We're talking about an incentive structure. Whether that's liability insurance or a direct tax, the goal is the same: to disincentivize unnecessarily dangerous road vehicles.

In a competitive market for insurance the goal is to optimize the actuarial outcomes such that you make a margin after losses are paid out on average. Making the tables optimal and margins small bring you volume of business. Taxes have no such incentive structure at all.

They don't apply the same technique, but they absolutely do establish the same incentive structure: taxing "vices" leads to decreased consumption[1], especially when the target isn't something you can easily sell on the black market (like cigarettes can be).

If Car B costs $X,XXX more than Car A for the sole reason that it's more deadly to everyone else outside of the car, then the purchasing envelope shifts for a large number of people.

[1]: https://www.tobaccofreekids.org/press-releases/2012_09_20_ny

But when you talk about incentive structures you have to consider both sides to understand the final price. Taking a one sided view doesn’t explain the final price at all.

Which side am I missing? When people buy cigarettes at the store, it's generally understood that the tax they're paying is used, in part, to offset the social ills of smoking. I would expect a similar understanding when purchasing large cars.

The insurance company doesn’t care about your safety, just how risky you are and the expected payout for insurance over your lifetime subtracted from the income produced from the policy. They don’t increase it to change behavior as you imply. This is different than the government taxation which is less about revenue and costs than about public health incentive creation.

Okay. In that case, I think I strongly prefer the tax!

> Okay. In that case, I think I strongly prefer the tax!

I'm reading this as you preferring a moral solution rather than a technical one? You must feel pretty confident that the folks in charge of governing will always have priorities that align with your own.

These are both moral solutions, in my book; the GP has convinced me that one is more effective than the other.

I don't think any such law will ever come into effect. So I don't feel the need to be confident (or the opposite) with respect to my elected officials. It's all wishing.

Sometimes, a tax can effectively be insurance for liability.

Sin taxes, e.g. alcohol or tobacco tax, in part help pay for the social cost of those activities.

As the name implies, sin taxes are taxes to discourage use. Tobacco smoking, for instance, likely saves tax payers money because:

1) Smokers pay more in taxes through tobacco purchases.

2) Smokers die way earlier, so there are less social security payments and fewer medical expenses.

No, that's just how they're sold.