A couple weeks ago, my truck was stolen. This wasn't just any truck. It was a 1999 Toyota Tacoma that I owned for 20 years. I bought it used back when I was a teenager, and it was my primary mode of transportation for basically my entire adulthood. Sure, it was dented. It was rusting. It was starting to fall apart. But I loved that truck.
My personal experience matches the data. The San Francisco Bay Area has one of the highest rates of car theft of any major metro area in the nation. New York City has one of the lowest. Maybe my experience of living in New York and other low-theft areas was why I was so naive. I didn't invest in an alarm or other anti-theft devices. I didn't have comprehensive insurance that would cover the cost of theft . I mean, why would I? It was an old, beat-up truck.
Analyzing the failure of the private market to beef up anti-theft technologies in cars, the economist Simon Fieldthat the problem was that drivers lacked strong incentives to take precautionary measures."In practice, there is very little incentive for individual owners to prevent auto theft, since most of the costs fall in the form of insurance premiums and government expenditures rather than in the form of losses falling to individual owners," Field wrote.
Car manufacturers and individual car owners in Europe were just like those in the United States: they lacked much in the way of incentives to do something about the problem. But there was one group that did have strong incentives to fight the problem: insurance companies.