But how does the impact of elderly lobbying affect this?

I know from personal experience how skewed things can be for drivers of various ages. For young drivers driving is privilege. For elderly drivers it’s a sanctioned right.

Years ago I knew an elderly driver who was only able to find her car because she memorized the license plate. She would walk up and down the rows of parked cars until she found the right one.

Eye test? She memorized the charts and was able to successfully determine which chart was being used when given eye tests.

But she was blind as a bat.

I’m not so sure. Just last weekend I was talking to my grandmother, who has significant assets. She’s not happy about the lifestyle change of being kept from driving, but she was finally convinced of its necessity when it was explained to her that in case of an accident, even one not her fault, someone could sue her “for every penny I’ve got.”

Her decision may have been more based on a perhaps-skewed perception of how the American legal system works than insurance, but nonetheless it was a market-based decision that deterred a wealthy elderly driver from driving.

Moreover, my point is that this is less about deterrance per se than Frank indicated. A driver that destroys someone else’s $40,000 BMW and dies himself in the process imposes no harm on anyone else, as long as his estate pays $40,000 to the owner of the BMW. The objections that (1) the driver might not have $40,000 left in his estate, and (2) it is harder to quantify human life (if he kills a pedestrian, for example) than a BMW go to the problem that the tort system is undercompensatory. That is not, however, the problem of inequality that Frank pointed out.

Insisting that one has “adequate” or “properly priced” insurance is as irrelevant as it is insolent. There is simply no such thing as a “right to drive incompetently.” All else is sophistry.

You miss an important factor that an elderly driver may consider. A deterrent effect imposed by the market after a crash is less effective than it should because of the significant likelihood that the elderly driver will not survive the crash. His insurance rates will not be going up and he has no need to buy a new BMW. If he has few true assets to pass on to heirs (for example, he has reversed mortgaged his house, lives off of a pension/lifetime annuity, plans to pass on wealth to his children through a life insurance payout to his kids, deeded his house away and only owns a life estate) he has to rationally consider his diminished likelihood to survive the crash, and thus, avoid compensating the victims for their losses.

The complication is that our tort system is undercompensatory for at least some types of personal injury. Compensating for destroying a BMW is easy, compensating for killing a pedestrian is hard. From an economic perspective, however, that is a problem of quantitation, and has nothing to do with inequality.