LoJack hides its anti-theft device so well that thieves can't avoid it — and stop stealing cars citywide instead

the problem

A visible deterrent only protects the one asset wearing it, and lets a thief simply target something else

background

what everyone would do

The standard anti-theft playbook is to make the deterrent visible — an alarm siren, a steering-wheel lock, a window sticker — so a thief sees it and picks an easier, unprotected car instead, protecting that one owner's vehicle.

what they saw

A visible deterrent doesn't reduce theft, it only redirects it onto whichever car nearby lacks the same visible protection, so citywide crime stays flat. Reagan's design instead removed every external sign of the device, so a thief casing any car in a LoJack market could never rule it out.

the move

Because a LoJack unit gives no external sign of its presence — no sticker, no visible hardware — a thief stealing any given car in a LoJack market can never know in advance whether that specific car will lead police straight back to wherever it's taken, including chop shops and theft rings. Economists Ian Ayres and Steven Levitt's 1998 study of the technology found this invisibility was the mechanism, not a side effect: an unobservable device can't just displace crime onto other cars, so its deterrent effect spreads across the whole market instead of concentrating on the one car wearing it.

why it works

Because the device is unobservable, a thief cannot select against it the way they can against a visible lock or sticker — every car in the market becomes an unknown risk instead of just the equipped ones. That forces would-be thieves to discount the value of stealing any car in the area, not just the minority actually carrying LoJack, which is why Ayres and Levitt found theft rates falling market-wide even where only a small share of cars had the device installed.

the payoff

Ayres and Levitt's analysis found that a LoJack buyer/insurer captured less than 10% of the total social benefit their purchase generated, with the rest accruing to everyone else's cars in the same city as auto theft, chop-shop activity and related crime fell; the paper estimated marginal social benefits running as high as 15 times marginal cost in high-theft areas, evidence of a private good that was being drastically undersupplied by the market precisely because most of its value wasn't capturable by the person paying for it.

where it breaks

The mechanism depends on thieves being unable to distinguish equipped from unequipped units at the point of decision; if a device becomes detectable (scanner apps, visible retrofits, public installation-rate data narrow enough to price individual risk) or if enforcement response to a signal is slow or absent, the invisible-market-wide effect collapses back into an ordinary, individually-scoped deterrent.

what came after

The study became a standard citation in economics for measuring positive externalities from an unobservable precaution, and its policy implication — that insurers or governments should subsidize purchases whose benefits mostly accrue to third parties — has been applied to arguments for subsidizing other hidden deterrents, from unmarked audit trails to covert compliance monitoring, ever since.

references

1. [1]Measuring Positive Externalities from Unobservable Victim Precaution: An Empirical Analysis of LojackNational Bureau of Economic Research (Ayres & Levitt), 1997nber.org
2. [2]Lojack for Bikes?Freakonomics, 2005freakonomics.com

keep it

same kind of clever

• 2009 · Airbnb (Brian Chesky, Joe Gebbia)Airbnb's New York bookings weren't stalled by its algorithm — they were stalled by bad photos, so the founders rented a camera and fixed the listings by hand, one apartment at a time.
• 2012 · Buc-ee'sBuc-ee's turned the gas station bathroom — the part every competitor treats as pure cost — into the actual reason to stop there
• 2006 · Cedars-Sinai Medical CenterCedars-Sinai got doctors to wash their hands by photographing the bacteria growing on their own palms