Monday, March 8, 2010

The Increased Risk of Driving a Recalled Toyota

Finally, the information I've been waiting for. Carnegie-Mellon Professor Paul Fischbeck has done the calculations (here) and estimates that driving a recalled Toyota increases the risk of having an automobile accident (of any kind) by 2%. As Fischbeck explains:
Walking a mile is 19 times or 1,900 percent more dangerous than driving a mile in a recalled Toyota. Driving while using a cell phone would increase risk much more than the chance of having a stuck accelerator.
He concludes that, if left uncorrected, the Toyota defects would result in an extra 600 motor-vehicle deaths each year.

The total estimated cost of the recall to Toyota is approximately $2 billion (see here), which may seem a lot to reduce a risk that is 19 times less dangerous than walking a mile. However, over any reasonable time-period, saving 600 lives per year is worth a lot. Even if we were only talking about one year, the cost per life saved would be $3.33 million, which is well within the accepted range of human life valuations in the literature.

Hat tip: Marginal Revolution

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