Ford Pinto Case

THE FORD PINTO CASE:

THE VALUATION OF LIFE AS IT APPLIES
TO THE NEGLIGENCE-EFFICIENCY
ARGUMENT
Christopher Leggett
L! " V#$tio%
Pro&essor P#'iter
Spri%g( )***
THE FORD PINTO CASE
The &or+ pi%to ,se
THE FORD PINTO CASE:
THE VALUATION OF LIFE AS IT
APPLIES
TO THE NEGLIGENCE-EFFICIENCY
ARGUMENT
Christopher Leggett
L! " V#$tio%
Pro&essor P#'iter
Spri%g( )***

http:--!!!.!&$.e+$-/p#'itr-L!"V#$tio%-Ppers-)***-Leggett-
pi%to.ht'#
The Iss$e

I% M0 o& )*12( the For+ Motor Co'p%0( 3se+

$po% re,o''e%+tio% 30 the% 4i,e-presi+e%t Lee
I,o,,( +e,i+e+ to i%tro+$,e s$3,o'p,t ,r %+
pro+$,e it +o'esti,##0.

I% % e&&ort to gi% #rge 'r6et shre( the

$to'o3i#e !s +esig%e+ %+ +e4e#ope+ o% %
,,e#erte+ s,he+$#e.

D$ri%g the &irst &e! 0ers s#es o& the Pi%to !ere
e7,e##e%t.
Pro3#e'

I% M0 )*89( Li#0 Gr0 !s tr4e#i%g !ith thirtee%

0er o#+ Ri,hr+ Gri'sh! i% )*89 Pi%to !he%
their ,r !s str$,6 30 %other ,r tr4e#i%g
ppro7i'te#0 thirt0 'i#es per ho$r.

The i'p,t ig%ite+ &ire i% the Pi%to !hi,h 6i##e+

Li#0 Gr0 %+ #e&t Ri,hr+ Gri'sh! !ith
+e4stti%g i%:$ries.

A :$+g'e%t !s re%+ere+ gi%st For+ %+

the :$r0 !r+e+ the Gr0 &'i#0 ;<1=(===
%+ Mtthe! Gri'sh! ;9.< 'i##io% i%
,o'pe%stor0 +'ges.

The s$rprise ,'e !he% the :$r0 !r+e+

;)9< 'i##io% i% p$%iti4e +'ges s !e##.
This !s s$3se>$e%t#0 re+$,e+ to ;?.<
'i##io%.
The Histor0

The $to'o3i#e@s &$e# s0ste' +esig% ,o%tri3$te+ to

the +eth o& three !o'e% o% A$g$st )=( )*)2 !he%
their ,r !s hit 30 %other 4ehi,#e tr4e#i%g t
re#ti4e#0 #o! spee+ 30 '% +ri4i%g !ith ope%
3eer 3ott#es( 'ri:$%( ,&&ei%e pi##s %+ ,ps$#es
o& Aspee+.B

The &,t tht For+ h+ ,hose% er#ier %ot to

$pgr+e the &$e# s0ste' +esig% 3e,'e %
iss$e o& p$3#i, +e3te s res$#t o& this
,se.

The +e3te !s heighte%e+ 3e,$se the

prose,$tor o& E#6rt Co$%t0( I%+i% ,hose
to prose,$te For+ &or re,6#ess ho'i,i+e %+
,ri'i%# re,6#ess%ess.
C$estio%3#e Desig%

The $to'o3i#e@s &$e# t%6 !s #o,te+ 3ehi%+ the rer 7#e(

i%ste+ o& 3o4e it - to ,rete 'ore tr$%6 sp,e.

It '+e the Pi%to 'ore 4$#%er3#e to rer-e%+ ,o##isio%.

The gs t%6 %+ the rer 7#e !ere seprte+ 30 o%#0 %i%e

i%,hes.

There !ere #so 3o#ts tht !ere positio%e+ i% '%%er tht

threte%e+ the gs t%6.

The &$e# &i##er pipe +esig% res$#te+ i% higher pro33i#it0 tht it

!o$#+ to +is,o%%e,t &ro' the t%6 i% the e4e%t o& % ,,i+e%t
th% $s$#( ,$si%g gs spi##ge tht ,o$#+ #e+ to +%gero$s
&ires.
Desig%

D$ri%g the i%iti# pro+$,tio% %+ testi%g

phse( For+ set A#i'its &or 9===A &or the
Pi%to.

Tht 'e%t the ,r !s %ot to e7,ee+ ;9===

i% ,ost or 9=== po$%+s i% !eight.

This set to$gh #i'ittio%s o% the pro+$,tio%

te'.
Crsh Testi%g Res$#ts

Dhe% str$,6 &ro' the rer t spee+s o& ?)

'i#es per ho$r or 3o4e( the Pi%to@s gs t%6
r$pt$re+.

The t%6 !s positio%e+ ,,or+i%g to the

i%+$str0 st%+r+ t the ti'e E3et!ee% the
rer 3$'per %+ the rer 7#eF( 3$t st$+s
protr$+i%g &ro' the rer 7#e !o$#+ p$%,t$re
the gs t%6.
Crsh Testi%g Res$#ts

Upo% i'p,t( the &$e# &i##er %e,6 !o$#+

3re6( res$#ti%g i% spi##e+ gso#i%e.

For+ ,rsh teste+ tot# o& e#e4e%

$to'o3i#es %+ eight res$#te+ i% pote%ti##0
,tstrophi, sit$tio%s.

The o%#0 three tht s$r4i4e+ h+ their gs

t%6s 'o+i&ie+ prior to testi%g.
For+Gs De,isio%

Not to '6e i'pro4e'e%ts to the gs t%6 o& the Pi%to

&ter ,o'p#etio% o& the ris6-3e%e&it %#0sis.

For+ h+ +e4e#ope+ the te,h%o#og0 to '6e

i'pro4e'e%ts to the +esig% o& the Pi%to tht !o$#+
+r'ti,##0 +e,rese the ,h%,e o& Pi%to Aig%iti%gA
&ter rer-e%+ ,o##isio%.
For+Gs De,isio%

For+ esti'te+ the ,ost to '6e this pro+$,tio%

+:$st'e%t to the Pi%to !o$#+ h4e 3ee% ;)) per
4ehi,#e.

Most peop#e &o$%+ it reprehe%si3#e tht For+

+eter'i%e+ tht the ;)) ,ost per $to'o3i#e !s too
high %+ opte+ %ot to '6e the pro+$,tio% ,h%ge to
the Pi%to 'o+e#.
Ris6-He%e&it A%#0sis

I% +eter'i%i%g !hether or %ot to '6e the

pro+$,tio% ,h%ge.

Ntio%# High!0 Tr&&i, S&et0 A+'i%istrtio%

ENHTSAF re>$ire+ the' to +o ris6-3e%e&it
%#0sis.

The ris6-3e%e&it ppro,h e7,$ses +e&e%+%t i& the

'o%etr0 ,osts o& '6i%g pro+$,tio% ,h%ge re
greter th% the Aso,iet# 3e%e&itA o& tht ,h%ge.
Ris6-He%e&it A%#0sis

The phi#osoph0 3ehi%+ ris6-3e%e&it %#0sis

pro'otes the go# o& ##o,ti4e e&&i,ie%,0.

The pro3#e' tht rose i% the For+ Pi%to %+

'%0 other si'i#r ,ses high#ights the
h$'% %+ e'otio%# ,ir,$'st%,es 3ehi%+
the %$'3ers !hi,h re %ot &,tore+ i% the
ris6-3e%e&it %#0sis.
Cost-He%e&it A%#0sis

The esti'te+ ,ost &or the pro+$,tio% ,h%ge !s

;)) per 4ehi,#e.

This ;)) per $%it ,ost pp#ie+ to )) 'i##io% ,rs

%+ ).< 'i##io% tr$,6s res$#ts i% % o4er## ,ost o&
;)?8 'i##io%.

M6i%g the ,h%ge !o$#+ res$#t i% tot# o& )2=

#ess 3$r% +eths( )2= #ess serio$s 3$r% i%:$ries( %+
9()== #ess 3$r%e+ 4ehi,#es.

These esti'tes !ere '$#tip#ie+ 30 the $%it ,ost

&ig$re+ 30 the Ntio%# High!0 Tr&&i, S&et0
A+'i%istrtio%.

These &ig$res !ere ;9==(=== per +eth(

;18(=== per i%:$r0( %+ ;8== per 4ehi,#e
e>$ti%g to the tot# Aso,iet# 3e%e&itA is
;I*.< 'i##io%.

Si%,e the 3e%e&it o& ;I*.< 'i##io% !s '$,h

#ess th% the ,ost o& ;)?8 'i##io%( For+ &e#t
:$sti&ie+ i% its +e,isio% %ot to #ter the
pro+$,t +esig%.

The ris6(-3e%e&it res$#ts i%+i,te tht it is

,,ept3#e &or )2= peop#e to +ie %+ )2=
peop#e to 3$r% i& it ,osts ;)) per 4ehi,#e to
pre4e%t s$,h ,s$#t0 rtes.

O% ,se 30 ,se 3sis( the rg$'e%t see's

$%:$sti&i3#e( 3$t #oo6i%g t the 3igger
pi,t$re ,o'p#i,tes the iss$e %+ stre%gthe%s
the ris6-3e%e&it %#0sis #ogi,.
He%e&its %+ Costs
Re#ti%g to F$e# Le6ge
He%e&its

Savings: )2= 3$r% +eths(

)2= serio$s 3$r% i%:$ries(
9)== 3$r%e+ 4ehi,#es

Unit Cost: ;9==(=== per

+eth( ;18(=== per i%:$r0(
;8== per 4ehi,#e

Total Benefit: )2= 7

E;9==(===F J )2= 7
E;18(===F J 9)== 7 E;8==F
K ;I*.< Mi##io%
Costs

Sales: )) 'i##io% ,rs( ).<

'i##io% #ight tr$,6s

Unit Cost: ;)) per ,r( ;))

per tr$,6

Total Cost: ))(===(=== 7

E;))F J )(<==(=== 7 E; I )F
K ;)?8 Mi##io%

,osts !o$#+ 3e 9.< ti'es

#rger th% the res$#ti%g
3e%e&its.
S&et0 Does%@t Se##

For+ !s %ot i% 4io#tio% o& the #! i% %0 !0 %+ h+ to

'6e the +e,isio% !hether to i%,$r ,ost to &i7 the o34io$s
pro3#e' i%ter%##0.

There !ere se4er# optio%s &or &$e# s0ste' re+esig%.

The optio% 'ost serio$s#0 ,o%si+ere+ !o$#+ h4e ,ost the For+
Motor Co'p%0 %+ ++itio%# ;)) per 4ehi,#e.

U%+er the stri,t ;9=== 3$+get restri,tio%( e4e% this %o'i%#

,ost see'e+ #rge.

I% ++itio%( For+ h+ er#ier 3se+ % +4ertisi%g ,'pig% o%

s&et0 !hi,h &i#e+ 'iser3#0. There&ore( there !s ,orporte
3e#ie&( ttri3$te+ to Lee I,o,, hi'se#&( o& As&et0 +oes%@t se##.A
Re:e,tio% o& the
Pro+$,t Desig% Ch%ge

Hse+ o% the ,ost-3e%e&it %#0sis per&or'e+ 30 For+.

Usi%g the NHTSA pro4i+e+ &ig$re o& ;9==(=== &or the A,ost to
so,iet0A &or e,h esti'te+ &t#it0( %+ ;)) &or the pro+$,tio%
,ost per 4ehi,#e( the %#0sis see'e+ stright&or!r+.

The pro:e,te+ ,osts to the ,o'p%0 &or +esig% pro+$,tio%

,h%ge !ere ;)?8 'i##io% ,o'pre+ to the pro:e,t 3e%e&its o&
'6i%g the +esig% ,h%ge !hi,h !ere ppro7i'te#0 ;I*.<
'i##io%.

Usi%g the st%+r+ ,ost-3e%e&it %#0sis( the %s!er !s

o34io$s--%o pro+$,tio% ,h%ges !ere to 3e '+e.
Reso%s &or For+@s De,isio%

Ris6-3e%e&it %#0sis !s the 'i% %ot to '6e +esig% ,h%ges

to i%,rese 4ehi,#e s&et0.

For+ h+ 3se+ % er#ier +4ertisi%g ,'pig% ro$%+ s&et0(

!hi,h &i#e+. The ,o'p%0 re#iLe+ this !s %ot pri'r0
&,tor i% ,r s#es

The 3+ p$3#i,it0 i%4o#4e+ !ith re,## !o$#+ 3e too '$,h

%egti4e p$3#i,it0 to o4er,o'e. I& this $%>$%ti&i3#e &,tor
!ere i%,#$+e+ i% the ,ost-3e%e&it %#0sis the +i&&ere%,e '0
h4e 3ee% o4er!he#'i%g.

At the ti'e o& the pro+$,t +esig% %+ ,rsh tests( the #! +i+
%ot re>$ire the' to re+esig% the &$e# s0ste'

It !s ,$sto'r0 i% the $to'oti4e i%+$str0 to p#,e the gs

t%6 %+ 3et!ee% the rer 7#e %+ 3$'per.
Co%,#$sio%

This &r'e!or6 is e,o%o'i,##0 e&&i,ie%t %+ the

proper o%e to pp#0.

The res$#t o& the For+ Pi%to ,se i%+i,te there is

3e#ie& he#+ 30 'ost o& the p$3#i, tht it is !ro%g &or
,orportio% to '6e +e,isio%s !hi,h '0
s,ri&i,e the #i4es o& its ,$sto'ers i% or+er to
re+$,e the ,o'p%0@s ,ost or i%,rese its pro&its.

V#$e o& h$'% #i&e ,%%ot 3e esti'te+ %+

>$%ti&ie+.