Thursday, February 17th, 2011

The price of an (American) life

The value of Americans is rising, reporte The New York Times. The Environmental Protection Agency increased the price it puts on a life to $9.1 million, from about $7.5 million in 2009. The Food and Drug Administration bumped up its valuation to $7.9 million, from $5 million in 2008.

Businesses tend to dislike this kind of vital inflation because higher prices justify imposing more costly standards.  For instance, regulators will assume that a new safety rule that will save 1,000 lives must be implemented if it costs no more than the value saved through the intervention.

The process of assigning a price tag to life is fraught with other complication. Should the life of an old person be worth less than the life of a child? If both lives are worth the same, it means that each remaining year of life of the elderly would be worth much more. Polls suggest saving a life from a terrorist attack was worth more than saving a life from, say, a natural disaster. 

And the way we value human life today, assessing the risks people are willing to take in order to make or save money,  inevitably finds that the rich are worth more than the poor. Thomas Schelling, the Nobel Prize-winning economist noted to this effect: ” Just as the rich will pay more to avoid wasting an hour in traffic or five hours on a train, it is worth more to them to reduce the risk of their own death or the death of somebody they care about. It is worth more because they are richer than the poor.”

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