What’s the Value of a Human Life?

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Can You Put a Price Tag on Human Life?

Can You Put a Price Tag on Human Life?

Most of us have heard of the concept of “net worth” – a measure of total wealth, calculated by taking a person’s total assets minus their liabilities. But when we talk about the true “worth” of someone’s life, did you know that some government agencies and actuaries have actually set a solid number?

If someone asked you, “How much is your life worth?” that would often be considered rude, or even indecent. Most people don’t like to think about the prospect of converting human life to a financial equivalent. Every human life is unique, precious and irreplaceable, and most people would say that human life is “priceless.”

However, some people who work in insurance, workplace safety agencies and other regulatory bodies have to spend some time thinking about the value of a human life. The economic concept of “value of a statistical life” (VSL) sets an approximate dollar amount on the value of a human life. This concept gives economists, actuaries, government officials and other decision makers a general metric to use in determining the spending levels and limitations of various public policies.

Does this sound distasteful, or even a little creepy? Although it might sound strange, there are good reasons for using the “value of a statistical life.” By thinking about this unthinkable question, American officials can make better-informed decisions that affect the lives of us all.

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According to a Princeton University research paper by Orley Ashenfelter, the value of a statistical life has numerous applications, especially in the fields of medicine, environmental protection and transportation safety. By setting the value of a statistical life, we have a measure to decide the tradeoffs between wealth and safety – in other words, VSL gives us a way to know (approximately) how much money people are willing to give up in exchange for better safety protections.

Professor Ashenfelter’s paper discusses an example of the VSL at work. Every year, 30,000 Americans die in car accidents. Although by many measures, driving is safer today than ever before, improving the safety of America’s roadways is an ongoing process. If a Department of Transportation was trying to decide how to spend some money to make the roads safer, the VSL would be used to decide how to distribute the money.

For example, if transportation planners were trying to decide between three different projects and the cost of saving a life with each of the three projects was $3 million, $1 million and $0.5 million, the value of a statistical life would help the agencies decide which projects were most cost-effective in saving the most lives for the money.

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Or, if a new highway or environmental safety program was estimated to cost $200 million, but was expected to save 200 lives (due to a lower rate of car accidents or lower levels of cancer-causing pollutants in the air and water), that program would need to prove whether it was a good value in terms of the “dollar value” of the number of lives saved.

How much is the current value of a statistical life? It depends on which federal agency you ask, but according to a Mother Jones report, the current VSL ranges from $5 million to $9.1 million.

It may not be a pleasant topic, but there is some real benefit to setting an approximate economic value on the human lives that are saved (or lost) due to accidents, disasters, and the various other risk factors of modern life. Calculating the value of a human life helps policy makers decide whether to implement new regulations or how much to spend on new safety features.

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In this way, the VSL helps create better public safety and better protections for all of us. Assigning a numerical value to human lives can, ironically, make human lives even more priceless.

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