Cost-benefit analysis of Rear-view video on cars

The Obama administration wants to add about $200 to the price of every car and light truck in the US.

Such technology currently boosts the price of a car by as much as $200. But administration officials said the added cost is justified because the technology could potentially halve the number of deaths and injuries each year attributed to "back over" crashes, currently at about 207 and 15,446, respectively. Such crashes disproportionately affect children and elderly people. . . .


Suppose that a value of life is $4 million (probably an over estimate for the elderly and young people killed accidentally here) and that the average injury is $50,000 (definitely an overestimate since most injuries tend to be very small), the total cost from these accidents is $1.6 billion. There are about 12 million cars and light trucks sold in the US this year. In that case, any cost over $133 per car would produce costs greater than the benefits. If the average injury costs $10,000, any cost of the rear-view cameras over $82 is too much.

The LA Times notes that Ford says the systems add about $400 to the price of their cars.

The rear-view camera system adds about $400 to the price of a Ford. . . .


A Toyota Camera costs about $239.95, a Gray monitor added another $265.95, and a color monitor adds $369.95.

The WSJ notes:

The rule could cost the auto industry between $1.9 billion and $2.7 billion a year . . .


The $2.7 billion at $200 per car implies that 13.5 million cars will be sold each year. The 12 million is probably low given that sales are probably still low from the recession.

The Detroit News makes the right point:

No matter what system you choose or the government forces carmakers to install, the most important thing to remember is that technology will never replace a careful driver. It may assist us, make us a little safer and enhance the driving experience, but it cannot replace a driver aware of his or her surroundings. . . .


The numbers above assume that adopting these cameras will eliminate deaths and injuries from cars backing over children. That is obviously incorrect. Even if half of them are avoided, the regulation will probably be surprisingly successful.

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Cost-benefit analysis of Rear-view video on cars
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