The Question No One Is Asking: Was GM’s Risk Assessment About That Faulty Ignition Switch Reasonable?

Eric Posner weighs in.
April 10 2014 12:50 PM

In Defense of GM

No one is asking the right question: Was the company’s risk assessment about the faulty ignition switch reasonable?

Mary Barra
GM CEO Mary Barra testifies during a House Energy and Commerce Committee hearing on April 1, 2014. Barra, and the company she heads, might not deserve the criticism they're getting.

Photo by Kevin Lamarque/Reuters

In the brouhaha over the defective ignition switch that prompted GM to recall 2.6 million cars over the last two months, members of Congress and pundits have judged, tried, and condemned the company’s engineers and executives. Michael Moore wants them to be executed. With the defect linked to several accidents, which caused 13 deaths, everyone thinks that GM has put profits over human lives. But this is a phony scandal. Though it’s too early to tell for sure, because key information has yet to come to light, GM might have acted reasonably under the circumstances. The premature denunciations are mere grandstanding.

As I said, some of the facts are still murky, but the story appears to go like this. About a decade ago, GM installed into several car models an ignition switch that turned out to be faulty. Heavy keys dangling on the keychain, or a knock from a knee, could turn the ignition key and shut down power while the car was in use. According to a document issued by the House Energy and Commerce Committee, which held hearings on the GM recall, GM may have known of the problem as early as 2001 but believed that a design change fixed the problem. It revisited the issue in 2004 after receiving a complaint from a customer that the vehicle “can be keyed off with knee while driving.” In 2005 engineers concluded that possible fixes were too costly or inadequate, and later GM told dealers to tell customers to remove heavy items from key rings. Also in 2005, a fatal accident occurred that may have been caused by the ignition switch problem. In 2006 GM began installing modified ignition switches in 2007 models. Over the ensuing years, more fatal accidents occurred and GM conducted additional investigations. When exactly GM understood the magnitude of the danger posed by the faulty ignition switch is not yet clear.

Much has been made of the 57-cent price tag for the replacement part that would have solved the problem. Commentators claim that GM cared more about saving 57 cents per car on cars that cost thousands of dollars than saving 13 lives. But this accusation is not credible. Either the GM engineers thought that the original part was adequate or there was some kind of communication failure.

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Still, once the ignition switch was linked to fatal accidents, didn’t GM have a duty to recall the cars? The answer is not as clear as it might seem. What has been lost in the public debate is just how rare the fatal accidents were. Thirteen deaths might sound like a large number, but that is the total over almost a decade. Of the 40,000 Americans who died in car accidents every year during the mid-2000s, one or two could be attributed to the ignition switch. It appears that the 2.6 million recalled cars were mostly manufactured over about five years, from 2003 to 2007. That would put the average age of the recalled cars today at eight years, which means that the cars in aggregate have been driven for more than 20 million years. If these assumptions are correct, for every year one of these cars was driven, its driver faced a risk of death of about 0.0000007 as a result of the ignition switch. That’s less than one in a million.

For comparison’s sake, as of 2002, the probability of dying in a car accident in a year was 0.0000567. So if you drove one of GM’s cars, the probability of death increased (by 0.0000007) from 0.0000567 to 0.0000574.

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