Government itself has this problem too in fact and the method generally used to deal with it is price mechanism. We generally try to work out what is the statistical value of a life by looking around at what people do and how much they charge for the risk. Some people work in more dangerous jobs (trawlerman, lumberjack), so what’s the difference in wages between a more dangerous and less dangerous job (trying, of course, to keep other things like effort, training and so on constant)? People smoke and are willing to pay some sum for a safer car but not an unlimited amount. This process is more of an art than a science, but the U.S. government comes up with numbers in the $4 million to $10 million range for the value of a statistical life.
This is not what a life should be worth. This is what, from observation of what people do, modern Americans think a life actually is worth. Now we can use it to decide on our safety regulations. And it doesn’t matter whether we’re talking about corporations eyeing their profits or government aiding the EPA in setting rules about what corporations may do. We still end up with the same economic point.
If the statistical value of a life is $10 million then a rule, a regulation, a new way of doing something, which costs more than $10 million per life saved is a waste of resources. It’s not just something we might have to think about doing: it’s something that we positively should not do. Equally, something that costs less than $10 million per life saved is something we should do. Either way, we are trying to make sure that we expend our limited and scarce resources in order to produce the greatest human value we can. Spending $20 million on saving one life is a waste of those resources: not spending $500,000 on saving one is a waste of that life which we value more.
Tim Worstall, “Sorry, Salon: The Koch Brothers Are Actually Right”, Forbes, 2016-05-17.
January 24, 2018
QotD: What is a human life worth?
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