The Biden White House hosted an event on right to repair last Tuesday to provide information “about federal and state efforts to strengthen the right to repair.” Several Biden officials, including Federal Trade Commission (FTC) Chair Lina Khan and Environmental Protection Agency Deputy Administrator Jane McCabe, spoke during the webinar.
For the last decade, the “right to repair” battle has primarily been fought in state legislatures. Only recently has the movement found success. States like New York, Colorado, Minnesota, and California passed right to repair laws that would force manufacturers to sell certain repair products to independent repair shops, including parts, tools, and diagnostic information.
But right to repair also received noteworthy attention in President Biden’s Executive Order on promoting competition, which gave the FTC and its Chair Lina Khan a big role. In addition to taking actions against companies like Harley-Davidson and grill manufacturer Weber under the Magnuson-Moss Warranty Act, the FTC also assisted state legislatures with right to repair legislation. “Over the past year, there’s been a groundswell of right to repair bills introduced in a whole set of states. And the FTC has been grateful for the opportunity to provide input and assistance on several of these efforts,” Khan said.
It would be interesting to know just how much input Khan and the FTC had on the recent Agricultural Right to Repair Act (H.R. 5604) introduced in Congress this September, which would grant additional rulemaking and adjudicative powers to the FTC.
The Biden administration’s “whole of government” approach to policy was on full display. Tom Perez, senior advisor to the president, said,
Consumer protection, I’ve learned through the course of my experience, is at its best when we build an ecosystem, a consumer protection ecosystem, a combination of federal actions through the alphabet soup of regulators, state actions, local actions, and we have responsible corporate partners like we have here today on this presentation. That’s the ecosystem that works best.
The most confusing part of the Biden administration’s right to repair rally came from Lael Brainard, director of the National Economic Council. She said that the repair of electronic devices could save Americans $49.6 billion annually, implying that right to repair efforts could provide big savings to consumers.
This number is fanciful. It comes from a report published by the United State Public Interest Research Group (US PIRG) earlier this year. There are several problems with the report. It fails to account for consumers who already successfully repair their products. And it fails to consider that consumers are more likely to purchase a new device without ever pursuing repair in the first place.
Consumer Reports, an organization that has historically supported right to repair, published a nationally representative survey in 2021 that provides information on consumer behavior regarding repair and replacement. I wrote about the survey in my report, “Two Wrongs Don’t Make a Right to Repair,” to show that consumers already utilize repair services outside of the original manufacturer’s more often than not, dispelling advocates’ claims of a repair “monopoly.”
Further, the survey gives great insights on what consumers typically do when faced with a broken device. In many instances, consumer products are durable and don’t break:
|In the past five years, have you had the product you owned stop working well enough to use?|
|Product||Yes||No||Haven’t owned in past 5 years|
When a product does break to the point that it is no longer usable, consumers are more likely to replace their device without attempting repair:
|Which of the following best describes what you did when your product stopped working well enough to use?|
|Product||Replaced||Tried to repair, but replaced||Repaired||Nothing|
The US PIRG report concludes that “Repair could reduce household spending on electronics and appliances by 21.6 percent.” There are several problems with that number alone. Notably, it assumes that “additional repair would add 50 percent to the life of the equipment” without any evidence or substantiation.
Even assuming, for the sake of argument, that the 21.6 percent in savings is accurate, the total $49.6 billion in claimed savings across all households is flatly wrong. It includes those consumers that are already repairing their devices, and there’s no evidence that consumers who prefer to replace their products would start repairing after passage of right to repair laws.
The only group likely affected would be those that tried to repair but ended up replacing. Based off initial calculations, the US PIRG report overestimates the total savings of repair by over 250 percent:
|Product Category||Annual Spending per HH||Claimed Savings per HH||Total Claimed Savings||Tried repair but replaced||Revised Savings per HH||Revised Total Savings||Over-estimation|
|HH = Household *The Consumer Reports survey only provided results for smartphones, not general consumer electronics. But the US PIRG report used two consumer electronics, smartphones and laptops, to calculate its 21.6 percent in household savings annually. Secure Data Reports conducted a survey last year that found “38% have had to replace a laptop due to breaking it in their lifetime.” While this is likely an overestimate, I averaged the 25 percent that tried to repair but replaced a smartphone in the Consumer Reports survey with the 38 percent in the Secure Data Reports survey to arrive at 31.5 percent.|
While the US PIRG report asserts a $381.73 annual saving per household, the revised savings would be $107.52 per household. This is about $43 per person annually.
Again, the revised total annual savings ($13.9 billion from $49.6 billion) is still likely an overestimation because it doesn’t consider how often a product is damaged beyond the point of repair or when repair costs more than the total value of a broken product. There is research suggesting that delaying replacement for the sake of repair could lead to higher costs in the long term.
Finally, the baseline of $1,767.25 in annual consumer spending on major appliances, minor appliances, and consumer electronics does not reflect the price increases that are likely to result in response to the costs incurred by manufacturers in complying with right to repair legislation. This price response is most notably explained in a recent article published by the journal of Management Science, which found that right to repair laws could lead to a “lose-lose-lose” scenario where consumers, manufacturers, and the environment are all worse off.
The “right to repair” movement has an economics problem. Activists fail to provide numbers measuring an actual problem. And they fail to provide accurate numbers on the purported benefits of right to repair efforts.