We urge, Mr. President, that your administration implement measures, particularly federal tax credits, to accelerate experiments in automobile insurance reform.

The experiment of most interest is pay-as-you-drive (PAYD) insurance, which varies much more strongly with mileage than most automobile insurance plans currently do.

If this policy reform works as its advocates predict, it would reduce the number of highway deaths without increasing overall insurance costs for the average motorist.

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Environmentalists also embrace PAYD, because reduced driving would moderate other problems associated with motor vehicle use, including oil dependence and emissions of conventional pollutants and greenhouse gases.

Related Policy Recommendation:

Chapter 11. Pay as You Slow: Road Pricing to Reduce Traffic Congestion
Ian Parry and Elena Safirova

Winston Harrington pursues research interests that encompass urban transportation, motor vehicles and air quality, and problems of estimating the costs of environmental policy. He has written or coauthored five books, including Choosing Environmental Policy: Comparing Instruments and Outcomes in the United States and Europe.
Chapter 10. State Innovation for Environmental Improvements: Experimental Federalism

Ian Parry specializes in environmental, transportation, energy, and tax policies. His recent work has analyzed gasoline taxes, fuel economy standards, mass transit subsidies, alcohol taxes, policies to reduce traffic congestion and accidents, environmental tax shifts, the role of technology policy in environmental protection, and the distributional impacts of pollution control.
Chapter 4. Slaking Our Thirst for Oil
Chapter 11. Pay as You Slow: Road Pricing to Reduce Traffic Congestion

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