X Prize — another comment

The X Prize is apparently underwritten in part by the Progressive Insurance company – a firm that, I believe, is active in auto insurance. I see no reason why any auto insurer would favor less safe cars. Indeed, much of our work on the size/safety relationship (the “blood for oil” tradeoff) came from the Insurance Institute for Automobile Safety.

Moreover, the X Prize idea can focus attention on resolving a technology barrier that prevents gains along some product attribute dimension 9for example, fuel efficiency). Thus, the X Prize goal of a car that is “acceptable” to the regulatory process (that is, “safe enough”, able to meet EPA regs, etc.) rather than a car that people would choose.

So, while I like the prize idea also, it is somewhat misleading. The objective is not to focus on “how safe” or “how fuel efficient” or “how affordable” is a particular design but rather “who decides?” We all make individualized tradeoffs between the many aspects of a product and choose based on our valuation of the final product.

Interventionists – for reasons that I do not fully understand – don’t wish to admit that tradeoffs exist. So the Amory Lovins of the World argue that carbon composites (already proven in say F-22 fighters) would enable us to have full sized automobiles that would be as safe as steel cars and be much lighter and, thus, more fuel efficient.

True, but a pound of an F-22 is much more costly than a pound of a Chevy — thus, the tradeoff moves from size-safety comparisons of similarly priced cars to the new car/old car economics – that is, how long you keep the older car – and its fuel efficiency.

Technology CANNOT eliminate tradeoffs; nor can technology advance prizes. The belief that tradeoffs can be eliminated is at the basis of much of the popularity of “technology mandates.” Markets are very good at picking the mix of quality attributes and price that customers prefer. It is that such choices differ from those of the planners (safety, health, environment, whatever) that lead to the push for mandates. But they don’t wish to admit that their policies do impact on consumer welfare (people wouldn’t voluntarily have made that same choice).

Mar 21, 2:24 PM — [ ] — X Prize automotive competition — inside CEI discussions