Safety Evaluation of Red-Light Indicator Lights (RLILs) At Intersections

Chapter 8. Economic Analysis

The research team conducted an economic analysis to estimate the B/C ratio for this strategy at signalized intersections. The team used the statistically significant reduction in total crashes as the benefit for this treatment strategy. On the cost side and in the absence of details of each installation, the analysis conservatively assumed that the installation of RLILs cost $3,000 per intersection. In total, 108 intersections received RLIL treatments at an estimated cost of $324,000. As summarized in the appendix of this report, the cost of bulbs ranged from $50 to $300. The local agencies involved with the installation of RLILs noted that there was negligible cost for operation because the bulbs were directly wired into the existing traffic signals. The minimal operational cost was offset by the reduced enforcement cost and thus was not factored into this analysis in order to be more conservative.

The analysis assumed the useful service life for safety benefits was 5 years. This was based on information provided by vendors. This service life is likely conservative because 5 years is the minimum service life reported by several vendors, with some potential service lives estimated at up to 10 years.

The FHWA Office of Safety Research and Development suggested that, based on the Office of Management and Budget Circular A-4, a real discount rate of 7 percent should be applied to calculate the annual cost of the treatment for the 5-year service life.⁽¹⁴⁾ With this information, the capital recovery factor was 4.1 for all intersections.

For the benefit calculations, the most recent FHWA mean comprehensive crash costs disaggregated by crash severity and crash geometry type were used as a base.⁽¹⁶⁾ Council et al. developed these costs based on 2001 crash costs and found the values in table 17 by crash type and severity.⁽¹⁶⁾ Table 17 also provides the proportion of fatal and injury crashes and the proportion of property damage only (PDO) crashes for each crash geometry type. Considering the proportion of crashes by type and severity, the unit cost (in 2001 dollars) for crashes at signalized intersections in this study was $51,395.

¹K/A/B/C refers to the KABCO scale.

Because the analysis was performed in 2014, the unit cost in 2001 dollars was updated to 2014 dollars by applying the ratio of USDOT 2014 value of a statistical life of $9.2 million to the 2001 value of $3.8 million.^(15,16) Applying this ratio of 2.42 to the unit cost resulted in an aggregate 2014 unit cost for total crashes of $124,377 for signalized intersections.

The research team calculated the total crash reduction by subtracting the actual crashes in the after period from the expected crashes in the after period had the treatment not been implemented. The research team then divided the total crash reduction by the average number of after-period years per site to compute the total crashes saved per year. The number of total crashes saved per year was 58.7 for all intersections. Considering the number of treated intersections, this resulted in an average savings of 0.54 crashes per intersection per year.

The research team obtained the annual benefits (i.e., crash savings) by multiplying the crash reduction per site-year by the cost of a crash, all severities combined. The research team calculated the B/C ratio as the ratio of the annual benefit to the annual cost. The B/C ratio was 92:1 for all signalized intersections. USDOT recommended a sensitivity analysis be conducted by assuming values of a statistical life of 0.57 and 1.41 times the recommended 2014 value.⁽¹⁷⁾ These factors were applied directly to the estimated B/C ratios to obtain a range of 53:1 to 130:1 for all signalized intersections. These results suggest that the strategy, even with conservative assumptions on cost, service life, and the value of a statistical life, can be cost effective for reducing total crashes at signalized intersections. While the resulting B/C ratio was very high, users should keep in mind the low-cost nature of this strategy and that implementing other strategies with lower B/C ratios might result in larger reductions in crashes.