Economic Payback of Road Safety Advertising in ROI September 2010 Oxford Economics Abbey House 121 St Aldates Oxford OX1 1HB UK tel: 44 1865 268900 fax: 44 1865 268906 31 Bruce Street, Belfast BT2 7JD T 048 9033 1044 F 048 9033 1622 E [email protected] www.lylebailie.com Speciali st s in AT titude & Beha viour C hange Excellence is always more cost-effective than Mediocrity. Contents 1 Introduction ..................................................................................... 1 2 Methodology .................................................................................... 2 2.1 2.2 2.3 3 Factors influencing road collisions ............................................................. 2 Existing road safety statistics ..................................................................... 3 Oxford Economics methodology ................................................................ 5 Results ........................................................................................... 10 3.1 3.2 3.3 Oxford Economics payback results .......................................................... 10 Additional factors that influence the results ............................................. 10 Summary .................................................................................................. 11 Economic Payback of Road Safety Advertising in ROI 1 Introduction Oxford Economics were commissioned in August 2010 by LyleBailie International to undertake economic payback analysis of road safety advertising in the Republic of Ireland for the period 1996 to 2008. Over the past several decades both the number of road deaths and the number of serious injuries in ROI have fallen. The number of road deaths in 2008 was a record low of 279 deaths, from 478 in 1990. Serious injuries have witnessed a sharp decline from a peak of 2,822 in 1995, to a low of 835 in 2008. This trend means that over the period 1996 to 2008 as the driving age population in Ireland increased, the rate of death and serious injury on the roads decreased significantly. Figure 1.1: Number of road deaths, ROI, ’90-‘08 Figure 1.2: Number of road serious injuries, ROI, ‘90-‘08 3,000 2,500 Source: Road Safety Authority 2008 2007 2006 2005 2004 2003 2002 2001 2000 1999 1998 1997 1996 1995 1990 2008 2007 2006 2005 2004 2003 2002 2001 2000 1999 1998 1997 1996 1995 1994 500 1993 250 1992 1,000 1991 300 1994 1,500 1993 350 2,000 1992 400 1991 Serious injuries 450 1990 Number of road fatalities 500 Source: Road Safety Authority Note: The dashed lines represent the beginning of the period which is being examined During the period of 1996 to 2008 a total of just over €30million of public money was spent by the Road Safety Authority (RSA) on their road safety campaign. This report aims to calculate the economic payback of this expenditure, thus, determining how much of the aforementioned decline in road death and serious injury rates can be directly attributed to the RSA’s advertising campaign. The Oxford Economics methodology takes into account a range of factors which impact ‘expected’ road deaths and injuries and thus provides an estimation of the deadweight effect and, consequently, the net additional economic payback of the Road Safety Authority’s road safety advertising campaign. The scope of this project encompasses the following: A detailed description of the enhanced Oxford Economics approach adopted Estimate of the total economic saving / payback of RSA’s road safety advertising campaign based on the enhanced methodology, with results presented for alternate assumption scenarios 1 Economic Payback of Road Safety Advertising in ROI 2 Methodology Economic payback definition: In the context of this work, economic payback is defined as the monetary value saved through the prevention of road deaths and serious injuries attributable to RSA’s road safety advertising campaign, as compared to the value of public expenditure on the road safety advertising campaign. A key consideration of any economic appraisal or impact study is the need to determine the counterfactual, or rather, in the context of this appraisal; the outcome had the RSA not implemented a road safety advertisement campaign. Would the death and injury values have fallen at the same rate without the campaign given changes in other influential factors such as age profile of drivers, average road speeds, improved conditions of roads, etc? Examining a counterfactual approach will allow us to calculate the additional benefits that the road safety campaign potentially induces over and above what would have happened in the campaign’s absence. 2.1 Factors influencing road collisions Based on the approach of ‘Wisdom of Crowds’, Millward Brown Ulster have conducted six ROI surveys between 2003-2010, designed to capture information on what respondents find most influential to road death / serious injury reduction in ROI. Figure 2.1 below indentifies the wide range of factors which respondents identified as contributing to the reduction of road deaths / serious injuries. The averages of the six surveys indicate that the road safety advertisement campaign was identified by respondents as the most influential (19%), followed by road traffic laws (15%) and Garda / Police enforcement (14%). This survey highlights that there are other factors that contribute to reducing the number of road fatalities and injuries that occur 1 independently of the RSA’s advertising campaign. 1 It can be claimed that economic development contributes to reducing both death and injury rates on the roads; this is a factor which has not been captured by the Millward Brown survey. According to the RSA facts 2008, Lithuania had 148 road fatalities per million residents in 2008. This compares with ROI where 63 road fatalities per million residents occurred in 2008. These figures support the theory that economic development is related to road fatalities and injuries given that in 2008 nominal GDP per capita was $59,820.77 in ROI and only $14,204.38 in Lithuania. As ROI enjoyed an unprecedented economic boom during the ‘Celtic Tiger’ era, it could be inferred that any reduction in either road fatality rates or serious injury rates over that period is in part a result of economic prosperity that is not explicitly captured in Figure 2.1 (In which case, economic performance should be factored into the deadweight effect). However, taking this analysis to a further level, we can begin to better understand the relation between economic prosperity and road fatalities. It is more realistic to consider that wealthier economies will have better quality roads, greater use of traffic controls and speed cameras, a population with a higher disposable income resulting in newer and safer cars on the roads, etc, when compared with less prosperous economies. It is these factors, rather than simply a notion of having more wealth, that will have a greater influence on road fatality and injury rates. 2 Economic Payback of Road Safety Advertising in ROI Figure 2.1: Perceived “Very Influential” Factors in Saving Lives, ROI, Averaged 2003 – 2010 Road Traffic Laws, 15% Garda / Police Enforcement, 14% Car Design & Features, 7% Penalties Imposed by Courts, 13% Road Engineering, 9% Education in Schools, 10% All Road Safety Ads, 19% News Coverage, 12% Source: Millward Brown Telephone Survey / Omnibus Base: Approximately 1,000 respondents per wave 2.2 Existing road safety statistics Table 2.1 provides an overview of the data which was used to arrive at the estimated overall economic saving as a result of the road safety advertising campaign. Over the period 1996 to 2008 distance travelled increased by 76%, licensed vehicles increased by 87%, road deaths decreased by 38% and serious injuries decreased by 65%. Table 2.1: Road death and serious injury ‘savings’ (1996-2008) Year Distance travelled by all licensed vehicles (million km) Road deaths Serious injuries ROI licensed vehicles 1996 24,912* 453 2,360 1,338,616 1997 26,591* 472 2,182 1,432,330 1998 27,979* 458 1,916 1,510,853 1999 29,707* 413 1,867 1,608,156 2000 30,882 415 1,640 1,682,221 2001 32,719 411 1,417 1,769,684 2002 33,844 376 1,150 1,850,046 2003 35,488 335 1,009 1,937,429 2004 37,129 374 900 2,036,307 2005 38,892 396 1,021 2,138,680 2006 40,915 365 907 2,296,393 2007 43,053 338 860 2,441,564 2008 43,790 279 835 2,497,568 % change 76% -38% -65% 87% * These values are estimated based on trend data Source: LyleBailie, Central Statistics Office, Road Safety Authority 3 Economic Payback of Road Safety Advertising in ROI In keeping with research by the Road Safety Authority and other bodies, the Oxford methodology uses the Goodbody Approach to determine the cost per person of fatalities and serious injuries on the roads. Table 2.2: Goodbody Approach - Total cost of road incidents per person, 2002 factor prices Lost Output € Human Cost € Medical Cost € Fatal 582,513 1,110,976 992 Serious Injury 22,423 154,368 13,609 Source: Goodbody Economic Consultants, Cost benefit parameters and application rules for transport project appraisal, 2004 According to the Goodbody Approach, the costs associated with each death and serious injury is a combination of lost output, medical costs and human costs. The human cost factor of death and serious injuries is a measure of the pain and grief inflicted on the casualty, relatives and friends. Human costs are typically difficult to quantify. The Oxford Economics methodology results are presented with and without factoring in the human costs. The Oxford methodology takes into account deadweight by factoring in the changing age demographic profile of ROI over the period being examined. Road Safety Authority publications have indicated that males aged 25-34 are most likely to be involved in a fatal collision on the roads. In 2008, 33 males aged 25-34 were killed on the roads; this is three times the number of female deaths for the same age category. In relation to serious injuries, males aged 25-34 also had the highest recorded incidence of serious injuries on the roads at 1,117 serious injuries in 2008. As a result, it could be considered that as the percentage of the population who are male and aged 23-34 increases over the period, that expected deaths and serious injuries would also increase. Figure 2.2: Number of deaths on the roads by age and gender, ROI, 2008 35 Number of Deaths 30 25 20 15 10 5 0 0-5 6-9 10-14 15-17 18-20 21-24 25-34 35-44 45-54 55-64 65+ Age Group Male Female Source: Road Safety Authority 4 Economic Payback of Road Safety Advertising in ROI Figure 2.3: Number of serious injuries on the roads by age and gender, ROI, 2008 Number of Injuries 1200 1000 800 600 400 200 0 0-5 6-9 10-14 15-17 18-20 21-24 25-34 35-44 45-54 55-64 65+ Age Group Male Female Source: Road Safety Authority 2.3 Oxford Economics methodology Ideally, to measure the impact of a road safety campaign a controlled experiment would be required. This would involve observing two countries with exactly the same road safety characteristics (age structure of drivers, quality of road infrastructure, wealth, driving test standards etc) but where one has an advertising campaign and the other does not. From observing a divergence in road fatalities and injuries between the two countries, the impact of a campaign could be isolated from other influences. In practice, however, no perfect counterfactual situation such as this exists. Instead, we have developed a methodology to allow us to calculate the economic payback of the RSA’s advertising campaign. Figure 2.4 illustrates the approach taken by Oxford Economics in order to measure the economic payback of the Road Safety Authority’s advertising campaign. The methodology uses actual death and injury rates, obtained by the RSA. Expected injury and death rates are calculated, these rates take into account the increasing volume of road usage over the period 1996-2008, as well as the changing population structure of ROI. The difference between the actual and expected rates of death and injury provide a value for the economic saving of death and injury on the roads. These savings are then monetised using the Goodbody Approach. Using the ‘Wisdom of Crowds’ theory the correct share of the total economic saving is attributed to the activities of the RSA road safety campaign. Figure 2.4 also highlights areas that would have been constructive to include but which we have not been able to incorporate into this report, such as average speed. 5 Economic Payback of Road Safety Advertising in ROI Figure 2.4: Oxford Economics road safety economic payback methodology Information available Information available •Death / serious injury rate per vehicle at start of campaign (1993-1995) •Distance travelled by all licensed vehicles •Actual deaths / serious injuries 19962008 Actual deaths / serious injuries Information not currently available Expected deaths / serious injuries Information not currently available Death and serious injury saving •Average road speeds •Average road speeds Key issue Costs per death and serious injury •Include / exclude human cost element Total economic saving •Urban-rural breakdown of accidents Information not currently available ‘Wisdom of Crowds’ theory Information available Economic Payback Convert public expenditure contribution to adverting campaign to 2002 prices Source: Oxford Economics ‘Potential’ / ‘Expected’ road deaths and injuries Due to the increasing numbers of households with multiple cars the distance travelled is a more suitable variable than the number of licensed vehicles to estimate expected death and injuries on the roads. Using figures obtained from the Central Statistics Office, we can see from Figure 2.5 that the distance travelled by all vehicles registered in ROI experienced a slower rate of growth than the number of licensed vehicles since 1996. The underlying message here is that basing predicted deaths and serious injuries on registered vehicles would lead to an over estimation of potential deaths and serious injuries. Figure 2.5: Change in licensed vehicles and distance travelled by all vehicles, ROI, 1996-2008 200 190 change in licensed vehicles 180 Index 1996 =100 170 160 150 change in distance travelled by all licensed vehicles 140 130 120 110 100 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 Source: Road Safety Authority, Central Statistics Office 6 Economic Payback of Road Safety Advertising in ROI It is also important to note the importance of the selection of the average death and serious injury rate for the period 1993 to 1995, as an earlier period in time would be liable to over estimate the expected number of deaths and serious injuries on the roads between 1996 and 2008. The ‘potential’ deaths and serious injuries are calculated using the following ‘expected’ death and injury rates per number of licensed vehicles: 1. During the 3 years 1993-1995, the cumulative total of kilometres travelled by all licensed vehicles was 67,622million km. 2. During the same three years 1993-1995, the cumulative total of road deaths was 1,272 and serious injuries was 7,871 3. Based on the above, the average rate of road deaths per 100 million kilometres travelled by all licensed vehicles for 1993-1995 was 1.88. Based on the same calculation method, the average rate of serious injuries was 11.64. 4. We then calculated the expected death and serious injury rates using the average ratios, held constant, and the distance travelled by all vehicles. Table 2.3 shows these results. Table 2.3: Expected road deaths and serious injuries, ROI, 1996 - 2008 1996 Expected road deaths at 1.88 per 100million km 469 Expected road injuries at 11.64 per 100million km 2,899 Distance travelled by all licensed vehicles in 100million km 249.12* 1997 501 3,094 265.91* 1998 527 3,256 279.79* 1999 559 3,457 297.07* 2000 582 3,594 308.82 2001 616 3,807 327.19 2002 637 3,938 338.44 2003 668 4,130 354.88 2004 699 4,321 371.29 2005 732 4,526 388.92 2006 770 4,761 409.15 2007 811 5,010 430.53 5,096 437.9 Year 2008 825 * These values are estimated based on trend data Source: Central Statistics Office, Oxford Economics 7 Economic Payback of Road Safety Advertising in ROI Additionality / Deadweight The Oxford Economics methodology acknowledges further factors, which in the deadweight case will affect death and injury rates. Potential factors that impact on road deaths and serious injuries include the age profile of licensed drivers, the average road speeds, urbanisation etc. Oxford Economics have developed a composite age death / serious injury rate index in order to adjust for the expected road death and serious injury estimates for the changing demographic profile of ROI, (used as a proxy for licensed drivers), given that the rate of death and serious injury on the road vary significantly across age groups. It could be assumed that there is a link between road speeds and urbanisation and the number of serious injuries and deaths on the roads. Unfortunately for this study we have been unable to obtain appropriate time series data on average road speeds. Death and serious injury ‘savings’ In order to determine the economic saving generated from the road safety advertising campaign, the economic saving from deaths and serious injuries must be calculated by deducting the actual deaths and serious injuries from the calculated expected deaths and serious injuries and monetising the results. In Figure 2.6 and Figure 2.7 we can observe the reductions in road deaths and serious injuries between 1996 and 2008. With increasing total distance travelled and changing demographics we would have expected road deaths and injuries to rise over the period 1996 to 2008. Figure 2.6: Divergence of potential and actual road deaths, ROI, 1996 - 2008 900 Expected road deaths at 1.88 per 100million km 800 700 Number of deaths 600 500 400 Actual road deaths 300 200 100 0 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 Source: Road Safety Authority, Oxford Economics Figure 2.7: 6,000 Divergence of potential and actual serious injuries, ROI, 1996 - 2008 Expected road Injuries at 11.64 per 100million km Number of serious injuries 5,000 4,000 3,000 2,000 Actual serious Injuries 1,000 0 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 Source: Road Safety Authority, Oxford Economics 8 Economic Payback of Road Safety Advertising in ROI Economic payback valuation The next stage in the Oxford Economics methodology is to equate the monetary value in relation to the savings made in terms of road deaths and serious injuries. This value of savings in terms of death and serious injury on the roads is multiplied by the respective costs per head as determined by the Goodbody approach. Finally using the ‘Wisdom of Crowds’ approach, the Oxford Economics methodology calculates the amount of economic savings attributable to the RSA’s advertising campaign in 2002 prices. 9 Economic Payback of Road Safety Advertising in ROI 3 Results The Oxford Economics payback results have been presented as follows: Oxford Economics methodology scenario including the human cost – These results are obtained by following the Oxford Economics methodology previously outlined to determine the road safety economic payback. This method calculates the economic payback rate of the RSA’s campaign, including all cost factors, to be €78.50 for every €1 of expenditure. Oxford Economics methodology scenario excluding the human cost – These results have been calculated using the same methodology as above, with the exception of excluding the human cost element from the Goodbody Approach. This method calculates the economic payback rate of the RSA’s campaign to be €20.32 for every €1 of expenditure. 3.1 Oxford Economics payback results Table 3.1: Economic payback of road safety advertising, ROI, 1996-2008 Oxford Economics methodology scenario including the human cost Oxford Economics methodology scenario excluding the human cost Total economic saving (€million, 2002 prices) 11,742 3,040 % attributable to road safety advertising campaign 18.96% 18.96% Road safety economic payback (€m, 2002 prices) 2,226 576 Public spend net of sponsorship (€m, 2002 prices) 28.36 28.36 Economic payback ratio 78.50 20.32 Source: Oxford Economics 3.2 Additional factors that influence the results There are several other factors that influence the results that require acknowledgement. A lack of suitable and sufficient data has limited the scope of this methodology which could be better improved with more historical data for distances travelled by all licensed vehicles, average speeds on the roads and enhanced data on the historical profile of licensed drivers in ROI. The process by which serious injuries on the roads in ROI have been recorded has vastly improved in recent years. Nevertheless due to potential backward revision of the recorded incidence of serious injuries there is 10 Economic Payback of Road Safety Advertising in ROI likely to be a reduction in the accuracy of these results over the period examined by this methodology. As such, any potential under or over accounting of serious injury rates will have impacted upon the economic payback results. The Goodbody Approach is the method by which the RSA and LyleBailie account for the economic value of death or serious injury on the road in ROI yet there are several weaknesses in these values. For instance, in relation to replacement demand, if a person becomes unable to work as a result of a road traffic incident, it has been assumed that the potential economic output is lost. However, there is the potential to replace the worker through immigration or simply just a new entrant to the labour market from non-employment. A further deficiency in the lost output measure is that it does not take into account the varying level of economic contribution made by various members of society. In economic terms someone who works full time and is injured or killed in a road accident may have a higher lost output that someone who is, for example, longterm unemployed. 3.3 Summary Over the period 1996 to 2008 the total distance travelled by all vehicles on the road increased by 76% and the total number of licensed vehicles increased by 87%. Over the period 1996 to 2008 the number of deaths on the roads decreased by 38% and the number of serious injuries decreased by 65%. According to the ‘Wisdom of Crowds’ theory, road collisions have fallen by 19% as a result of the Road Safety Authority’s advertising campaign. According to the Oxford Economics methodology the economic payback of road safety advertising in ROI is €79 per €1 spent on advertising when all cost factors are included and €20 per €1 spent on advertising if the human cost factor is excluded. This is a greater economic payback than a similar advertising campaign in Northern Ireland where the economic payback was £34 per £1 on advertising when all cost factors are included and £8 per £1 spent on advertising when the human cost factor is excluded. 11 Economic Payback of Road Safety Advertising in ROI Validating statement The underlying methodology used to produce an estimate of the economic payback of the Road Safety Authority’s road safety advertising campaign (1996-2008) has been developed by Oxford Economics. Oxford Economics is one of the world’s leading providers of economic advice, with over 300 clients including international organisations (such as the IMF and World Bank), Government departments in the UK, US and Europe (including HM Treasury, DTI and the Department for Transport), central banks (e.g. Bank of England), as well as a large number of blue-chip companies across the whole industrial spectrum. Oxford Economics’ methodology is based on an enhanced version of an original methodology developed by LyleBailie International. Where possible the methodology attempts to adopt best practice by quantifying the net as opposed to gross additional impact of the advertising campaign (i.e. accounts for deadweight effects). It does this by factoring in exogenous influences on ‘expected’ road death and serious injury rates. These include changes in the age and gender profile of the population as a proxy for licensed drivers (statistical evidence for Republic of Ireland shows a large divergence in per capita road accident rates for different demographic driver groups) and changes in average distance travelled per licensed vehicle as opposed to the number of licensed vehicles which could over estimate road activity. Due to data limitations, it is not possible to include in the enhanced methodology other influencing factors such as changes in average road speeds and rates of urbanisation. In addition the methodology could in future be developed by splitting road deaths and serious injuries into (1) urban and rural (as where collisions occur has an influence on assumed official cost assumptions); and (2) by vehicle type. While this increased sophistication would likely have some impact on the estimate for payback, it is Oxford Economics’ view that the difference would be relatively minor. The economic cost parameters per road death and serious injury are taken directly from the widely used Goodbody Economic Consultants, cost benefit parameters and application rules for transport project appraisal, 2004. To the best of Oxford Economics’ knowledge, these are the standard cost parameters used in road safety payback analysis in the Republic of Ireland and no other cost parameters exist. Allocating what proportion of the total net economic saving is attributable to the road safety advertising campaign is based on survey evidence by Millward Brown on all policy-influential factors which individuals consider have the greatest impact on road death / serious injury reduction in the Republic of Ireland. 12 ROI Licensed Vehicles 1,338,616 1,432,330 1,510,853 1,608,156 1,682,221 1,769,684 1,850,046 1,937,429 2,036,307 2,138,680 2,296,393 2,441,564 2,497,568 - Year 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 Total - 43,790,000,000 43,053,000,000 40,915,000,000 38,892,000,000 37,129,000,000 35,488,000,000 33,844,000,000 32,719,000,000 30,882,000,000 29707140940* 27979009277* 26590590548* 24912254168* Distance travelled by all Licensed Vehicles km 8,396 825 811 770 732 699 668 637 616 582 559 527 501 469 Potential road deaths at 1.88 per 100million km 10,342 279 338 365 396 374 335 376 411 415 413 458 472 453 Actual road deaths 3,311 546 473 405 336 325 333 261 205 167 146 69 29 16 51,888 5,096 5,010 4,761 4,526 4,321 4,130 3,938 3,807 3,594 3,457 3,256 3,094 2,899 Potential road Saving Injuries at 11.64 (Deaths) per 100million km 33,935 835 860 907 1,021 900 1,009 1,150 1,417 1,640 1,867 1,916 2,182 2,360 Actual serious Injuries 33,824 4,261 4,150 3,854 3,505 3,421 3,121 2,788 2,390 1,954 1,590 1,340 912 539 Savings (Sis) 37,136 4,806 4,623 4,260 3,841 3,746 3,454 3,050 2,596 2,120 1,736 1,409 941 555 KSI Human Saving 0 Economic Payback of Road Safety Advertising in ROI OXFORD Abbey House, 121 St Aldates Oxford, OX1 1HB, UK Tel: +44 1865 268900 LONDON Broadwall House, 21 Broadwall London, SE1 9PL, UK Tel: +44 207 803 1400 BELFAST Lagan House, Sackville Street Lisburn, BT27 4AB, UK Tel: +44 28 9266 0669 NEW YORK 817 Broadway, 10th Floor New York, NY 10003, USA Tel: +1 646 786 1863 PHILADELPHIA 303 Lancaster Avenue, Suite 1b Wayne PA 19087, USA Tel: +1 610 995 9600 SINGAPORE No.1 North Bridge Road High Street Centre #22-07 Singapore 179094 Tel: +65 6338 1235 PARIS 9 rue Huysmans 75006 Paris, France Tel: + 33 6 79 900 846 email: [email protected] www.oxfordeconomics.com 1 If you would like to know more about this Report or how to use psychological research to improve road safety campaigns, please contact Fiona Rooney, Psychology Director, LyleBailie International, [email protected] Telephone: 00 44 2890 331044 Fax: 00 44 2890 331622 www.lylebailie.com If you would like consultancy advice on how to develop a communications’ methodology for changing road behaviour in conjunction with enforcement and how to measure the road safety economic payback, please contact David Lyle, Chief Executive, LyleBailie International, [email protected] Telephone: 00 44 2890 331044 Fax: 00 44 2890 331622 www.lylebailie.com 31 Bruce Street, Belfast BT2 7JD T 048 9033 1044 F 048 9033 1622 E [email protected] www.lylebailie.com Speciali st s in AT titude & Beha viour C hange
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