Investigation of the Effect of Economic Factors on the Shadow Price of Road Accidents in Iran

One big challenge every society has to deal with is the problem of road accidents and casualties after them. Many believe that this imposes huge economic costs on the society. Compared with developed countries, developing nations suffer from larger numbers of victims in this crisis that is why road accidents in these countries are known as one of the major causes of death. The aim of this study is to evaluate some economic factors which affect the shadow price of road accidents in Iran’s economy. This study analyzes the relationship between these factors and the shadow price in the form of ARDL econometric methods during the period 1996-2018. According to the obtained results, it can be claimed that the GDP and shadow price of accidents and traffic correlate with each other. This correlation shows the shadow price in Iran increases along with economic growth, and after reaching a turning point, it begins to decline. In other words, it could be said that the relation between the shadow price of road casualty and GDP in Iran seem to behave similarly to the inverted U-curve of Kuznets. Therefore, it was indicated that the Smeed’s law can be applied in Iran.