The first term gives the social costs of the risk that the car occupants themselves are
involved in an accident. The second and third terms give the social cost of the increased
accident risk for cars and other road users due to the additional car km. A similar for-
mula can beobtained for the marginal social accident cost of buses, trucks, etc. However,
to keep the explanation as simple as possible, we limit ourselves to cars.
In the determination of the marginal external accident costs, there are two main prob-
lems. First of all, one needs to determine the relationship between the number of road
users and the number of accidents. Secondly, there is the determination of that part of
the accident costs which is internalized in each road-user’s decision process.
Part of the marginal social cost is already internalized. From the literature on accident
costs, we know that road users already take into account their private marginal costs.
These include the insurance premium and two cost categories associated with their own
accident risk, namely their own utility loss due to the accident risk (a) and possibly also
the utility loss of their relatives and friends* (b). Thus, in the first term of eqn (4), only the
c cost category would be external. However, this depends on the type of insurance that is
in place. If insurance covering costs of type c is compulsory, then the cold-blooded costs
associated with the own accident risk are internalized through the insurance premium. In
Belgium, this is the case for car passengers, but not for car drivers. Therefore, the cold-
blooded costs are assumed to be external for the car drivers only. For public transport,
these costs are assumed to be external for both the driver and the passengers?.
The second term of eqn (4) can be written as: