Driving with Big Brother

D.C. commuters invite strangers to ride with them, and new technology has some people doing the same with Big Brother. Insurance companies are beginning to monitor customers’ driving in exchange for lower rates: * Progressive will announce its TripSense trial in Minnesota on Aug. 24. Customers who sign up will get a device the size of a Tic Tac box to plug into their cars. The device will track speed and how many miles are driven at what times of day. Every few months, customers would unplug the device from the car, plug it into a computer, download the data and send it to Progressive. Depending on results, discounts will range from 5% to 25%. * In Great Britain, major insurer Norwich Union will start its Pay As You Drive test in a few weeks. Volunteers will get a device the size of a Palm computer installed in their cars. The gadget will use global positioning satellite technology to track where the car goes, constantly sending information to Norwich Union wirelessly. Cars that spend more time in safer areas will qualify for bigger discounts. (I wonder what State Rep. Canales thinks about this.) Seems like this approach could offer a market-based solution to the controversy surrounding seat belt laws. (And even those with strong libertarian leanings often support these laws because they don’t want to have to pay for the risky behavior of others.) In response to my seat belt law criticisms , Eugene Volokh once suggested an interesting compromise: Instead of pulling people over and fining them for not wearing seat belts, have cops alert drivers’ insurance companies. Insurers would then (presumably) raise the rates of those who don’t buckle up. I wonder if technology used by Progressive and Norwich Union could be tweaked to expand on Volokh’s idea. Perhaps (with the driver’s ok) the act of buckling up could be tracked by insurance companies. This approach would also throw a carrot into the mix, for buckling up would be rewarded with lower rates. For more on how new technology offers new market-based solutions to old problems, see this (pdf) article by Fred Foldvary and Dan Klein, which is adapted from their book, The Half-Life of Policy Rationales: How New Technology Affects Old Policy Issues. For more on why you might like (private sector) Big Brothers, see this Reason cover story. And here are some responses to reader comments on my anti-seat belt law article.