The Agenda

How Driverless Cars Might Transform the Broader Economy

Adrian Wooldridge has an excellent column on how the advent of driverless cars might impact the global automotive industry and the broader economy. One paragraph struck me as particularly interesting:

When people are no longer in control of their cars they will not need driver insurance—so goodbye to motor insurers and brokers. Traffic accidents now cause about 2m hospital visits a year in America alone, so autonomous vehicles will mean much less work for emergency rooms and orthopaedic wards. Roads will need fewer signs, signals, guard rails and other features designed for the human driver; their makers will lose business too. When commuters can work, rest or play while the car steers itself, longer commutes will become more bearable, the suburbs will spread even farther and house prices in the sticks will rise. When self-driving cars can ferry children to and from school, more mothers may be freed to re-enter the workforce. The popularity of the country pub, which has been undermined by strict drink-driving laws, may be revived. And so on. [Emphasis added]

Wooldridge’s column reminded me of the following passage from Scott Atlas of the Hoover Institution:

WHO ranked the U.S. 42nd in life expectancy. In their book, The Business of Health, Robert L. Ohsfeldt and John E. Schneider of the University of Iowa demonstrated that this finding was a gross misrepresentation. WHO actually included immediate deaths from murder or fatal high-speed motor-vehicle accidents in their assessment, as if an ideal health-care system could turn back time to undo car crashes and prevent homicides. Ohsfeldt and Schneider did their own life-expectancy calculations using nations of the Organisation for Economic Co-operation and Development (OECD). With fatal car crashes and murders included, the U.S. ranked 19 out of 29 in life expectancy; with both removed, the U.S. had the world’s best life-expectancy numbers (see table above).

That is, the U.S. might benefit disproportionately from a sharp reduction in high-speed motor-vehicle accidents.

I also found the notion that self-driving cars might facilitate labor force participation for primary caregivers very interesting. We tend to focus on things like marginal tax rates, but self-driving cars could greatly increase market production by secondary earners and thus increase output. This is yet another reason we should prioritize the building of infrastructure for self-driving cars over high-speed rail, which wouldn’t have nearly as big an effect on the labor market. Self-driving cars more closely resemble a general-purpose technology like computing that can enhance efficiency across many different domains than a technology like HSR that will likely have a far narrower impact. 


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