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The Value of Forecast Improvements: Evidence from Advisory Lead Times and Vehicle Crashes

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  • Anand, Vaibhav

Abstract

Scientific and technological advances are resulting in improved forecasts of risk, but do better forecasts result in better risk management? I investigate to what extent the improvements in lead time of winter weather advisories affect the frequency of motor vehicle crashes. I construct a data set of winter weather advisories, weather monitor readings, and vehicle crashes at the county-date level in 11 states in the US during 2006-2018. Using within county variation in lead time, I show that receiving winter advisories earlier reduces crash risk significantly. I also examine two potential mechanisms that might lead to these effects. First, using the mobile phone location data from SafeGraph, I show that longer lead times result in fewer visits by people to places outside their homes. Second, using snow plow truck location data, I show that road crews perform a greater level of winter maintenance activities when advisories arrive with longer lead time. Overall, this study provides evidence that improvements in forecast lead times result in meaningful economic benefits to society, and these benefits come from both the individual and institutional response to longer lead times.

Suggested Citation

  • Anand, Vaibhav, 2022. "The Value of Forecast Improvements: Evidence from Advisory Lead Times and Vehicle Crashes," MPRA Paper 114491, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:114491
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    References listed on IDEAS

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    Cited by:

    1. Linsenmeier, Manuel & Shrader, Jeffrey G., 2023. "Global inequalities in weather forecasts," SocArXiv 7e2jf, Center for Open Science.
    2. Song, Yuqi, 2024. "The value of weather forecasts: Evidence from labor responses to accurate versus inaccurate temperature forecasts in China," Journal of Environmental Economics and Management, Elsevier, vol. 125(C).
    3. Renato Molina & Ivan Rudik, 2022. "The Social Value of Predicting Hurricanes," CESifo Working Paper Series 10049, CESifo.

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    More about this item

    Keywords

    Weather forecast; risk mitigation; auto crash;
    All these keywords.

    JEL classification:

    • D80 - Microeconomics - - Information, Knowledge, and Uncertainty - - - General
    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
    • H41 - Public Economics - - Publicly Provided Goods - - - Public Goods
    • Q50 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - General
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming
    • Q55 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Technological Innovation
    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy
    • R00 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General - - - General
    • R41 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Transportation Economics - - - Transportation: Demand, Supply, and Congestion; Travel Time; Safety and Accidents; Transportation Noise

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