The cure for economic slowdown - drive faster

This is the headline used by Reuters in their report of the government Transport Secretary’s proposal that the speed limit on motorways should be raised from 70 to 80mph.

The justification for the proposal is largely that, when the limit was introduced, cars were less safe than they are now, and that technical improvements have made 80mph a safe speed at which to travel. Other arguments include the desire to conform with the higher motorway speed limits in Europe, which are generally higher than in the UK, and also the fact that many drivers do drive at between 70 and 80 on motorways anyway and tend not to be fined for it, so the law may as well be amended to keep up with actual behaviour.

There have been many excellent reports on the proposal in the press, some of which are referenced below. There are also may objections to it, which are included in those reports. I see plenty of opportunity for application for our students, and the story could be used as a start point for a discussion of how many aspects of economics it could be used to illustrate. Here are some of my suggestions; I am sure you can add to them:

Government intervention - legislation

Market failure - an increase in pollution

Government failure - does the current limit work as it should, and what are the potential effects of the change?

Productivity - will shorter journey times allow business to operate more efficiently, and what are the social benefits of that?

Cost benefit analysis - is the social cost of the extra accidents which may occur worth the benefit of any gains?

Government spending - will the police need to allocate more resources to policing the motorways in order to ensure compliance with the new limit?

Govenment revenue - when cars travel at 80 instead of 70mph their consumption is worse (so they use more petrol per mile travelled); how much extra tax will be received as motorists buy more petrol for each motorway journey?

Behavioural economics - if people are used to breaking the law to travel at 80mph without any penalty, will the new limit encourage them to break it again and travel at 90mph?

80 mph motorway speed limit plan criticised
Today programme discussion - Higher speeds mean more accidents
Response of Brake road safety group
Speed limit rise would increase deaths and pollution, admits government