Real-life Case Study: Safety at Any Cost?

Opportunity Cost

When you buy a car, you face trade-offs: Do you buy the new subcompact that may not have enough room for your gear or the larger used sedan that needs a paint job? The features that make a car safer may also involve tradeoffs. Economists urge consumers to consider the trade-offs and opportunity costs of each of their purchase decisions. Most of these opportunity costs fall into one of three categories: cost and convenience, size, and personal freedom.

Safety devices save lives but also involve some opportunity costs.

Safety Devices Versus Cost and Convenience Over 40,000 people are killed every year in crashes on our roads. Safety features like antilock brakes and dual-side air bags may save lives, but they also make cars more expensive. Some features like seatbelts are sometimes seen as an inconvenience, so consumers do not always use them. Manufactures would like to produce safe cars, but they must sell them at a price that buyers are willing to pay. Safety features are defeated if travelers ignore or disable them.

Size Versus Pollution Heavier cars are generally safer cars—they tend to hold up better when there is an accident and provide passengers with more protection. SUVs have become increasingly popular because they are heavy and taller, giving the driver a better view of the road. On the other hand, they are also more expensive to buy and more costly to run because they have lower fuel efficiency.

Burning extra fuel also means increasing auto emissions. The U.S. currently generates more greenhouse gas emissions than any other country in the world, and the amount is growing. Also, “gas guzzlers” increase our dependence on foreign oil.

Safety Laws Versus Personal Freedom Many states have struggled with laws requiring the use of seatbelts in cars, carseats for infants and young children, or helmets for motorcyclists. There is considerable evidence that these safety precautions reduce the severity of injury if there is an accident. However, laws requiring people to use seatbelts or helmets also restrict individual freedom, so there is a trade-off between a national interest in keeping people safe and a personal interest in being able to make your own life choices.

Applying Economic Ideas

1. Suppose you are buying a car. How would the trade-offs discussed above affect your decision?
2. The table below shows the specific costs of various optional auto safety devices. On what basis would you decide which, if any, of these safety options to buy?

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