Political economy tries to incorporate the incentives and constraints which are at play within a democracy in the analysis of governmental institutions. In the context of decentralisation versus centralisation the effect of interest groups, the scope and incentives for innovation and the career concerns of public officials can differ. The broader economic context and what type of policies have priority determine in theory whether the trade-off is in favour of the decentralised or centralised provision of transport. Empirical evidence for EU countries in 2000 suggests, however, that there is a higher level of traffic safety, measured by an indicator of traffic deaths, in countries with more decentralised provision of public goods. Increasing the degree of expenditure decentralisation by 0.10, which, for instance, is the difference in decentralisation between Italy (0.25) and Germany (0.35), is associated with a reduction by 2.2 traffic deaths per 100 000 inhabitants. The benefit of decentralisation is, however, contingent on the presence of strong institutions and low levels of corruption.