Crime Prevention and the Costs of Auto Theft: an Economic Analysis

The total cost of auto theft to the U.S. in 1985 is estimated at $6 billion at current prices, or about $45 per automobile per year. On the basis of this estimate, it is calculated that it would be cost-effective for society to invest a few hundred dollars per car in built-in security to prevent auto theft. 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. It is argued that there should be government-mandated standards of design security applied to all automobiles, since the private market is inadequate to the task of providing an optimal level of theft security.