $200 a year. Of course, 1 ticket a year is an insanely high number.

About 1 in 5 drivers get a speeding ticket each year. 90% of people speed. Again, for simplicity, lets take those two numbers and just say you have a 1 in 4 chance of getting a ticket if you speed. This is a wild overestimation of how often people get tickets going to work though.

With a 1 in 4 chance of getting a ticket that costs $150, you can estimate the yearly cost of speeding tickets to be $37.50. That makes the real profit of speeding come up to well over $300 a year.

This Must Be Wrong!

Yes. You read all that right. Government regulation has regulated speeding to the point of STILL being profitable. That means, it’s economically stupid not to speed to get to work. Government has failed miserably at regulating speed limits.

(Take note that traffic fatalities are left out of this estimate. That could also sway the true efficiency down.)

Enforcers Incentive

Why does this happen? Well… That’s a complicated question but there is one clear motor pushing this insanity.

People have this belief that traffic cops are supposed to prevent dangerous driving. There are a number of ways that could be argued against but fundamentally it’s based on a silly mistake. What is “supposed to” mean anyway? That’s a bit of a useless phrase. The more appropriate question is what are they rewarded for doing?

The things that regulators are rewarded for are the things that they’ll repeat (assuming they’re not magical fairy tale characters.) The things they get punished for will not be repeated.

To start, just think about what would happen if people stopped speeding. Do you think police departments would need as many employees if it weren’t for speeding tickets? Many estimates suggest traffic tickets are a multi-billion dollar industry. It’s fair to assume a lot of police officers would lose their jobs if people stopped speeding.

That means, it would be insane to push for higher speeding ticket costs.

What would happen if more people started speeding? Police departments would make more and more income off their officers. That would reward the officers with better pay and benefits while opening more jobs for other officers.

Does it still sound silly that the regulators haven’t regulated speeding to the point of it not being profitable for the average person? If they did, they would be the ones losing jobs. If they keep speeding profitable then they can make more money off it too.

Of course, they claim that they’re working to get speeding to be reduced but in reality, that’s not the slightest bit beneficial for police officers.

This also completely ignores the claims people make about police officers being around to make driving safer. They are actually just another form of taxation. If they were there to make it safer then speeding wouldn’t be profitable.

It’s Not Exclusive To Speeding

As much as I would love to believe that this regulatory problem is exclusive to the speeding laws in America, any honest examination can see similar problems in virtually every government regulated situation. There is no economic incentive for a government employee to actually do the things that politicians promise they’ll do. In most cases, they have the exact opposite incentive. (You can’t get more funding when the problem is getting less significant.)

Don’t let yourself get caught up trying to understand every problem that government fails to properly address. You don’t need to be an expert in hundreds of subjects to understand the fundamental problems that cannot be addressed. Just understanding one simple problem like speeding can show you countless problems with regulation that still haven’t been solved.

Do you want to know how you can live your life free of obstructive government regulations (without hiding in the woods or begging for other people to change?) That’s what this blog is all about. If you enjoyed this article then please share it. Don’t forget to follow the Libertarian Money feed too.

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