In an example for use of the Value of a Statistical Life in BCA we calculated the benefits of increasing the speed limit for a highway (Week 8). To get additional practice and a better understanding of the use of VSL, this exercise asks you to calculate the benefits of reducing the speed limit. Suppose the area around a 30-mile stretch of highway has become more urbanized and traffic has increased, so city planners are considering lowering the speed limit on the highway as it passes the town from 65 mph to 50 mph. The relevant information is available in the attached Excel spreadsheet. Use the worked example from week 8 as a guide to answer the following questions.
a. Calculate additional travel time costs by calculating average travel time before and after, then calculating the difference. Then calculate total time added.
b. Calculate costs as the value of time added to leisure and business travelers.
c. Calculate benefits as avoided operating, fatal crash, and non-fatal crash costs. d. Calculate NSB. Should the speed limit be lowered?
