Monday, February 11, 2013

Externalities

Somehow not the same as a gun shop
Americans don't think you should be able to buy a gun without passing a background check.  More specifically, 9 out of 10 Americans believe that; even Congress will find it hard to ignore that kind of political consensus.

The trouble is, implementing a universal background check is going to be very difficult.  Right now background checks are only required for people purchasing firearms from a dealer.  That's the so-called "gun-show loophole;" since you can buy a firearm from a private citizen without passing a background check and since lots of private citizens sell firearms at gunshows, you can fairly easily purchase a firearm from a complete stranger without passing a background check by just going to a gun show.


This loophole has gone digital too.  Armslist.com provides listings of firearms for sale by private citizens.  Find a gun you like, agree to pay, then arrange the exchange; it's like a virtual gunshow and there's no background check required.  In fact, as the folks over at MotherJones point out, an undercover investigation of Armslist by the New York City government found that 54% of sellers were willing to sell after finding out that their buyer couldn't pass a background check.

That willingness to sell - not just without a check but to people who can't pass in the first place - is going to make a universal background check law very difficult to enact.  A background check doesn't make firearms traceable and even if we were to go one step further and require guns to be transferred like cars - serial numbers and all - a nefarious seller could still disavow an illegal transaction after the fact, claiming that he did not sell the gun but rather than it was stolen or lost.

Yet we don't have this problem with cars.

There are costs associated with owning a car.  They are taxed as personal property in most areas and registered owners are required to carry insurance on them.  While a gun owner might lend or give a firearm to a friend or family member for a period of years he would almost certainly never do that with a vehicle as he would have to continue paying insurance and taxes on it.

Instead, he'd transfer ownership legally and officially.

Mandatory firearms liability insurance would likely have the same effect.  As it turns out, there's already a pretty good case to be made for such insurance without factoring in the firearms tracking aspect.

A paper entitled "The social costs of gun ownership" by Philip Cook and Jens Ludwig ballparks the "average marginal social cost of household gun ownership... in the range of $100 to $1800."  Cook and Ludwig crunch a lot of numbers (you can read their full paper here) and in the end arrive at a a figure closer to $600 a year but the actual amount isn't terribly relevant just yet.

The theory is that, besides risks of suicide, and accidental injury, "each additional 10,000 gun-owning households leads to around 6 additional crime-related gunshot injuries" annually and that the cost of these shootings is rarely paid by the shooter.  It is what economists call an "externality:" a cost to a transaction (the sale of a firearm) which is not borne by either the buyer or seller.

Creating a firearms licence program built around an insurance model would push these costs back onto the gun-owners who incur them while simultaneously creating a system of financial reinforcement for gun registration and background check compliance.  Moreover, it would also create market incentives for gun owners to more carefully secure their firearms and encourage them to keep current in firearms safety and competency.



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