Cost-Benefit Analysis of Administrative License Suspensions

Lacey, John H.; Jones, R. K. (Ralph K.); Stewart, J. Richard · 1991 · ROSA P / United States. National Highway Traffic Safety Administration

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Summary

This 1991 report by the National Highway Traffic Safety Administration (NHTSA) evaluates the economic viability of administrative license suspension laws for driving while intoxicated (DWI). These "administrative per se" laws mandate immediate license revocation for drivers arrested with blood alcohol concentrations at or above the legal limit, independent of criminal court outcomes. The study was motivated by the reluctance of many states to adopt such laws due to concerns regarding implementation costs, despite evidence that these laws effectively deter impaired driving through swift and certain punishment. The researchers conducted a cost-benefit analysis across three states representing different sizes and administrative approaches: Nevada (small, western), Mississippi (mid-sized, southeastern), and Illinois (large, mid-western). The methodology involved identifying start-up costs (training, legal advice, forms, computer programming) and annual operating costs (personnel, hearings, mailing). Benefits were categorized into direct fiscal revenues (license reinstatement fees and federal Title 408 incentive grants) and societal benefits (reduced crash costs). To quantify societal benefits, the study utilized time series analyses of nighttime crash data as a proxy for alcohol-related crashes, assigning monetary values to crash severities based on willingness-to-pay methodologies. The findings demonstrated that administrative license suspensions were highly cost-effective in all three jurisdictions. In every state, direct revenues from license reinstatement fees exceeded the annual operating costs of the program. Furthermore, the laws enabled each state to qualify for federal Title 408 incentive funding, providing additional resources for anti-DWI initiatives. Most significantly, the implementation of these laws resulted in dramatic reductions in nighttime crash costs. The report notes that in each state, the societal savings from reduced crashes were well over 100 times the cost of implementation. For instance, while Nevada’s annual operating costs were approximately $200,787, the associated savings in nighttime crash costs were estimated at $37 million. The study concludes that administrative license suspension laws provide substantial net benefits to society and state governments. The authors recommend that states not yet having adopted such legislation give serious consideration to doing so. The analysis confirms that the financial burden of implementation is negligible compared to the fiscal gains from reinstatement fees and federal grants, as well as the profound societal benefit of reduced crash costs. The report serves as a definitive economic argument for the widespread adoption of administrative per se laws to combat impaired driving.

Key finding

License reinstatement fees exceeded annual implementation costs in all three states, and societal savings from reduced crash costs were more than 100 times the cost of implementation.

Methodology

dataset

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• dui enforcement

Information type

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• Applied Guidance: policy recommendations