[Updated March 18, 2012 with corrected value for human life. Reviewing my files, I find the correct figure should be $5 million rather than $1 million. My apologies for the error. However, the conclusion is not affected by this change.]
This morning the U.S. DOT delayed requirements for rear view camera installation on SUVs, mini-vans, and similar consumer vehicles. (DOT is, of course, the Department of Transportation.) A quick benefit-cost analysis based on easily obtainable data shows why this rule should be eliminated. And, incredibly, there is an alternative available that costs about 1/8 the price of rear view cameras.
A report on NPR this morning discussed the USDT delay in the rule. Mentioned in passing was the following data: 300 people are killed each year by being backed over, and the estimated cost per car of installing rear view cameras is $200. Economists have a rule of thumb that a human life is worth about $5 million. In 2011 U.S. consumers bought 12.8 million vehicles. Total benefits: 300 lives saved per year times $5 million per life equals $1.5 billion. Total cost of rear view cameras: $200 per car times 12.8 million cars equals $2.56 billion. Net benefits: -$1,060,000,000. That’s right — costs exceed benefits by a whopping $1.06 billion. The benefit-cost ratio is 0.59.
If rear view cameras were the only available technology, even those figures might not be persuasive. But guess what? There’s an alternative that costs — brace yourself — $27.84 per vehicle. The “Fit System C088 Back-Up Assist Mirror for Most SUV Vans Mini Vans and Station Wagon” is available today on Amazon.com.
This rear-mounted mirror lets the driver look in the regular rear-view mirror and see the reflection of what’s behind the vehicle in the rear-mounted mirror. Not enough detail, you say? Does the driver really need to see detail? If there’s anything there, get out of the car and move it before you back up. Extra points if the object is living. Double credit if it’s a human being. Total cost of this option: $356.352 million. Net benefits: $1.14 billion. Benefit-cost ratio: 4.21. As always, my Excel workbook complete with a list of links to sources, is available by clicking here. (The workbook has been updated with the new value of human life.)
A detailed slideshow is available by clicking here. I’ve included a couple of photos so you can get some idea of how it works. Caveat: there is no cure for stupidity or driver neglect. Neither rear view cameras nor a rear-mounted mirror will compensate for the nut that holds the steering wheel.