One more point: Mackay seems to understand that marginal costs affect pricing in reasonably competitive markets, a point that seems to elude Lane: “First, as a matter of principle, it is clear that the customer ultimately pays.”

And as Justinian seems to misunderstand or to forget, higher prices also lead to lost lives, as price-sensitive consumers on the margin forego purchasing newer, safer products that save lives.

Quite a different ring than Lane’s excerpt, huh?

Particularly when qualified by Graham’s further and final finding, 6 bullet points down (pp. 184-85): “The case studies demonstrate that vehicle manufacturers sometimes delayed making seemingly feasible pro-safety design modifications. The liability system may contribute to such delays by creating fears among manufacturing management that design improvements will be used by plaintiff attorneys and juries as evidence that prior damages were defective. Hence the behavioral incentives created by product liability are not always pro-safety.”

Did Lane misread the article or deliberately quote it out of context to protray its findings, incorrectly, as comporting with his position? That’s an inquiry I’ll leave to the readers’ discretion.

I did some digging and found the $500 figure came originally from John Graham in the 1991 book The Liability Maze. The $500 figure is comprised of the costs of the tort system AND the cost of safety improvements made to vehicles because of the tort system.

Specific examples cited included the redesign of the Pinto’s gas tank (a societal benefit) and the installation of rear seat shoulder belts. (also a societal benefit) He specifically found, “liability seemed to cause safety improvements to occur more quickly than they would have in the absence of liability.”

I would be exceedingly interested in knowing exactly how much money DC (or any of the Big Three) spent in 2005 defending itself in tort lawsuits.
Perhaps with that number a more compelling argument to alter the justice system can be made than, “Because of the tort system, there’s a bunch of safety stuff in your car that drives up the price.”

I’ve noticed the one thing we argue most about is money in some form or another. I think we have a philosophical difference here. I believe the sole purpose of the justice system is, well, to administer justice. As such, economic arguments for tort reform don’t generally persuade me.

You seem to believe that an additional purpose of the justice system is to increase the economic efficiency of society. For that reason, I don’t think we’ll ever see eye-to-eye on issues such as damage caps. But I bet we can find some common ground on rules of evidence and the like.

Note that this is $500 added to the price of every vehicle. As we discussed, costs aren’t entirely shifted to consumers, so the actual cost to society is more than $500/vehicle.

Is the figure exactly $500? Probably not: someone probably figured it was easier to remember $500 than something like $512.72. So what?

Can you imagine a “tree hugger” buying a Hummer because it’s on sale for $500 off? Or even if they price-matched it to a hybrid? Just not going to happen. Similarly, a family with three children is not going to buy a 2-seater for their only car, no matter how cheap it is.

I appreciate that you provided the source of your $500 figure, but I generally don’t fall for appeals to authority.
Perhaps his figure of $500 is correct for Chrysler, but not necessarily for any other auto manufacturer. My assumption is he simply took some estimate of tort costs on the automotive industry, divided it by the number of cars sold in a certain year in the U.S., and then rounded it up or down a few bucks to $500 so it would make a nice sound byte. Effective? Yes. Accurate? No.

Let’s analyze that figure even further. In 2005, Chrysler sold 180,088 units. Multiply that by the $500, and you get $90,044,000… which is about 1.5% of Chrysler’s total revenue for 2005. How low should tort costs be for an auto manufacturer? 1%? .5%?

I’d also like to compare that $500 with another number: destination charges. I live within ten miles of a factory that produces the Saturn Vue. A Saturn dealer also within ten miles of the plant is selling those cars with a $600 destination charge. Saturn dealers in Los Angeles have the same $600 charge. Now, do you think it really costs the same amount of money to transport a car 10 miles as it does 1700 miles? No – so why not fight to reform the marketplace to force manufacturers to stop using artificial destination charges to increase profits?

I freely admit that if we reduced the tort costs in America, prices on some products would drop by some small percentage. But lower prices are not a compelling reason to change the justice system.

I’ll take your word for it that the Beetle was more deadly than the Pinto; that seems plausible enough. But the infamy of the Pinto wasn’t due to a large number of lawsuits as much as it was to the press surrounding one whopper of a jury verdict, and the criminal prosecution of Ford. All it took was two trials to doom the Pinto. The recall didn’t help it, either. 🙂

My personal decision to buy American isn’t based on racial discrimination, but out of patriotism; there are plenty of brown and black and yellow people working in the very same factory in Dearborn where my Bronco was built. (I’ve been there, and they have an awesome tour. If you’re ever in Detroit, I highly recommend it.)

Ah, so you admit that you can think of a reason that reducing liability expense would reduce car expense.

It’s unlikely that the $500 applies equally to the Jeep and Land Rover, but not in the manner you think: (1) the less expensive car is more likely to be driven longer and more often and with more carpooling passengers; (2) less likely to have expensive top-of-the-line safety features that haven’t yet become standard and thus more likely to be sued over the lack of those features; and (3) more likely to be sold in such a volume that trial lawyers have put together a cheap package targeting the vehicle for lawsuit in the hopes of achieving economies of scale by targeting a lot of potential plaintiffs. (There will never be a mass tort for a Rolls Royce, for example–not enough of them are sold.) Note that the plaintiffs’ bar puts profits before people: they look at the costs and benefits of bringing suit, and target the most profitable vehicles to sue over, rather than the most dangerous ones, which is why the Ford Pinto is notorious and the VW Beetle (whose designers were so inconsiderate to write their memos in German instead of cheap-to-analyze English), which killed people at a much higher rate, is remembered with fond nostalgia.

So the $500 figure (which comes directly from the president of Chrysler) is probably higher for cheap cars and lower for expensive cars, and perhaps close to zero for the Rolls.

The relevant inquiry is not what you, Justinian Lane, would do: yes, there exist some vehicle purchasers who are prejudiced against autos built by brown or yellow people. (Economics doesn’t teach that rationality depends on financial self-interest, it teaches that rational decisions are based on economic self-interest—utility. You claim to get $5000 worth of self-satisfaction in discriminating against non-American automobiles, so purchasing the Trans Am instead of the Mini Cooper is not “irrational” in the economic sense, even if it reflects an irrational prejudice.) But the critical inquiry for elasticity is what auto buyers collectively do at the margin in response to price increases or decreases. If you didn’t learn that in microeconomics, your class failed you.

Auto manufacturers sure seem to think that price changes make a difference. They sell more cars when they offer $500 rebates, and fewer when they don’t; they price cars in numbers ending in $95, apparently thinking that the difference between $19995 and $20000 is psychologically meaningful to buyers at the margin.

Second: My question about the roof was prompted because I believe I read one of the passengers was ejected from the vehicle. I can easily see that if the roof was off, but am genuinely curious how that would have happened in a rollover if the roof was on the vehicle.

Then another suit against the DMV for providing a license to this trauma stricken, (easily distracted), woman.

And how come firestone gets off scott free? 🙂

Oh and I’ll add that it appears the juries selected evidently lack even an “average” grade collectively!