The Sociological & Psychological Hurdles for Self Driving Cars

20 March 2018 | by Sean Stannard-Stockton, CFA

From the Planet Money Podcast:

“When elevators were first invented, they were like cars – big things that could kill you. And so like cars, they needed a driver… There are accounts in the 19th century of very bad things happening. So they tried to make it safer – they automated it. They created automatic doors with safety bumpers, automatic stopping and then a driverless elevator. It was like the Google car of its time. And people hated it. The elevator industry decided they had to convince people to rethink what an elevator was. It wasn’t a gritty, dangerous transportation device. It was an elegant room that magically did your bidding.”

You should go listen to the whole podcast. It is one of the most important pieces of journalism that relates to self driving cars.

I bring it up today because tragically someone was killed by a self driving car in Phoenix. It was the first known pedestrian death involving a self-driving vehicle. At the same time, 15 pedestrians were killed today by a human driven car. My heart goes out to the family who lost a loved on in Phoenix as well as to the other families who lost a loved one in an accident that won’t receive national news coverage. For those families, speculation about the evolution of self driving cars is academic. But these topics are important to address because over the next year another 5,500 families are going to lose a loved one who was a pedestrian hit and killed by a human driven car. Horrifyingly, another 35,000 vehicle occupants will die in a crash over the next year, and a stunning 4.6 million people will be seriously injured.

So what we know about driving is that it is an extremely dangerous activity that has a lot of room to be made safer. Self driving cars may not be safer than human drivers today. But whether it takes five years or 50, it seems implausible to think that human drivers will remain the safest way around which we can organize our transportation system.

But when self driving cars are discussed, especially the question of when they will become ubiquitous, the focus is usually placed on the technological hurdles that need to be overcome. What the Planet Money Podcast makes clear is that the path to success almost certainly will need to climb steep psychological and sociological barriers as well.

At Ensemble, we believe that wide spread usage of self driving cars are a question of when not if. This is important for investors in almost all types of businesses because the US economy is organized around the passenger vehicle and cargo truck-based transportation system. The rise of a self driving vehicle based transportation system will have widespread ramifications that are difficult to predict and stretch far beyond the auto sector.

  • How will parenting and norms around working outside the house change if children do not need a parent to drive them to school?
  • How will metro areas reorganize themselves and what will happen to property values if previously prohibitive commuting distances become highly productive focused work periods?
  • How will airport infrastructure evolve if someone in Seattle can get into their car at 9pm, doze off to sleep and wake up for a morning meeting in San Francisco?
  • What will happen to the 4 million people (2.7% of the total working population!) who drive for a living or whose jobs directly relate to human driven cars?

Humans as drivers is so deeply embedded into our society that a driver’s license is our primary form of national ID.

We can see today how the internet reorganized our society in ways that was unthinkable early in its development. We think something similar will play out around self driving cars. But the systems in play are so complex and interconnected that it is impossible today to forecast what those changes will look like and how long they will take to come to fruition.

But what we do know is that the primary limiting factor to self driving cars is not technology. Given the state of self driving cars today, it is easy to see that from a technological standpoint at some point we’ll look back on human driven cars as anachronistically as we might today think of human operated elevators. Instead, the big challenges to overcome are the very real psychologically and sociologically complex problems that will need to be addressed.

As this paradigm shift unfolds, investors in public companies across a range of sectors will need to track these technological, sociological and psychological developments. There will be big advancements and big setbacks. There will be unexpected ramifications and unrealized dreams. But what investors won’t be able to do is dismiss the changes as something only relevant to venture capitalists or tech investors. Just as the internet has laid waste to seemingly unrelated industries because of the way it empowered entirely new paradigms, self driving cars will have similar impacts across just about every commercial sector.

Our hearts go out to the family of the woman who died in Phoenix and the families of the 100+ people who died in human driven car accidents on the same day. While we don’t know how all these changes will play out, we do think that our children, and certainly their children, will navigate a much safer transportation system and likely be as horrified to think of climbing into a human controlled car as we would be to find out that a man with his hands on a pulley was responsible for making sure our elevator made it safely to the right floor.

While we do not accept public comments on this blog for compliance reasons, we encourage readers to contact us with their thoughts.

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