Personally I feel the majority of road accidents fall into category 1. As long as you are very careful and aware of your surroundings you can avoid a huge number of accidents. This is probably why experienced drivers get huge discounts on car insurance. I've managed to actively avoid many more accidents than I have been involved in and I've never caused an accident (beyond giving a car a scrape while parking just after getting my permit). Sometimes there's no winning though. Like waiting at a stop sign and someone rear ends the truck behind you (so you can't see anything behind the large truck) hard enough to send the truck into your car and almost send you into speeding cross traffic. When that happened it really freaked me out. That was definitely a category 2 event.
If you don't need a lot of space, i.e. you don't have kids and you can handle having roommates, then it doesn't really cost more to live in a big city. Sure, the rent is more, but not having to pay for an auto loan/gasoline/insurance saves a good amount too.
Source: I moved from the suburbs of DC in MD to Manhattan, I track my spending pretty religiously on Mint, and my spending only went up a few $K per year -- which is way, way less than my salary did from the move.
I work on Manhattan and live in Brooklyn, with family and kids. I still reap most of the benefits of a dense city (subway, nearly everything within walking distance, variety of options in food, etc), while spending < 20% of my income on rent.
