stop thief!

Years ago, Steve Levitt and I did an empirical study about the impact of Lojack on auto theft. The big surprise was that Lojack had a big deterence effect. For every dollar you spent on Lojack you reduced your neighbors' expected auto-theft losses by about $10.

People spend too much money on "the club" and traditional car alarms that mostly just shift crime they don't reduce it, while Lojack reduces crime because it gives the police a chance to catch the crooks -- the police clearance rate on cars stollen with Lojack is about twice as high as on cars stollen without Lojack.

Levitt and I made a big point out of saying that Lojack doesn't stop your car from being stollen because the thief doesn't know that you have Lojack (it's a hidden transmitter), But in coming back to this issue with Barry Nalebuff, I now see that Lojack does stop your car from being stollen -- because it stops you from stealing it your self. Lojack is an anti-fraud device. Turns out that maybe 20% of all theft is fraud (people steeling their own cars). But the fraud rate in Lojack cars is probably much much smaller. You'd have to be crazy to steal your car with Lojack in it, because you'd know that the police would find you. The commitment not to commit fraud should dreduce the insurance premia that Lojack owners pay on their cars (but doesn't sufficiently).

Another 20% of autotheft may occur because people leave their keys in the car. Leaving your keys in the car isn't just stupid, it's inconsiderate. 20% of police time on autotheft is spent on these crimes, 20% of your insurance premia is because other people leave their keys in the car.

So stepping back, we can see that a lot of auto theft is caused because some people don't take enough precaution (they don't take their keys) and a lot is caused because some people take too much precaution (they use the crime-shifting club). Both of these behaviors are socially inconsiderate and there are simple things that we could do to induce better precaution taking. Barry Nalebuff and I write about several of them in the latest issue of Forbes:

Removing the key . . . impose[s] small inconveniences on the
owner but yield large benefits to society.We need to change social customs.
Folks who make life easier for thieves are imposing costs on the rest of us. The
damage is just like that from secondhand smoke.Modesto, Calif.,which holds the
dubious distinction of having the nation’s highest per capita auto theft rate,
is considering ticketing people who leave their keys in the car.