[LINK] Weekend Magazine - How Much is a Human Life Worth

[Tom Koltai]

Linkers may remember the Koltai Leisure Minute Value Calculator from a
couple of years ago.

I have subsequently upgraded the model to include hedonic enjoyment
based on insurance Company assessors actuarial tables from 14 countries.
Whilst I have not made the new model available, the average value of a
life in Australia [calculated in Sep 2010 AU dollars] would appear to be
3.7 million dollars. 

The EPA in Washington DC, has decided that it's time to value a human
life in terms of pollution.

This will be of interest to anyone that has been following the James
Hardie industries case. 

[My somewhat sardonic commentary follows this Quote....]

QUOTE/ [from:
http://www.nytimes.com/2011/02/17/business/economy/17regulation.html?_r=
2&hp]

WASHINGTON - As the players here remake the nation's vast regulatory
system, they have been grappling with a subject that is more the
province of poets and philosophers than bureaucrats: what is the value
of a human life? 

The answer determines how much spending the government should require to
prevent a single death. 

To protests from business and praise from unions, environmentalists and
consumer groups, one agency after another has ratcheted up the price of
life, justifying tougher - and more costly - standards. 

The Environmental Protection Agency set the value of a life at $9.1
million <http://www.epa.gov/ttn/atw/rice/rice_neshap_ria2-17-10.pdf>
last year in proposing tighter restrictions on air pollution. The agency
used numbers as low as $6.8 million during the George W. Bush
administration. 

The Food and Drug Administration declared that life was worth $7.9
million <http://www.epa.gov/ttn/atw/rice/rice_neshap_ria2-17-10.pdf>
last year, up from $5 million in 2008, in proposing warning labels on
cigarette packages featuring images of cancer  victims. 

The Transportation Department has used values of around $6 million to
justify recent decisions to impose regulations that the Bush
administration had rejected as too expensive, like requiring stronger
roofs on cars. 

And the numbers may keep climbing. In December, the E.P.A. said it might
set the value of preventing cancer deaths 50 percent higher than other
deaths, because cancer kills slowly. A report last year financed by the
Department of Homeland Security
<http://topics.nytimes.com/top/reference/timestopics/organizations/h/hom
eland_security_department/index.html?inline=nyt-org>  suggested that the
value of preventing deaths from terrorism might be 100 percent higher
than other deaths. 

The trend is a sensitive subject for an administration that is trying to
improve its relationship with the business community, much of which has
bitterly opposed the expansion of regulation. The White House said the
decisions on the value of life were made by the agencies. The agencies,
for their part, referred any questions to the White House. 

"This administration utilizes the best available science in assessing
the benefits and costs of any potential regulation, drawing on widely
accepted methodologies that have been in use for years," Meg Reilly, a
spokeswoman for the Office of Management and Budget, which oversees the
rule-making process, said in an e-mail. 

Several independent experts, however, said that the increases were long
overdue, noting that some agencies had been using the same values for
more than a decade without adjusting for inflation. One office at the
E.P.A. cut the value of life in 2004. 

"Agencies have been using numbers that I thought were just too low,"
said W. Kip Viscusi,
<http://law.vanderbilt.edu/faculty/faculty-detail/index.aspx?faculty_id=
196>  a professor of economics at Vanderbilt University whose research
is cited by most of the federal agencies as the basis for their
calculations. 

Businesses would prefer to discuss the consequences of the increases -
new regulations and higher costs, which they say are hampering economic
growth - rather than suggest that the government has overstated the
value of life. 

But some industry representatives said assigning a value to life was
inherently subjective, and that the recent changes were driven by the
administration's pursuit of its regulatory agenda rather than scientific
considerations. 

"It looks like they just cooked the books - they just doubled the
numbers," said Todd Spencer, executive vice president of the
Owner-Operator Independent Drivers Association, a trade group for the
trucking industry, which faces higher costs under some of the
Transportation Department's new rules. The Bush administration rejected
a plan in 2005 to make car companies double the roof strength of new
vehicles, which it estimated might prevent 135 deaths in rollover
accidents each year. 

At the time, Transportation officials figured that the cost of the roofs
would exceed the value of lives saved by almost $800 million. So the
agency proposed a smaller increase in roof strength that might save 44
lives a year. 

Last year, the Obama administration imposed the stricter and more
expensive roof-strength standard, and it published a new set of
calculations showing that the benefits outstripped the costs. 

Most of the difference came from the increased value of human life. By
raising that number to $6.1 million from a figure of $3.5 million in the
original study, the Obama administration rendered those 135 lives - and
hundreds of averted injuries - more valuable than the roofs. 

The pattern of increases is scrambling a long-standing political
dynamic. The business community historically has pushed for regulators
to put a dollar value on life, part of a broader campaign to make
agencies prove that the benefits of proposed regulations exceed the
costs. 

But some business groups are reconsidering the effectiveness of
cost-benefit analysis as a check on regulations. The United States
Chamber of Commerce is now campaigning for Congress to assert greater
control over the rule-making process, reflecting a judgment that
formulas may offer less reliable protection than politicians. 

Some consumer groups, meanwhile, find themselves cheering the
government's results but reluctant to embrace the method. Advocates for
increased regulation have long argued that cost-benefit analysis
understates both the value of life and the benefits of government
oversight. 

"If analysis is going to be imposed on the rule-making process, we want
higher values for injury and for fatalities," said Robert Weissman ,
president of Public Citizen , which pushed the Transportation Department
to reconsider the roof-strength regulation. 

But Mr. Weissman said he still believed that such analysis was an
impediment to necessary regulation. 

"The bigger picture is absent," he said. "How do you do cost-benefit
analysis on global warming? It constrains the imagination. It really is
a constraint in terms of bounding what is given serious consideration." 

*	
/QUOTE
Article continues....
http://www.nytimes.com/2011/02/17/business/economy/17regulation.html?pag
ewanted=2&_r=2&hp 

(But don't bother unless you have a NYT account to login..............)

OK OK, Article continues after this important message:
===========================================================

POSTCRIPT...

I particularly like the fact (US HomeSec) that dying from a Terrorist
act is at least 100 times(percent) worse than from any other cause... 

Most Religions tell us that Death by misadventure [through another's
instigation] is almost a sure ticket to the Pearly Gate ride.
So obviously the "Religious Majority" in Link will be guffawing at the
Dept of Homeland Security's enormous dipsy doo.

Oh you wont be guffawing? What, neither of you ? Dearie dearie me, what
is happening to religion these days?
What? Oh you heard about the 72 virgins offer and you're interested in
knowing more...  Good luck with that.
============================================================

QUOTE/ [err, Page 2....]

The current rise in the value of life is based on the work of Professor
Viscusi, who wrote his first paper on cost-benefit analysis as a Harvard
undergraduate in the early 1970s. He won a prize and found a career.

The idea he and others have since developed in a long string of studies
is that differences in wages show the value that workers place on
avoiding the risk of death. Say that companies must pay lumberjacks an
additional $1,000 a year to perform work that generally kills one in
1,000 workers. It follows that most Americans would forgo $1,000 a year
to avoid that risk - and that 1,000 Americans will collectively forgo $1
million to avoid the same risk entirely. That number is said to be the
"statistical value of life."

Professor Viscusi's work pegs it at around $8.7 million in current
dollars.

Before the current administration, only the E.P.A. had fully embraced
this methodology. Other agencies relied instead on the results of
surveys asking Americans how much they would spend to avoid a given
risk. This technique tends to produce significantly lower results. An
even older technique, which yields even lower numbers, is to sum the
wages lost when a worker dies. In 2000 the E.P.A set a baseline of $7.8
million, updated to current dollars. But in 2004, the office that issues
clean air regulations reduced that baseline by $500,000 in an analysis
of proposed limits on emissions from industrial boilers.

Last year, the E.P.A. directed its various offices to return to the 2000
baseline, adjusting that figure for inflation and wage growth. In some
recent studies, the E.P.A. has used a figure of $9.1 million after
making those adjustments.

The agency said at the same time that it was working to set a new
standard. In a white paper issued in December, it raised the possibility
that people might place a higher value on avoiding a slow death from
cancer than a quick death in a car accident. It also broached a concept
it described as "altruism," the idea that people may place a higher
value on the common good than on their own survival.

John D. Graham, who oversaw the use of cost-benefit analysis during the
George W. Bush administration, said that the scientific justification
was "quite strong" for raising the values used by the Transportation
Department, but he cautioned that the E.P.A. was going too far.

"Why should the same clinical condition be valued differently at
different federal agencies?" Mr. Graham, now dean of the School of
Environmental and Public Affairs at Indiana University, asked in an
e-mailed response to questions.

Many experts similarly ask why life itself should be valued differently.
Agencies are allowed to set their own numbers. The E.P.A. and the
Transportation Department use numbers that are $3 million apart. The
process generally involves experts, but the decisions ultimately are
made by political appointees.

The Office of Management and Budget told agencies in 2004 that they
should pick a number between $1 million and $10 million. That guidance
remains in effect, although the office has more recently warned agencies
that it would be difficult to justify the use of numbers under $5
million, two administration officials said.

Close observers of the process point to two reasons for the variation in
numbers. First, they say that setting a single standard is not worth the
high-stakes battle that would be required with advocates on both sides.
The Obama administration, like its predecessors, has preferred to deal
with the issue informally, on an agency-by-agency basis.

Second, they say the lack of a standard preserves flexibility.

The Food and Drug Administration issued a rule in 2009 requiring new
warning labels on packages and bottles of acetaminophen and other drugs.
Its justification valued life at $5 million. A few months later, the
agency acknowledged that it had calculated the cost of adding one new
label, while requiring two new labels. However, the agency continued,
the benefits still exceeded the costs because the value of life was $7
million.

A few months later, in an unrelated rule regarding salmonella, the
agency once again cited a value of $5 million, which it said best
reflected the available research. And in its recent study on cigarette
labels, the agency cited a value of $7.9 million.

"The reality is that politics frequently trumps economics," said Robert
Hahn, a leading scholar of the American regulatory process who is now a
professor at the University of Manchester in England. But he said that
putting a price tag on life still was worthwhile, to help politicians
choose among priorities and to shape the details of their proposals.

"Even small changes," he said, "can save billions of dollars." 

/Quote