The Pinto Disaster
The Ford Pinto, one of the best-selling cars of the 1970s, had a defective gas tank with an unfortunate tendency to burst into flames in rear-end collisions. Instead of fixing the Pinto, Ford lobbied against federal regulation affecting fuel tank safety. As part of the lobbying effort, the company prepared a cost-benefit analysis. According to Ford's engineers, it would cost $11* per car, or $137 million per year for the industry as a whole, to meet the rollover standard, while avoiding an estimated 180 deaths per year, along with an equal number of serious burn injuries and a few thousand wrecked cars.
Ford's cost-benefit analysis valued those lives at a mere $200,000 apiece. That number was calculated by the National Highway and Traffic Safety Administration at the request of the auto industry, mainly on the basis of lost wages, plus medical and legal costs and a small amount for pain and suffering. At $200,000 per head, 180 deaths are "worth" $36 million, not nearly enough to "justify" a $137 million expenditure. As Ford saw it, spending an extra $11 per car to fix the gas tank just wasn't worth it.
Despite Ford's lobbying, the gas-tank safety regulation was adopted.
Ford responded by immediately, and inexpensively, making the 1977 Pinto
safer. But the damage to the company's image had been done. The public
realized that Ford had knowingly produced a dangerous car, leading to
hundreds, perhaps thousands, of preventable deaths. Ford finally discontinued
the model in 1980.
* Numbers are in 1972 dollars; to correct for inflation, multiply by 4.4. Thus the cost per car would be a bit more than $48 in 2003 dollars.
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