Attack of the Random Eggplant Assassin Dudes!

If the Department of Public Safety (DPS) has any statisticians on staff, I hope they track the trend in car accidents before, and after, our mandatory liability insurance law takes effect.

Purely as an academic exercise, I see two offsetting factors at work.

FACTOR ONE: Moral Hazard.

“Moral hazard” is a favorite term in economics. This force would favor an increase in accidents under a mandatory insurance environment, since it is insurance companies, not a car’s driver, that has to foot the bill for driving like a moron (which, in the final analysis, is what causes most of our accidents. We don’t have ice covered roads, fog, blizzards, or UFO attacks here. What we have is a plethora of really bad drivers).

Moral hazard applies to all insurance situations, not merely auto insurance. If, say, you’ve got fire insurance for your house, you have less incentive to prevent fires than if you didn’t have insurance.

The mandatory level of auto liability insurance here is low, “fifteen, thirty, and fifteen” in the parlance of insurance salesman, meaning if you wipe out some hapless victims you’re only covered for 15 grand per person, up to a maximum of 30 grand total for all the people, and 15 grand for their vehicle. So if you’re going to crash, run into a cheap car with no more than two occupants in it.

Still, even with this low amount of coverage, there is a distinct moral hazard force at work. An economist would predict an increase in accident rates under mandatory insurance laws, all else being equal.
And “all else being equal” bring us to….

FACTOR TWO: The Random Eggplant Assassin Dudes.

Hmmm….I haven’t seen this phrase in any textbooks, but you’ve seen the Random Eggplant Assassin Dudes (READ) in action.

You’re in your trusty rusty, cruising along Beach Road in Chalan Kanoa, (scoping out the good looking Chinese gals? No, not me…) and–ZOOM–somebody with the IQ of an eggplant pulls out three nanometers in front of you. The driver never turns his head or seems to be aware of your presence…he’s in some Zen-like trance where a collision can’t happen if the consciousness doesn’t perceive the other auto…and, if he misses you, he fades away like a phantom. I’ve seen these guys (it’s always guys); there’s a whole secret society of them. They’re trained in secret camps outside of Calcutta to be suicide bombers. Bombs, however, are hard to smuggle past our Customs officers, so the terrorists are issued old Subarus and sent on random assassination missions in Chalan Kanoa.

I doubt these secret agents of destruction are going to crawl out the shadows and dutifully register for insurance. The DPS, then, can snare them in roadblocks and kick their sorry butts off the roads. The READ factor will then be less of a threat.

And there you have it. Moral hazard vs. the diminished READ threat. I think the READ factor will be the prevailing force, and that the mandatory insurance law is a step in the right direction. But that’s merely a subjective view; we’ll have to wait until some data comes our way before we can draw any conclusions. Once again we’re at the cutting edge of economic theory, and your humble servant (that’s me) is happy to report on these exciting issues.