RESOURCE-ALLOCATION IN PUBLIC-POLICY - THE EFFECTS OF THE 65-MPH SPEED LIMIT

In 1987 the U.S. government allowed states to raise speed limits to 65 -mph on some highways. We evaluate the consequences using a resource a llocation perspective: the chance to drive faster reallocates traffic from side roads to the safer interstate highways, and a higher speed l imit permits highway patrols to shift manpower from speed enforcement to other safety activities. This perspective implies that we should me asure the effect of a speed limit by its systemwide rather than its lo cal effects. We do so and find that the fatality rate dropped by 3.4%- 5.1% following the speed limit increase.