Mind the Weather: A Panel Data Analysis of Time-Invariant Factors and Traffic Fatalities

Many important determinants of traffic fatalities have been identified using the widely popular fixed-effects (FE) estimator for panel data. However, the FE estimator precludes an analysis of time-invariant or rarely changing variables, thereby obscuring their relative impact on traffic fatalities. This study estimates the effect of time-invariant and rarely changing variables (climate, geography, laws, etc.) on the U.S. state traffic fatality rate using alternative econometric methods in addition to the FE estimator. We find that alcohol consumption, air temperature, and precipitation have the largest effect on traffic fatalities. Our findings suggest that policy makers and the insurance industry practitioners may want to re-evaluate the role of climate in road safety.