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Culture War Roundup for the week of December 2, 2024

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Maybe something goes wrong and it takes them four hours to get at some part of the car, instead of one.

I'll also chime in here that this is not how most auto shops work. Probably not all of them; who knows what Jim-Bob is doing up in the hills. But most places are "flat rate" shops. They list their labor charge as $X/hr, but the way they figure out the amount of the actual charge is not by setting a stopwatch for when the mechanic starts/finishes the job. The history here is that many mechanics would get paid a direct portion of the shop rate (say, P% of the $X/hr that is billed). A lot of places still do this to incentivize the mechanic to get more stuff done and make the business more money (usually the final pay being determined as the minimum of either their labor charges for the pay period or a different hourly rate for on-the-clock time; e.g., they could get paid $20/hr for on-the-clock time or $45/hr of billable labor).

But obviously, it would be dumb incentives for them to be able to start a job, lollygag, take an extra few hours getting it done, and rack up the money. Instead, what the majority of shops do is just use a "book" (a computer these days, for sure) that estimates how long it would take an average mechanic to do that procedure on that car. That determines how much they quote/bill the customer... and how much the mechanic will get paid for that billable labor. This is extra incentive for the mechanic to work hard. If he can be more productive than the average book rate (e.g., he can get a three hour job done in two and a half, then start another job and rack up more billable labor hours), he can make even more money.

I will admit I have no insight into the inner workings of auto mechanics, as I experience it only from the customer side. I was speculating as to what might happen, but I can say that I have had auto shop bills come in higher than the estimate. So whatever the cause might be, it does happen.

Of course it happens. Most people are mostly okay with it happening sometimes, because they got an estimate, were told what the plan was and what the estimate was based on, were able to make an informed decision, and then were told what happened and why the charge was higher. Often times, we would call people when we ran into something that we saw would increase the price and tell them what was going on and if they had options. Many customers are price conscious, and you had to be communicative. If you were, and you made sense in your communication, they're mostly okay with it.

Contrast with the medical industry. Most consumers aren't nearly as price conscious, probably in part because they hardly feel like it's even an option to be1. (There are other reasons, more cultural, but one would have to get off on a tangent about Robin Hanson's terminology of the sacred/profane.) They just go to the doctor, do what he says, and magically a bill goes through their insurance company... and maybe they have to pay some of it. If they bother to inquire, there's a half decent chance they'll be told that it's impossible to know anyway. Every part of it is completely the opposite of the pro-active, communicative pricing information that even only half-decent auto shops provide. If we could get the median medical provider to have price transparency resembling the 25th percentile auto shop (with similar allowances for some situations to happen sometimes where final bills are higher than the estimate, but with similar communication), I'd be super happy. I think this is pretty possible to do.

1 - Yes, and some patients are in situations where they really really really aren't price conscious at all