« Freakonomics Radio

69. The Hidden Cost of False Alarms (Rebroadcast)

2013-05-15 | 🔗
If any other product failed 94 percent of the time, you'd probably stop using it. So why do we put up with burglar alarms?
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ladies and gentlemen, Stephen Governor, has lost his voice this week in his home sick. So we bring you this re broadcast from marketplace, enjoy from a p M american public media and w, and my see this is economics, radio on marketplace: here's a host of Marketplace- Cairo's doc- saw nerve but a freak and on a radio that moment in the broadcast. Every couple of weeks where we talk to Stephen under the co author of the book, I'm sorry I'm sorry I log of the same name. It is, of course, the hidden side. Let me find about your guy. I got it. I got it. I guess. So what are you doing tonight? We just put a burglar alarm in the studio here. It goes off like every five minutes. One would think you'd be able to turn it off when you're on the radio dude. You would, but you know it.
I'm. Just me. Cried you have any idea what the false alarm ray is for burglary alarms in this country. Well, I'm just gonna, guess you're trying to make a born yours, I would say hi. Yes, the data show that fall alarms account for nine. Before to ninety nine percent of all alarm calls. You that's did that's great, that their false alarms would it's bad the false alarms right? Well, you know who, it's an even more than the homeowners. Are the police just listen to Craig Steckler he's a police chief of Fremont? California, He realized that ninety eight percent alarm calls to his department were false alarms. He trying to figure out what this was actually costing us this time we figure was around sixty seven dollars and for each officer the response to officers per call them. The dispatch time was around twelve dollars for every dispatched call. So We took those figures and multiplied by our.
Number rulers and came up with this figure: six hundred and sixty four thousand wide eyed tragedy with a lot of false alarms. We talk to Simon Hakim, an economist. A temple. Who's been studying this issue for a long time. He says that in a given year: U S police respond to more than three. Five million alarm activation so again, Kai something like ninety. Five percent of them are false alarms and the cost is about two billion. Dollars most of the time. It's not a burglar that came to your house, but its force activation so then Before to ninety nine percent. You get the personal service, it's not enhancing. Anyone form the security of the Commission We also that that phrase used false activation. What does that mean? Well, you know But one industry experts we talk to puts about seventy five percent of the blame on user air force. Industry would blame my stupid users rights and then there's
whether in power surges and also you know, let's not forget, there are actual burglars air about two million Burglary is a year in the. U S so do these arms systems, though determine? Would it be five million without em? Well, you know Hakim says yes, that alarm systems do determine which, to some degree, the sign in the yard, and we know the threat of alarm in the police. We ve got a deterrent effect, which just happens to have an extraordinarily high a false, positive rate port. Is the alarm industry, aiming there, obviously making a lot of money selling these things that don't work. Ninety five Seneca well good point. We talked. Run Walter's with the security industry ALARM coalition, which helps deal with the complaints about false alarms from the police department, It's our number one priority. This is the one issue that we have decided ass to be addressed. So you know their proposed thing better design for alarm key paths, more video
monitoring to verify whether an alarm calls legit. But you know, if you think about how the incentives are late outcry. You do have to wonder how hard the alarm companies really need to try. Here's chief steckler again they have a business model that sells a product or service by a public entity that data even age, do the service. And saw its money in your pocket. Why should they change yeah? That's the total skeptical realist view, but he's got a point when he does have a point. You know finance landless, say that industry leader eighty tee, for instance, has an operating margin of about twenty five percent on roughly three billion dollars and annual revenues, and so these false alarms pose what economists call a negative externalities. That is, the provider charges you for the service, but then they pass along a big part of their. Course to someone else, in this case the police departments and the taxpayers who support them rights order which most new but over the solution. Well, you know it's probably a good idea to
make the alarm companies more accountable in some fashion, including you know, having to make alarms dont fail so often in them, in time. You know some cities have started to penalized homeowners for repeated false alarms, cash fines, even misdemeanor charges, as from I think I'm just going to ditch my new alarm. It seems go off every five minutes, I'm going. School here kite see. If this new alarm a mine would actually keep you make me say: I've been to your house, I know you don't have a God did at Mister Upper West evened out, you're freaking out like that love is the website. Cynical bluish talk you soon, guy
hey podcast listeners coming up on the next for economics, radio, Steve Leather and I answer your question it here's one from a reader named Sebastian several. Why is it safe to sneeze with your eyes open the best questioning give her a rear. Its another instalment of free Whitley asked questions is on tight, yeah.
Transcript generated on 2021-03-15.