The Ford Pinto and the Cost-Benefit Memo

The story

In the late 1960s, small, inexpensive imported cars from Japan and Germany were winning American buyers. Ford answered with the Pinto, a low-priced small car launched for the 1971 model year. But the Pinto's fuel tank sat behind the rear axle, and in some rear-end crashes the tank or its filler pipe could be punctured, spilling gasoline that could catch fire.

The most famous court case began in 1972. A Pinto stalled on a California freeway and was hit from behind. It burst into flames. The driver, Lilly Gray, died, and her 13-year-old passenger, Richard Grimshaw, suffered terrible burns that required many surgeries. His family and Gray's family sued Ford. In February 1978, after a six-month trial that included evidence about Ford's own crash tests, a jury awarded about $2.5 million to Grimshaw and about $560,000 to the Gray family, plus $125 million in punitive damages, which are meant to punish a company rather than just repay a victim. The judge cut the punitive award to $3.5 million, and a California appeals court upheld the verdict in May 1981.

Regulators acted too. The Center for Auto Safety had asked the National Highway Traffic Safety Administration (NHTSA), the federal car-safety agency, for a recall in 1974. In 1977, Mother Jones magazine published a sharp article called "Pinto Madness." NHTSA opened a defect investigation that September, ran its own crash tests, and found the fuel system a safety defect. On June 9, 1978, Ford agreed to recall about 1.5 million 1971–1976 Pintos and some Mercury Bobcats to add shields and a better filler pipe. In 1980, Ford was put on trial in Indiana for reckless homicide after three young women died in a 1978 Pinto fire. The jury found Ford not guilty.

Then there is the memo. Mother Jones and many later textbooks described a Ford document that seemed to show the company deciding it was cheaper to let people die than fix the Pinto. A real Ford document does exist. Written in 1973 by two Ford employees, Grush and Saunby, it was sent to federal regulators to argue against a proposed rule. It estimated that a fix costing about $11 per vehicle, for about 12.5 million cars and light trucks, would cost $137 million. It weighed that against about $49.5 million in "benefits," based on preventing an estimated 180 burn deaths and 180 serious injuries. For each death it used a value of about $200,000, a figure taken from a government estimate of the cost to society of a traffic death.

What is disputed is what the memo meant. Law professor Gary Schwartz, in a well-known 1991 study, pointed out that the memo was about fuel leaks in rollover crashes for all cars and light trucks, not rear-end crashes in the Pinto, and that the Grimshaw judge did not allow it into evidence. He also estimated that Pinto rear-end fires caused about 27 deaths, far fewer than the 500 that Mother Jones had claimed without a clear source. Other writers still see the memo as a troubling example of turning human lives into numbers.

So what lessons hold up? The courts and regulators established that the Pinto's fuel system was defective and that Ford was liable for harm in the Grimshaw case. Ford did not admit fault in the criminal case and was acquitted. And the memo, whatever its exact purpose, became a lasting symbol. Companies must make trade-offs about cost and safety every day, but how they make those choices, and how they would look to a jury or a grieving family, matters enormously.