How much is your life worth? Ask the fed­eral govern­ment

The Charlotte Observer (Sunday) - - Opinion - BY JAMES BROUGHEL Tri­bune News Ser­vice

On Tues­day the Trump ad­min­is­tra­tion pro­posed new pol­lu­tion lim­its for coal-fired power plants. While there’s likely to be no short­age of con­tro­versy sur­round­ing the new reg­u­la­tion, which re­places more strin­gent lim­its set in mo­tion by the Obama ad­min­is­tra­tion, less well­known is what’s buried deep within an En­vi­ron­men­tal Pro­tec­tion Agency anal­y­sis ac­com­pa­ny­ing these new guide­lines: a dol­lar value as­signed to hu­man lives.

It sounds like some­thing out of a dystopian novel, but the U.S. govern­ment ac­tu­ally com­putes this on a reg­u­lar ba­sis. Agen­cies put a dol­lar value on our lives to gauge whether life­sav­ing poli­cies are worth their cost.

Dif­fer­ent agen­cies use dif­fer­ent num­bers, but es­ti­mates tend to be sim­i­lar: The EPA says a life is worth about $10.5 mil­lion on av­er­age.

The govern­ment uses num­bers like this when writ­ing reg­u­la­tions. Take, for ex­am­ple, a reg­u­la­tion that’s ex­pected to save one life im­me­di­ately and cost $2 mil­lion to im­ple­ment. If a life is worth $10 mil­lion, then the rule passes a “cost-ben­e­fit test.” In other words, the saved life is worth more than the cost of the rule, so the rule should pre­sum­ably pro­ceed. How­ever, if the cost rises to $15 mil­lion, the rule would fail the test.

The value-of-life num­ber is based on how much peo­ple are will­ing to pay to re­duce risk in their own lives. This ap­proach has an ad­van­tage in that it’s based on peo­ple’s real-world be­hav­ior – but it also has se­ri­ous prob­lems.

A young adult might not be will­ing to pay much at all to re­duce risk be­cause she doesn’t earn much yet and is rel­a­tively healthy and care­free, whereas a mid­dle-aged per­son with a big check­ing ac­count might spend a con­sid­er­able amount to re­duce risk.

Last year, the Pres­i­dent’s Coun­cil of Eco­nomic Ad­vis­ers es­ti­mated the fa­tal­ity cost of the opi­oid cri­sis to have been $432 bil­lion in 2015, us­ing val­ues of life that vary by age. To pro­duce its es­ti­mate, the coun­cil said the lives of peo­ple aged 25 to 44 are worth more than younger and older adults.

Valu­ing lives can lead to some un­pleas­ant pol­icy rec­om­men­da­tions. Con­sider a reg­u­la­tion that costs $2 mil­lion. What hap­pens if we in­vest the money in­stead and then put it to use in a few years, af­ter it has in­creased in value? With more re­sources avail­able to spend, we can save more lives that way.

But then again, why not wait even longer? We would never in­vest in life­sav­ing poli­cies by this logic, be­cause it al­ways makes sense to wait.

The govern­ment tries to get around this dilemma by as­sum­ing that lives de­cline in value due to the pas­sage of time – which, in ad­di­tion to seem­ing crazy, may not solve the wait­ing prob­lem. That’s be­cause the govern­ment si­mul­ta­ne­ously as­sumes that richer peo­ple, with their greater will­ing­ness to pay, are worth more. By this logic, the value of a life rises with eco­nomic growth, and it makes sense by that logic to de­lay projects so richer fu­ture ci­ti­zens can be saved rather than us.

In the past, and in other con­texts such as pre­vent­ing ill­nesses, agen­cies have taken an­other ap­proach: They fo­cus on the fi­nan­cial costs as­so­ci­ated with ill­ness and death. In other words, they sim­ply cal­cu­late how much money – in terms of med­i­cal ex­penses, lost time on the job, and so on – pre­vent­ing a death can save. Then reg­u­la­tors are only count­ing dol­lars, not con­vert­ing lives into money. And money – un­like lives – earns in­ter­est over time, so the sooner it is earned the bet­ter.

There are no sim­ple an­swers, so the govern­ment’s con­fus­ing ap­proach should sur­prise no one. Even so, you should ask your­self: How much does the govern­ment think my life is worth?

James Broughel is a re­search fel­low with the Mer­ca­tus Cen­ter at Ge­orge Ma­son Univer­sity.

Newspapers in English

Newspapers from USA

© PressReader. All rights reserved.