A VIEW FROM

Campaign Middle East - - NEWS -

In In­di­ana, in 1978, three teenage girls were on their way to vol­ley­ball prac­tice.

They stopped at a petrol sta­tion to fill up their Ford Pinto.

As they drove away, their petrol cap fell off so they stopped to re­trieve it.

Be­fore they could get out of the Pinto, it was hit by a two-ton van trav­el­ling at 50mph.

The petrol tank ex­ploded and the three girls were burnt to death.

The van that hit them was found to con­tain il­le­gal sub­stances.

So, the fam­ily of the three girls sued the van driver, right? Wrong. They sued Ford, the man­u­fac­turer of the Pinto. Be­cause the fault that caused the petrol tank to ex­plode was known to Ford and could eas­ily have been fixed, for just $11.

Ford ad­mit­ted that it knew about the fault and, in fact, it had con­trib­uted to pre­vi­ous deaths, but it de­cided to do noth­ing about it. So that’s an open and shut case, right? Wrong again. Ford de­fended its de­ci­sion to do noth­ing on the ba­sis of risk/ ben­e­fit anal­y­sis.

Un­der Amer­i­can law, if the cost of cor­rect­ing a fault out­weighed the cost of dam­age to the pub­lic, the man­u­fac­turer didn’t have to cor­rect it. And so that was Ford’s de­fence. It pro­duced the fol­low­ing num­bers in court as its ar­gu­ment.

The cost of cor­rect­ing the fault to the petrol tank was $11 per ve­hi­cle.

But the fault could be in 11 mil­lion cars and 1.5 mil­lion trucks, so the over­all cost could be $137m.

Whereas Ford cal­cu­lated the num­ber of deaths would prob­a­bly be 180, the num­ber of in­juries also prob­a­bly 180, and the num­bers of de­stroyed ve­hi­cles 2,100.

Cost per death was es­ti­mated at $200,000, cost per in­jury $ 67,000, and cost per ve­hi­cle $700. Which all added up to $ 49.5m. So, the ben­e­fit-ver­sus- cost anal­y­sis worked out at $137m to fix the fault ver­sus $ 49.5m to ig­nore it.

Ob­vi­ously, it made fi­nan­cial sense to let a few peo­ple die.

The com­pany was clearly be­hav­ing in a pru­dent, fis­cally re­spon­si­ble fash­ion.

This ar­gu­ment was based on a prece­dent es­tab­lished by Judge Learned Hands in 1947.

The logic was that a com­pany couldn’t safe­guard against ev­ery pos­si­ble even­tu­al­ity, so a rea­son­able com­pro­mise had to be struck. The judge en­cap­su­lated this in his for­mula: B< PL. Where B = cost of preven­tion, P = the prob­a­bil­ity of harm, and L = the cost of that harm.

Like most al­go­rithms, it as­sumed that num­bers were the only re­al­ity. But, of course, they aren’t. Ford was found not guilty based on this for­mula. And if num­bers were the only re­al­ity, that would be the end of the mat­ter – but it wasn’t.

For us, the learn­ing is that the trial ir­repara­bly dam­aged Ford’s rep­u­ta­tion.

Ford was seen as mak­ing dan­ger­ous, low- qual­ity cars.

The man­age­ment was seen as cal­lous and un­car­ing about cus­tomers’ lives.

Mil­lions of Pin­tos had to be re­called to fix the prob­lem, so no money was saved. The chair­man of Ford, Lee Ia­cocca, was fired. And within a year the en­tire Pinto range was scrapped.

In a fi­nal piece of stu­pid­ity, six months after their deaths, the mother of the girls re­ceived a mass­mail­ing let­ter no­ti­fy­ing her of the re­call of her Ford Pinto.

To have the $11 safety mod­i­fi­ca­tion fit­ted.

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