Battlepanda: One way to get rid of your gas-guzzler


Always trying to figure things out with the minimum of bullshit and the maximum of belligerence.

Monday, June 12, 2006

One way to get rid of your gas-guzzler

When two goods are complementary (e.g. gasoline and SUVs), and the price of one (gasoline) rises, economics tells us that the value of the other (the SUV) will fall. And when the value of a good falls below the insured value of the good, this creates what economists call "moral hazard":
SUV owners who are faced with rising gas prices have found a new way to get out from under their high car payments — arson.

This trend was spotted by a Southern California arson task force in the summer of 2005 when gas prices spiked. At one point, firefighters responding to a report of a vehicle fire arrived at the Los Angeles River Bed to find two SUVs burning at the same time.

Investigators found the arson-for-hire ring involved a new-car dealership in Cerritos, California. Debt-weary SUV owners contacted the finance manager, hoping to trade in their gas-guzzler for something cheaper. They were then put in touch with an arsonist who told them to leave the keys in the ignition and $300 cash in the glovebox. An arsonist would then take the car to a remote location and set it afire. After the car was torched, the owners would then contact their insurance company and report their vehicle stolen, expecting their debt to be cancelled. Instead, they were investigated for insurance fraud.
Via MetaFilter.