« Freakonomics Radio

69. The Hidden Cost of False Alarms

2012-04-03 | 🔗
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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as for economics, radio on marketplace, here's the host of marketplace. I really don T know if alone, 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 am 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 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's not just Did you have any idea what the false alarm rate is a burglar alarm 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 false alarms account for ninety for to ninety nine percent of all alarm call lugging. That's did that's great, that their false alarms would it's bad the false alarms right
you know who hates it even more than the homeowners are the police, ethical, listen to Craig Steckler he's a police chief of Fremont Caliph. When you, when he realized that ninety eight percent of alarm calls to his department were false alarms, he's trying to figure out what this was actually costing. the officers time we figures around sixty seven dollars and for each officer to respond to authors per call them. The dispatch time was around twelve dollars for every dispatch call. So we took those figures in multiplied by our number alarms and came up with this figure. Six hundred and sixty four thousand that registers the 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 thirty five million alarm activation now again Kyar, 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 the nineties, the ninety nine percent. You get the personal service, it's not enhance singing anyone form the security of the community rules so that that phrase used false activation. What does that mean? Well, you know 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 then there's the weather and power searches and also you know, let's not forget, there are actual burglars era there about two million burglaries a year in the? U S so do these alarm systems, though determine? Would it be five million without em? Well, you know Hakim says yes, that alarm system do deter burglars to some degree, the sign in the yard and mean of the threat of alarm in the police. We ve got a deterrent effect, which just happens to have an extraordinarily high false positive rate.
What is the alarm industry saying? They're, obviously make a lot of money selling these things that don't work. Ninety five percent of the time. Well, good point: we talked to RON Walters with the security industry ALARM coalition, which help to deal with the complaints about false From the police departments, its number one priority: One issue that we have decided has to be addressed, so you know their proposing better design for alarm keeper as more video monitoring to verify whether an alarm calls legit. But you know, if you think about how the incentives are laid out Kai, you do have to wonder how hard the alarm companies really need to try. Here's chief steckler again they have a business model, the cells of product service by a public entity that data even page do the service,
and saw its money in their pocket. Why should they change yeah? That's the total sceptical realist view, but he's got a point when he does have a point. You no financial analysts 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 costs 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 the meantime, you know some cities have started to penalized homeowners for repeated false alarms, cash fines, even misdemeanor charges as from
gee, I'm just going to ditch my new alarm. It seems go off every five minutes, I'm going old school here kite see if this new alarm of mine would actually keep you out of your league, my bill, your house, I know you don't have a guy get added upper West evened out of economic got love. Is the website? Cynical Bluish, Socrates, in kind.
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Transcript generated on 2021-03-16.