Economics and the mid-life crisis have much in common: Both dwell on foregone opportunities

C'est la vie; c'est la guerre; c'est la pomme de terre . . . . . . . . . . . . . email: jpalmer at uwo dot ca

. . . . . . . . . . .Richard Posner should be awarded the next Nobel Prize in Economics . . . . . . . . . . . .

Wednesday, September 21, 2005

The Economics of Dead-bolt Locks

When we moved to this small town (pop. 3300) 9 years ago from the big, evil city of London, Ontario, we asked someone about putting dead-bolt locks on the doors. He smiled condescendingly and then laughed:
Dead bolt locks are only good for keeping your friends out.
He then pointed out that all our doors had glass windows in them, and it would be very easy to break the glass, reach in, and twist the deadbolt locks.

Deadbolt locks make sense, I guess, if you have metal security doors. But even then, I'm not so sure:

A number of years ago, the economics department installed deadbolt locks on all the office doors. If I recall correctly, this was after some student went up and over the walls, through the suspended ceiling tiles, to try to steal an advance copy of an exam. I guess there had been other incidents of attempted break-ins, but I don't remember them.

Then two years ago, my office neighbour had a hole punched in the drywall next to his door (his deadbolt was locked). The criminal then unlocked the door, and his office was ransacked.

After that episode, I received a very stern warning that I must double lock my office door, using the deadbolt lock. Yeah, well, whatever,....

The economics: What percentage of attempted office breakins is deterred by deadbolts? I expect the number is very small, but perhaps non-zero. What is the value of potential loss from those break-ins? I have no idea, and I don't mean to trivialize it, but if people broke into my office about all they'd get is a 15-year old HPIIIp laser printer and busted bar fridge that I painted lavender to match the rest of my office furniture (the walls are bright pink).

In contrast, what was the cost of installing the deadbolt locks? non-trivial, especially since now that they are in place, we annually receive warnings:
Security Alert
This is a reminder to please deadbolt office doors.
Can anyone say "sunk costs"? It is as if the memo read:

This is a reminder: we spent all that money on deadbolt locks, so justify that expenditure by using them.
Our homeowners insurance company threatened to cancel our house insurance if we didn't install deadbolt locks on all five doors to our house. I explained the situation and informed them that we had no intention of replacing the doors with glass in them, and told them that if they were serious, we would find another insurer. They quickly relented.

Ain't competition grand?

I expect that in some settings, deadbolt locks make sense. They certainly do not make sense in our home, and I'm not so sure they do at my office, though I might be mistaken about the expected costs and benefits.
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