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What are we worth?
Author: BobR    Date: 07/11/2008 12:12:23

What is a person worth? Can you put a dollar figure on that? Should you put a dollar figure on that? Who decides and what criteria do they use?

Amid all the hoopla yesterday, a seemingly innocuous story slid beneath the radar. The more I read of it, however, the more it bothered me. Apparently, the EPA does just that, and recently devalued what a human life is worth:
It's not just the American dollar that's losing value. A government agency has decided that an American life isn't worth what it used to be.

The "value of a statistical life" is $6.9 million in today's dollars, the Environmental Protection Agency reckoned in May — a drop of nearly $1 million from just five years ago.

The Associated Press discovered the change after a review of cost-benefit analyses over more than a dozen years.

Though it may seem like a harmless bureaucratic recalculation, the devaluation has real consequences.

When drawing up regulations, government agencies put a value on human life and then weigh the costs versus the lifesaving benefits of a proposed rule. The less a life is worth to the government, the less the need for a regulation, such as tighter restrictions on pollution.

Consider, for example, a hypothetical regulation that costs $18 billion to enforce but will prevent 2,500 deaths. At $7.8 million per person (the old figure), the lifesaving benefits outweigh the costs. But at $6.9 million per person, the rule costs more than the lives it saves, so it may not be adopted.

I don't know what's more disturbing:
  1. That the EPA is doing the calculations at all

  2. That the value has dropped

  3. That the value affects whether regulations are even enacted
Sure I know about Actuarial Science and how private insurance companies use it to set insurance premium numbers. But a government agency doing a calculation to determine whether a regulation that may save lives is "worth it"? It boggles the mind.

The article goes on to provide a little detail as to how the value is calculated, and why it's gone down:
... economists calculate the value based on what people are willing to pay to avoid certain risks, and on how much extra employers pay their workers to take on additional risks. Most of the data is drawn from payroll statistics; some comes from opinion surveys. According to the EPA, people shouldn't think of the number as a price tag on a life.

The EPA made the changes in two steps. First, in 2004, the agency cut the estimated value of a life by 8 percent. Then, in a rule governing train and boat air pollution this May, the agency took away the normal adjustment for one year's inflation. Between the two changes, the value of a life fell 11 percent, based on today's dollar

So the EPA thinks we shouldn't think of it as a "price tag on a life", yet that's exactly what it is. And apparently - unlike everything else - the price is not inflation-adjusted.

The other notable factoid is that the government's value is keyed to employers' perceptions as to their employees' worth. To me, this seems like yet another step towards Corporatism. (Side Note: If the latest G8 Summit is any indication, rampant corporatism and its control over environmental protections is a worldwide problem.)

But hey - at least we're worth more than people in other countries, right? If we divide the cost of the war in Iraq by the number of Iraqis killed in the conflict, we can determine that an Iraqi life is worth about $43K.

Wow - that's practically a steal.

 

276 comments (Latest Comment: 07/12/2008 13:34:36 by m-hadley)
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