Quantifying the social cost of firearms: a new approach to gun control

By Timothy M. Smith 
University of Minnesota

Another week in America, another week of sadness and hand-wringing prompted by gun violence.

While the most recent incidents are tinged by race, they also point to a country awash in guns and the too many deaths that result from their use (or abuse). But are these shootings any more likely to lead to some kind of meaningful action to address the problem?

Unfortunately, probably not. As long as the debate continues to be one of constitutionality (the right to bear arms) and control (regulation), little meaningful change is likely to address the 16 million new guns entering the U.S. market each year or the nearly 34,000 annual gun deaths.

A new dialogue is desperately needed among policymakers and the public. And it could begin by shifting our focus away from the regulation of guns toward understanding (and mitigating) the social costs of firearm fatalities.

My research examines ways to assess the social, environmental and health effects of new technologies to inform policymakers and companies. Though my focus at the University of Minnesota is on sustainability, similar analyses may also be useful for the political debate over gun control.

Firearm fatalities

The current congressional debate focuses on the most violent actors (terrorists or those whose background check may not check out) and the most lethal guns (military-style rifles) – not necessarily the deadliest guns or those creating the greatest risks to society.

Despite the headlines, most guns never kill anyone, and military-style rifles are some of the least frequently used guns in firearm deaths. Each year, fewer than one firearm-related death occurs in the U.S. for every 10,000 guns in circulation, or 33,636 fatalities for an estimated 357 million guns. And about two-thirds of those deaths are suicides.



Gun deaths associated with mass shootings have surged dramatically in recent years, but are still rare compared with other gun violence. In just the first four months of 2016, 70 mass shootings have been reported (more than all of 2015), with 129 victim fatalities, according to Stanford University’s Mass Shootings in America. Adding in Orlando and Dallas, mass shooting deaths in the first half of 2016 equal those of 2015 and are four times the annual average in recent years.

While this is alarming, such deaths represent just a fraction of the number of firearm-related homicides, about 1.6 percent. And military-style rifles were used in just 10 of the 136 mass shootings reported since January 2015.

Any policy to reduce the likelihood of these events should, therefore, reflect the very small probability of a military-style rifle being used in a mass shooting that targets the public – just one in 575,000 (about 50 deaths out of about 29 million rifles).

New regulation would need to be very restrictive. Millions of these guns would have to be removed from circulation to see any measurable effect on public safety, a politically impossible lift.



Price tag of saving a life

A potential reframing of the issue might be to estimate the social cost of gun deaths, establish the burden borne by each weapon and seek policies that reflect it in the market for firearms.

Across many different areas of government, this kind of analysis is applied all the time when examining the benefits and costs of potential policies. When considering food handling or tracking systems, benefits of reducing the risk of illness and premature death are compared with the costs of implementing the policy. Policies to reduce harmful pollution, improve the safety of automobiles or add bicycle lanes to roads are evaluated in similar ways.

To get at a social cost of mortality, measures have been developed to assess how much people are willing to pay for small reductions in their risks of dying. In aggregate, these values are referred to as the “value of a statistical life” (VSL).

This is not how much an actual individual life is worth, but it is an estimate of how much, in total, a large group of people would be willing to pay to save one statistical life. For example, if the average response from a sample of 100,000 people indicated a willingness to pay $100 to reduce their risk of dying by 0.001 percent, than the VSL would be $10,000,000. So, the total economic cost of mortality in a particular year equals the VSL times the number of premature deaths. Similarly, the economic benefit of a mitigating action becomes the same VSL multiplied by the number of lives saved.

That said, different federal agencies use various valuation methods and assumption. The Environmental Protection Agency’s adjusted VSL for 2013 is $9.4 million, the Department of Transportation set its 2013 base year value at $9.1 million and the Department of Agriculture provides a midpoint estimate of $8.66 million.

From a purely economic perspective, the social costs of gun deaths likely exceed $300 billion annually. This is a staggering number, more than what the federal government spent on Medicaid in the same year. And that’s not including the more than 80,000 nonfatal firearm injuries each year.

A gun’s burden

Identifying guns’ overall mortality risk burden doesn’t exactly help inform legislation targeting certain types of guns used in certain types of homicides.

But, based on the previous analysis of military-style rifles used in mass shootings, these guns (in these situations) are some of the least costly from a VSL perspective. In fact, the social burden of a single military-style rifle is likely to be as little as $15.77 a year (or $455 million for all rifles based on 50 deaths and a $9.1 million VSL).

It is hard to see how this valuation could deter gun sales enough, or support the implementation of a robust screening and background check system, to make a difference. By comparison, handguns – which are implicated in nearly 70 percent of gun-related homicides – bear a disproportionate burden on society of $401 annually per handgun in circulation.

Policies reducing the burden of gun deaths (e.g., by reducing the number of guns or improving their safety) need to be compared against the additional costs of implementing them. These costs could come as regulations, increased taxes/fees or price increases.

In other words, applying a mortality risk valuation to handguns might cost as much every year as the initial cost to the gun owner. In the current climate, any form of tax or fee approaching this valuation would be a political nonstarter.

A way forward

So, if this analysis leads to societal burdens that are both so low (the case of rifles) and so high (the case of handguns) that neither are politically viable, one can easily understand the paralysis in Congress.

The automobile insurance market, where risks are pooled across geographies, types of vehicles and driving behavior, may provide some insights and a way forward.

Similar to guns, nearly 250 million personal vehicles (or their drivers) were associated with 27,507 deaths in 2013. These premature fatalities tally social costs of $250 billion.

A closer look at translating a social burden into a liability premium. | CDC, FBI, Author provided

For illustrative purposes, if we assume that half of these damages are associated with no-fault third parties, the social burden for non-policy-holder deaths might be about $502 per vehicle, on average.

Unlike with guns, a robust system of vehicle registration and mandatory insurance requirements exists in this market. If we also assume that about half of each auto’s liability policy (estimated at $519 in 2013) covers bodily injuries (not property), these insurance premiums represent about half of each vehicle’s societal burden.

I’m not suggesting that these premiums are effective deterrents to poor driving or cover all an accident’s damages to society. Rather, incorporating the external costs of mortality risks into the cost of ownership alters the number of cars on the road and how they are used.

Applying this relationship to firearms, an annual social price tag of $140 per gun might go a long way toward mitigating the mortality costs of gun-related homicide. This estimate is a weighted average of different types of guns, ranging from $15/year for rifles to $200/year for handguns.

Nobody likes new taxes or additional fees, and the gun lobby will certainly oppose even the hint of a disincentive on gun ownership. But there may be enough Republican and Democrat lawmakers open to the idea of market-based policies that don’t directly restrict gun access, progressively impose higher costs to more dangerous guns and generate resources to improve the safety and security associated with guns in America.

Gun reform doesn’t have to be gun control

This back-of-the-napkin analysis may be crude, but it does highlight the need and potential for shifting current arguments away from regulating guns to mitigating the social costs of gun-related deaths.

The devil is always in the details, and important debates will be needed around the imposition of new taxes, registration fees or mandatory insurance. It is unclear who should be affected (owners, retailers, manufacturers) or how to include all of the estimated 357 million guns in the U.S., not just the registered ones.

Policymakers should even consider the impact of these types of economic mechanisms on equity of gun ownership – maybe gun subsidies would be needed for low-income or first-time gun buyers. Most importantly, policymakers should have much-needed arguments about how to reduce gun deaths.

An $140 annual registration fee, applied only to the 23.1 million guns transacted each year, could generate over $3.2 billion in revenues annually. If nothing else, these resources could bolster local police and security budgets, improve access to gun safety training and education, incentivize new technologies that make guns less dangerous and compensate victims’ families.

Anything to break the logjam and actually address the real costs of gun violence.

Timothy M. Smith, Professor of Sustainable Systems Management & International Business, University of Minnesota.

This article was originally published on The Conversation.The Conversation

Share this story