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What economics and cars can tell us about guns

David Zilberman, professor, agriculture and resource economics | March 18, 2018

For years I have been teaching classes on applied economics and policy and a key concept that economists stress is externalities. Activities of individuals may cause unintentional harm to a third party. Pollution from production of steel is a classic example. But car accidents are another. And economic theory and common sense suggest that people who engage in activities that may have unintended consequences will be subject to policies that lead them to take extra caution, or reduce the likelihood of accidents.

The two main types of policies are financial incentives (e.g. penalty on pollution) or direct control that limits the activities people are allowed to do. For example, speeding tickets reduce the likelihood that people will drive recklessly and speed limits near hospitals and schools reduce the likelihood and impact of accidents in especially vulnerable areas.

One of the big challenges in policy design is uncertainty – individuals are different, are subject to varying circumstances and therefore there is a need to monitor and enforce policies.

A buyer of a gun, in principle, is supposed to use it for legal activities (e.g. hunting, self-defense). But there may be externalities and accidents, and thus some of the regulations that apply to other externalities can apply here. Here, driving is a good example. In order to drive, people need to pass a test and they need to continue this test over time and once their physical or mental situation makes them unsafe drivers, their license can be revoked. We have a registry of all drivers and their driving record.

For example, you need to take special training and pass additional tests to drive a truck. Certain types of vehicles can only be used by the military. I grew up in Israel and went to the army. As a teenager, I was introduced to guns by instruction and my use of guns was restricted. In the army, your access to weapons expands as your training expands. Even then, with highly trained individuals, I saw a lot of accidents, and once in a while, abuse. But, one thing that I appreciated in Israel is that we had regulations to temporarily or permanently deny access to guns to people who were deemed unfit.

Based on my experience, the same logic that applies to regulation of driving should apply to regulation of guns. Of course, people can buy and own guns, but it has to be within some regulatory framework. It makes sense that potential users of guns need to be tested, and these tests need to be done periodically and licenses should be revoked if a user’s capabilities diminish. Furthermore, access to more advanced guns should require more advanced testing (like trucks) and some guns should be restricted entirely (like military vehicles). In Israel and many European countries, regulations of guns follow these principles. The murder is much lower, and, as the media suggests, U.S. police kill more people in days than other countries do in years.

Two other useful concepts are political economy and regulatory capture. Theories of political economy suggest that choices of organizations as well as politicians are affected by donations and contributions. The term regulatory capture generally refers to situations where industry captures an agency that is supposed to regulate it. I suspect that in the case of guns, the notion of capture is slightly different. Industry captured an organization that is supposed to represent a segment of the public – this organization is the NRA. The NRA always emphasizes that it represents 5 million law-abiding citizens, but much of their support comes from industry. The gun industry funnels $10s millions to the NRA each year. Some authors, for example Melzer (2012), suggest that an organization of sportsmen was captured in the late 1970s by hard-liners[1] that wanted minimal constraints on gun ownership and use.

An astute politician, Willie Brown, states it as a matter of fact that the NRA is “the political arm of a gun manufacturing industry intent on increasing sales.” Therefore, it’s no wonder that the NRA is resist raising age limits on gun ownership, oppose restrictions of automatic weapons, and restrictions on sales at gun shows and through the internet. Furthermore, the President, who has been endorsed by the NRA, is suggesting that arming teachers is a solution to the gun violence. I understand that the gun sector is suffering from a ‘Trump Slump’ and perhaps a new market segment, namely teachers, can address it…

Political economy suggests that politicians care about votes more than anything. In this regard, votes on gun legislation should be an important criterion in assessing politicians. Hopefully the high school student protests will have lasting impact and make politicians pay attention. Finally, NRA members who are aware of the externalities of the policies they endorse should try to change it from within, and not be complicit with the hard-liners who control it.

Economics is generally against bans — they tend to reduce social welfare.[2] A socially desirable outcome will allow people to own guns, but within limits. Moving from the current situation where guns are abundant to a more desirable outcome will require significant effort during a transition period, but as a start, it will require some of the measures of training, registration and limits to access. Moving to a better reality will require making politicians accountable for votes that don’t improve public safety and gun control.

[1] See Melzer, Scott. Gun crusaders: The NRA’s culture war. NYU Press, 2012. Especially the chapter “A Brief History of the NRA”

[2] Economists have developed measures of the well-being of different groups of society taking into account different contingencies. A good measure of social welfare will aggregate benefits from hunting and protection against crime with the risk of mishap.

Comments to “What economics and cars can tell us about guns

  1. I don’t think we need Swiss rules, Canadian rules, insurance rules, Willie Brown, or economic incentives to change gun policy. The right-wingers talk about “original intent” when arguing for a literal interpretation of the 2nd Amendment. That’s fine. The Founding Fathers were talking about protecting individual liberties and the country, not facilitating suicides or enabling psychopaths. These critical distinctions need to be front and center in the conversation. But equally important, if we allow police and national guardsmen, FBI, ICE, etc. to murder people with impunity, then there’s ample justification for people to own and control assault weapons to protect against police-state tactics. This aspect also figures into original intent. Reasonable policy requires that people who are imminent threats should not have access to guns. Close family members must be given authority to restrict gun ownership of other family members as it does not facilitate government control but relies on social ties that predate the Constitution. This interpretation does not interfere with the 2nd Amendment. People should receive training to own a gun, without cost to themselves, as a matter of gun ownership, as it enhances the militia aspect described in the 2nd Amendment. And gun owners must be held accountable if their weapons are unlocked and unauthorized people gain access to these weapons- think young children snooping in their parent’s bedroom. This type of lack of control is criminal endangerment or negligence. We need to step back from the competing dogmas and find common sense solutions.

  2. Hi
    Very nice article about the cars. Teaching classes on applied economics and policy and a key concept that economists stress .two other useful concepts are political economy and regulatory capture.
    Thank you for sharing

  3. I agree that car insurance plays a key role in limiting negative externalities.
    Gun owners, like car owners should need to pay for gun insurance. The insurance market would make sure that the riskier the gun, the more expensive the insurance. And, as importantly, a 22 year old male will pay more than a 55 year old female

    • The thing that is different in Switzerland is this: Soldiers (every healthy male between the ages of 20 and 42) store their military rifle at home (so they are ready to fight starting from their own home if they need to be mobilized.
      These weapons are rarely used in crimes (though quite often in suicides) and hence the crime statistics (still the worst outside the US) are lower than the “arsenal” would predict.

  4. Mark Moore once suggested an elegant policy: Congress should (1) forbid any person to possess or carry a firearm without a license, renewable perhaps every three years, but (2) charter the NRA to issue such licenses as it sees fit. Reflection that if anyone it licensed misbehaved with a firearm, their approval would be public record and generate lots of press could only improve the NRA’s rhetoric and behavior.
    The license might also require a liability insurance policy that the NRA would issue.

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