How government agencies determine the monetary value of human life: NPR

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Reopening the economy requires considering the trade-off between life and money. Government agencies are already used to placing a monetary value on human life when reviewing safety regulations.



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Is it worth shutting down the economy to save lives? Or should we let people die to serve the economy? Economists answer such questions all the time by converting a single human life into dollars. Here’s Sarah Gonzalez from our Planet Money podcast.

SARAH GONZALEZ, BYLINE: There is some kind of official price for human life. We can tell you what it is. A human life is worth around $ 10 million. And here’s the guy who helped us find that number.

KIP VISCUSI: I received a lot of criticism, and I still have it.

GONZALEZ: Kip Viscusi is an economist at Vanderbilt University, and he says valuing life and making those kinds of decisions about life for money comes from the world of safety regulations. The Department of Transportation, the CDC, the EPA, they all put a price on life. And they use that value to determine which safety rules are worth the cost. For example, should we require companies to label hazardous chemicals to prevent fatalities? Well, does labeling chemicals cost more or less than the cost of all deaths if a life is worth a certain amount of money? If it’s less, it’s worth it. Label the chemicals. If it’s more, it’s not worth it.

VISCUSI: Right.

GONZALEZ: Let these people die?

VISCUSI: That’s what they do. I mean, it’s – you know, they don’t identify that people are going to die, but these are the consequences of doing that.

GONZALEZ: And Kip Viscusi and all these government agencies, they didn’t just pick a random value for life. In fact, they’ve found a nifty way to avoid picking a number altogether. They looked around and said to people, all of us, we actually place a monetary value on our own lives all the time based on the jobs we do, how risky they are and how much extra money we have. which we need in wages for the risk of death. So they look at a group of workers – construction workers, nurses, coal miners, lawyers, something like that. And when you do that, today, in all jobs, Viscusi says that one in 25,000 people will die on the job in a year.

VISCUSI: We’re not sure, but we think the average person will die.

GONZALEZ: These are pre-coronavirus numbers. But to convince workers to take the risk, companies have to pay them an extra $ 400 a year – each of them. So if I take $ 400 to take a 1 in 25,000 chance of dying on the job, I’ve revealed, essentially, a value that I place in my own life. And if the group of 25,000 people gets $ 400 each, that’s $ 10 million.

So that’s the value of life today – $ 10 million.

VISCUSI: Right, the value of a statistical life, we’ll call it.

GONZALEZ: Is it a statistical life, not a real life?

VISCUSI: Yes, it’s a statistical life.

GONZALEZ: And government agencies use a value for all of us.

BETSEY STEVENSON: It’s the same number whether you’re 2, 42, or 82.

GONZALEZ: It’s economist Betsey Stevenson from the University of Michigan.

STEVENSON: It means we don’t have a senior reduction. It also means that we are not having a baby.

GONZALEZ: A value, so Betsey Stevenson and Kip Viscusi and many other economists used that value to calculate the coronavirus. Epidemiologists have said shutting down the economy could save 1-2 million lives. So 1 million lives saved at $ 10 million each is $ 10,000 billion. That’s about half of America’s GDP in a year.

STEVENSON: I think it makes it easier if you take a look at the math and realize that we’re talking about the lives of people who are worth billions and billions of dollars.

GONZALEZ: Billions and billions of dollars of people. Sarah Gonzalez, NPR News.

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