|
|
|
|
|
|
by computator
2954 days ago
|
|
|
> Should we initiate a recall? Take the number of vehicles in the field, A, multiply by ... Did you pick that example because of the Ford Pinto case? In case you didn't know about it, that's exactly the cost/benefit analysis that Ford did when they discovered that the gas tank on the Pinto would rupture if the car was hit from behind at 31 mph or greater. Here's the infamous internal memo: http://lawprofessors.typepad.com/tortsprof/files/FordMemo.pd... Look at Table 3 on page 6. Paying $200,000 per death would cost $49.5 million. Strengthening the tank at $11 per car would cost $137 million. Clearly it was cheaper to pay settlements on the deaths. |
|
|
That merely shows that tort settlements at that time didn't have an accurate price on human life. $200,000 is about $1.13 million in today's money, which is only about 7 years of senior-dev salary. An early death usually costs more than 7 years of healthy life.
If we assume that the median car-fire death actually had 20 years of healthy life ahead of them, instead of 7, then we can conclude that typical settlements should have cost about $500,000 (in the same 1973 money) instead of $200,000.
This would have raised the total tort cost estimate to $123 million, at which point the two figures are close enough that the entire discussion would have ceased to be worth the amount of C-level labor that must have gone into it.
(The above also assumes that one's own life is worth as much as one can earn prior to death-by-natural-causes. I have yet to find evidence to disprove this hypothesis with respect to my own life ... but some people feel that life is even more valuable. If those people were to perform the same process as I did above, then their conclusion would be even more powerful than mine.)
When you underprice something you have, don't be surprised to find yourself in a drastic shortage of it.