Accidents costs

Social costs reflect in this example all costs occurring from the provision and the use of transport infrastructure, such as wear and tear costs of infrastructure, capital costs, congestion costs, accident costs and environmental damage costs. Some of these costs are already indirectly included in the private costs through taxes and charges, while others are not. In the context of environmental economics, private and social aspects are of importance. Mainly since it is often the case that environmental degradation is a social cost caused by private activities. Hence, the distinction between private and social is as presented above another impact of costs not being properly internalized in prices. 

Estimating Chemical Accident Costs in the United States A New Analytical Approach, Larry Collins, Carmen D Angelo, Craig Mattheissen, and Michael Perron... 

Because an effective safety program in the plant or facility must include training, the ultimate objective of training is to influence the attitudes of employees around the clock. Off-the-job accidents cost industry many times more than on-the-job injuries. Although workers compensation is not involved, absenteeism from off-the-job injuries results in productivity losses and insurance cost increases. Employees injured off the job may, with the assistance of unscrupulous lawyers, sometimes claim the injury occurred during work time. Such fraud can be combatted by effective record keeping and supervisory vigilance. 

Colorado has a program that allows firms to adopt basic injury and illness prevention program components in return for a workers compensation premium reduction. The cumulative annual reduction in accidents was 23 percent and the cumulative reduction in accident costs was between 58 and 62 percent. 

Since output is fixed, the firm s economic problem is to minimize the sum of labor costs and safety costs. In this example, each foreman is paid 100,000 and each construction laborer is paid 40,000. Each accident costs 30,000 in terms of replacement labor and capital costs. These are the only costs associated with on-the-job accidents. Initially, suppose a workers compensation system is in place that only pays some of the lost wages after the waiting period, though the firm s HRM practices allow workers to use their sick-day benefits to replace their lost wages for the first three days following an injury. Hence, injured workers bear some costs of workplace injuries, though not any costs associated with the waiting period. 

Number of foremen Number of laborers Accidents Wage/salary costs ( ) Accident costs ( ) Total costs ( )... 

An increase in management safety culture should have the same impact on safety outcomes as an increase in worker participation in safety decision making, for similar reasons as more management resources are employed toward integrating safety within overall corporate strategy—and as more ways are foimd to minimize post-injury retum-to-work hurdles—accident costs will be reduced. To the extent this happens, the returns to safety investments increase, the level of job safety rises, and time away from work because of injuries falls. Higher values... 

It is worthwhile to reemphasize that our estimate of the reduction in workers compensation costs from engaging in these HRM practices is probably a lower bound estimate of the potential benefits. To the extent that the workplace is safer, either because physical risks have been reduced or because workers are taking more appropriate safety precautions, then some other accident costs are likely to be reduced as well. Uncompensated wage loss and pain and suffering associated with... 

In other words, in competitive markets, where firms are looking for skilled labor and seeking optimal HRM policies (policies that minimize the sum of the accident costs, as discussed in Chapter 1), the workers compensation administrator s role should be minimal. Administrators... 

U.S., major industrial accidents cost an average of 80 million each and business interruption costs can amount to four times the cost of the property damage from an incident. 

There is a great deal of literature on the subject of indirect accident costs and their relationship to direct costs. Bird and Davies say in Safety The Bottom Line, a 1996 publication, that a literature search indicated that well over 90 published articles or books have been written discussing accident costs since Heinrich went to press in 1931 (Bird and Davies, p. 272). 

The many and varying estimates of the annual cost of industrial accidents are stated in terms of millions of dollars and are usually based on the lost time of the injured worker and medical expense. This is largely an employer loss, inasmuch as the employee is partially compensated but it is far from being aU of the cost to the employer. The remaining additional, and so-caUed incidental, cost has been found by research to be four times as great as compensation and medical payments. Expressed in another way, compensation and medical payments constitute only one-fifth of the total employer accident cost. The accuracy of this estimate has been demonstrated by application to scores of specific plants. [Citation 42]... 

Direct and indirect costs are addressed in that report. Its Table 3 is titled Analysis of Accident Costs. Excerpts follow. Note that the ratio of indirect to direct costs diminishes as the cost of the benefits paid increases. Also, keep in mind that money numbers are in 1982 dollars. 

Statisticians may say they would like a larger sample from which to draw conclusions. Nevertheless, the data are significant. An excerpt from the report follows. Its substance is pertinent to the improbability of arriving at a universally applicable indirect-to-direct accident cost ratio. 

Risk factors Quality accidents Cost claims Ratio... 

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