FORD PINTO MEMO ON COST BENEFIT ANALYSIS OF BURN VICTIMS

C AR L O S D EL VAL L E MARTIN EZ
J AWAD M. SID D IQ U I

Goals of the study

Study estimates of fire deaths in road accidents made by both the NHTSA (National Highway Traffic Safety Administration) and NSC (National Safety Council) to justify their subsequent use in the CBA. Cost Benefit Analysis to evaluate the efficacy of a rollover modification in cars and light trucks to prevent fatalities due to fire in road accidents

The Study of Estimates

They study: The frequency of fire related fatalities Distribution and likelihood of fuel spillage by impact type Use a smaller data set of fatalities in road accidents and where fire was involved. Extrapolate these figures to nationwide fatalities Found 7% of the cases had fire induced, but only 1.4% showed death due to burns

The Study of Estimates: Conclusions

Conclude that NSC figures (~700 deaths) are more reasonable that NHTSA figures (~3500 deaths) Conclude the difference in these estimates is due to the basis of measurement Total deaths in fire involved vehicle crashes (NHTSA case) Deaths from fire in fire-involved crashes (NSC case) Determine that %age of rollover fuel leaks ~25%

Cost Benefit Analysis

The Alternatives for the CBA Go with rollover modification Dont go with the rollover modification Benefits = Non-fatal burn cases, Fatal burn cases, Vehicle damage cases prevented by rollover Costs = Retail price equivalent of vehicle modification

Cost Benefit Analysis

Assumptions Present Time cars considered. Future technological improvements ignored Static Rollover modification will eliminate all burn cases Impact of non-rollover modifications ignored Ford costs of modification ($11 per modification) have been assumed across the industry

Cost Benefit Analysis

Benefits
Deaths Savings burn deaths Unit Cost per death Total Benefit $ Injuries 180 serious burn injuries $ 200,000 per injury 36,000,000 $ Vehicle damage 180 burned vehicles 2,100 $ 67,000 per vehicle $ 700 12,060,000 $ 1,470,000 Trucks 11,000,000 light trucks 11 per truck 121,000,000 $ $ 1,500,000 11 16,500,000

Costs
Cars Sales Unit Cost Total Cost cars per car $ $

Cost Benefit Analysis

CBA
Benefits Costs Benefits - Costs Cost/Benefit $ $ $ 49,530,000 137,500,000 (87,970,000) 278%

Conclusions The costs of implementing rollover are approx. 3 times the benefits Rollover modification is economically not viable