Autonomous Cars: Unintended Consequences

On a call with reporters today, Musk reiterated his prediction that fully-autonomous Teslas will be possible in two years’ time, noting that Summon is “just a baby step.”

Autonomous cars trigger much hype. They are supposed to be the new ‘frontier’, the possibility of smooth transportation, the end of long tiring journeys, accidents driven by exhaustion, alcohol, and other substances. The promised benefits sound endless.

For anyone who’s been looking at the history of transportation, optimism and pessimism have come in waves. Henry Ford’s dream of freedom led to his disappointment at the impact of cars on cities’ expansion, at the congestion of city centers, and the industrialization of the Rust Belt — he retreated to a supposedly ideal countryside village built following his specifications, aimed at recreating the lost paradise of pre-Ford T decades.

Twenty years after the second world war, Ralph Nader wrote the book ‘unsafe at any speed‘, which led to the National Highway Safety Act. Thanks to Ralph Nader, it is now compulsory to wear safety seat belts. But the safety gains — the predicted decline in the number of fatalities — did not materialize as much as was predicted by the crash tests. Safer driving at a given speed led drivers to drive less carefully, and statistics on fatalities from the Fatality Analysis Reporting System suggest evidence of the so-called Peltzman effect: when drivers feel safer, their driving habits become more reckless.

Let me thus make a small prediction about autonomous cars: that the transportation paradise will likely not materialize. It will change our lifestyles, but it is unlikely that such changes will be beneficial. Why? Autonomous cars lead to a lower cost of transportation and thus more car use. Economics predict:

  • cities will be more congested, not less.
  • policymakers will respond by increasing the surface area of roads, under pressure from constituents. Urban sprawl will be an event more salient issue.
  • electric car use will rise, leading to more pollution in a substantial share of the world, depending on how electricity is produced. See this NBER paper to convince yourself: electric cars are more polluting than gasoline-powered cars — not less polluting — in about half of the United States.
  • the attractiveness of cities will increase not decline. Historically, and as predicted by economic theory, declines in commuting costs have led to a greater mobility to cities. The story of happy suburbanization did not materialize, quite the opposite, a story told brilliantly in the recent Rush hour.

Are these costs likely to be offset by the pleasure of not holding the steering wheel? Time will tell.