Should congested cities reduce their speed limits? Evidence from São Paulo, Brazil

Road accidents are the leading cause of unnatural deaths worldwide. Cities are experimenting with more stringent speed limits in an effort to reduce them. The impacts of these policies are unclear in many developing country cities, where a disproportionate share of accident damages occur but also where speed regulations could exacerbate already high levels of congestion. We evaluate a speed limit reduction program in São Paulo, Brazil using a dynamic event study design and measurements of 125 thousand traffic accidents, 38 million traffic tickets issued by monitoring cameras, and 1.4 million repeat observations of real-time trip durations before and after a regulatory change. We find that the program resulted in 1889 averted accidents within the first 18 months and reduced accidents by 21.7% on treated roads, with larger effects on roads with camera-based enforcement. The program also affected travel times on treated roads (5.5%), though the social benefits from reduced accidents are at least 1.32 times larger than the social costs of longer trip times. The benefits of accident reductions accrue largely to lower income pedestrians and motorcyclists, indicating that speed limit reductions may have important impacts on low income residents in developing country cities.