This blog contains posts and comments written by students in Dr. Tufte's economics classes at Southern Utah University.
9/25/2005
"Storm Cars"
It's bad enough that there are people robbing those effected by Katrina, but now selling their water damaged cars? In the article i read it says that thousands of cars that were damaged by the hurricane are expected to re-enter the market in the next few months. While trying to sell these vehicles I'm sure the retailer will forget to mention to the unsuspecting customers that these were the cars that were under water just a few months earlier. I don't think this is honest, or ethical. These so called car salesman will go gather up these broken cars, fix them so they will run for a month, and rip off these innocent car buyers, all in the name of money.
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-1 on Logan's comment for a spelling error.
Yes, there are fraudulent sales of flood damaged cars. But, did anyone stop to ask if the problem is worse with flood damage than with other sorts of damage? If there isn't any evidence of that, then this is a non-issue.
Used cars sales are also characterized by a problem known as adverse selection (which we will cover in an Aplia experiment later in the semester). Basically, they have a hard time getting people to believe them when they say they have a quality car, so people underbid on them. The result is that they refuse to sell a quality used car, and just wait until you overbid on a low quality one.
FWIW: My car was flooded up to the radio in New Orleans in 1995. My insurance covered repairs, and the car is still running, and is probably parked out by Administration right now.
Dr. Tufte brought up a point that there is definitely a market for these damaged cars. This could be a way for someone to get a good car cheap. I also see the fraudulent part of the deal and disagree with that, it just is not fair for the buyers.
There is some internet buzz around that these cars were sold under false pretenses in Latin America, but I've never come across any concrete measurement of that.
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