How Much Is a Human Life Worth?

How Much Is a Human Life Worth?

Some of the most important decisions that corporations and governments make concern actual human lives. That’s a benefit (or cost) that has to be calculated in some way. But surely we wouldn’t want to calculate the value of a human life?

Actually, no matter how repellent you find the concept, you’re going to have to agree that we must place at least a tacit value on a human life. You would save lives if you put an ambulance on every corner. But you’re not willing to do that, of course. Though the money spent on the ambulances might result in saving perhaps a life or two per week in a medium-size city, the expense would be prohibitive and you wouldn’t then have the resources to provide adequate education or recreational facilities or any other public good, including (nonambulance) health care. But exactly how much education are you willing to sacrifice in order to have a reasonable number of ambulances in a city? We can be explicit or we can be tacit. But whatever decision we reach, we will have placed a value on a human life.

The monetary value used in a policy analysis is not a measure of a person’s moral worth. Such analyses often value small reductions in mortality risk across a population, expressed as a value of a statistical life. Nisbett compares historical government figures to show how much the estimates can differ.[5] The Food and Drug Administration valued a life in 2010, apparently arbitrarily, at $7.9 million. That represented a jump from two years previously, when the value assigned a life was $5 million. Nisbett also reports a Department of Transportation figure of $6 million, which he describes as apparently arbitrary.

Other approaches base estimates on observed choices. The Environmental Protection Agency values a life at $9.1 million (or rather did in 2008).[6] That’s based on the amount of money people are willing to pay to avoid certain risks, and on how much extra money companies pay their workers to get them to take additional risks.[7] Another way of estimating the value of a life is to see how much we actually pay to save the life of a particular human. Economists at the Stanford Graduate School of Business made this calculation based on how much we pay for kidney dialysis.[8] Hundreds of thousands of people are alive at any one time who would be dead were it not for kidney dialysis treatments. The investigators determined that a year of “quality adjusted life” costs $129,000 for people in dialysis, so we infer that society places a value of $129,000 on people’s quality-adjusted lives. (The quality adjustment assigns a health-related quality weight to time lived; it does not measure the patient’s worth as a person. The account uses a weight of half that assigned to a year in full health. Dementia and other disabilities are more common for dialysis patients than for people of the same age who are not on dialysis.) The account extrapolates to a fifty-year life valued at $12.9 million ($129,000 × 2 × 50). The extra factor of two does not follow from the stated cost per quality-adjusted year; that extrapolation needs clarification before use.

Economists call values derived in these particular nonarbitrary ways revealed preferences. The value of something is revealed by what people are willing to pay for it—as opposed to what they say they would pay, which can be very different. Verbal reports about preferences can be self-contradictory as well as hard to justify. Randomly selected people say they would spend about as much to save two thousand birds from suffering due to oil damage as other randomly selected people say they would spend to save two hundred thousand of the same birds.[9] Apparently people have a budget for oil-endangered birds that they won’t exceed no matter how many are saved!

Nisbett presents $50,000 per quality-adjusted year as a benchmark used in insurance coverage decisions, while questioning its basis. This historical account does not establish a universal or current coverage threshold. Applied mechanically, the $50,000 figure would support a medical procedure costing $500,000 if it was to save the life of an otherwise healthy seventy-five-year-old with a life expectancy of ten years. But not $600,000 (or $500,001 for that matter). The same calculation would allow up to $4 million to save the life of a five-year-old with a life expectancy of eighty-five. (Nisbett reports that the United States lacked an agreed-upon value for insurance coverage at the time of his account, though polls suggested that the great majority of people are at least somewhat comfortable with calculations of that sort.)

But how about the life of someone from a less developed nation, say Bangladesh or Tanzania? Those countries are not as rich as the developed countries, but surely we wouldn’t want to say that the lives of their citizens are worth less than ours.

Actually, we do say that. Intergovernmental agencies calculate that the value of a citizen of a developed country is greater than that of a citizen of a developing country. (On the other hand, this practice does have its benign aspects from the standpoint of the citizens of less developed nations. The Intergovernmental Panel on Climate Change assumes that a developed nation can pay fifteen times as much as a developing nation to avert a death due to climate change.)

I trust that by now you’re dubious about techniques for calculating the value of a human life. And I haven’t even started to regale you with stories such as those about the insurance companies that pay less for the life of a coal miner than for the life of an office worker on the grounds that the coal miner’s value on his life is revealed to be lower because of his choice of a hazardous occupation! Or the report that the Ford Motor Company decided not to have a recall of its Pintos to put a safer gas tank in the cars because the recall would have cost the company $147 million, versus a mere $45 million for payments for wrongful deaths!

But … we really do have to have some base value for a human life. Otherwise we risk spending large amounts of money to carry out some regulation resulting in a trivial increase in the number of quality years of human life while failing to spend a modest amount of money to increase the number of quality years of human life by hundreds of thousands.