VW's Cheat Was Not Ingenious

It does seem to me that if one were keeping score, Toyota got a more serious punishment than GM for a far lesser crime. It even appears that the relative cost to VW of its nefarious manipulation of emissions is disproportionate compared to the cost to GM when so many lives were lost. -Jeffrey Liker

VW’s case is a different animal entirely. It did not involve a failure to recall defective vehicles that could cause safety issues. Rather, the company’s engineers intentionally added software designed to allow its diesel engines to evade emissions standards and then, in normal driving, emit 40 times the acceptable levels. This was a deliberate, and quite ingenious, way to break the law and avoid detection.

We are more outraged by deliberate attempts to break the law, compared to stochastic sloppiness leading to mistakes and accidents. But it is far from obvious that the egregious violations should be punished more severely in a Beckerian framework. In fact, if they are harder to pull off, compared to sheer neglect, perhaps they should be punished less severely, at least from a utilitarian point of view. I am not saying we should discard our intuitions about relative outrage, but we ought to look at them more closely rather than just riding them to a quick conclusion -Tyler Cowan

There was no immediate harm to individual drivers in the VW case, but the disclosure of the excessive emissions comes at a time when there is grave concern about climate change. -Jeffrey Liker

First, whereas Enron’s fraud wiped out the life savings of thousands, Volkswagen’s has endangered the health of millions. The high levels of nitrogen oxides and fine particulates that the cars’ on-board software hid from regulators are hazardous and detrimental to health, particularly of children and those suffering from respiratory disease.

Volkswagen's 482,000 problematic US cars are currently emitting between 5,800 to 14,200 additional tons of nitrogen oxide pollution (NOx) each year, assuming the cars are driven the US average.* This is over and above the pollution the cars would have emitted if Volkswagen had adhered to the legal limit.

Extrapolating that to 11 million cars around the world, and assuming the rest of the cars are driven the European average, we get somewhere between 86,800 and 212,500 additional tons of NOx emissions per year.

Now, there are lots of assumptions and simplifications embedded in those estimates, particularly around how many miles VW's cars are actually driven. But that's ... potentially a large amount of extra NOx pollution. At the high end globally, it's 20 times what a typical coal plant without emission controls puts out in a year.

the extra pollution from Volkswagen's US cars can be expected to lead to an additional 5 to 27 premature deaths per year. If we extrapolated worldwide to all 11 million vehicles, that would come to somewhere between 74 and 404 premature deaths each year.

So crime clearly does not pay. That said, it seems that if a company apologizes and carries on, it can survive and prosper in the long term. (For the most part, automakers have been quick to recall vehicles and contrite when accused of taking too long to do so.) In the meantime, many lawyers and the U.S. government are making a lot of money from the auto industry.

What is less clear is why there have been record numbers of U.S. recalls, and the United States has become so vigilant in going after automakers. In the Toyota recall, NHTSA, which had previously had been criticized for being soft on automakers, seemed to want to prove how tough it could be. In this relatively hostile environment in the United States, Volkswagen will now pay dearly for brazenly cheating on diesel-engine emissions.

"What was Volkswagen thinking?" This question makes a big assumption: that the Volkswagen people were thinking, about anything beyond their greed. About decency, about our environment, about their progeny.