How much is your life worth?
Contrary to what mommy said, you’re not priceless: in the U.S., a human life is worth around $10 million.
Hold up, you protest. Why are we assigning monetary value to something so sacred as life? Isn’t that cold and unethical?
The truth is, governments must carry out cost-benefit analyses to lay down regulations, and your life is included in that calculation. For example, labelling dangerous chemicals may seem like a no-brainer, but printing labels, hiring scientists to research a standard and other administrative work in between costs money.
If labelling the chemicals saves 10 lives per year, and each life was valued at $10 million, the regulation may still not be economically efficient if the cost of implementing it was $200 million, which is double the amount of lives saved ($100 million).
Human lives are precious. But if they were priceless, we’d be using all our resources to save any one person, which just isn’t viable in a world with scarcity. And governments don’t have unlimited amounts of money, so they must price lives to see if regulations would be worth it.
But where does the $10 million price tag come from?
It’s not your net worth (sorry), and it’s not meant to be a dollar value for individual worth . Rather, the $10 million is the value of a statistical life (VSL), or how much people are willing to pay for a small decrease in their risk of dying.
There are many ways of calculating this VSL. For one, economists could send out a survey to ask people how much they would need to be paid to accept a 1% increase in risk of dying from cancer, but it’s hard to generalize responses for the population for value-based questions like these. Another way would be to calculate the lost future income a person could have generated if they didn’t die at a certain age, but that implies people are worth how much they make. Other countries have also tried basing it off their GDP per capita.
The current $10 million estimate used by the U.S. government takes data from a broad range of occupations, measures how risky each job is and how much workers need to be paid to do it. With the COVID-19 pandemic, traditionally low-risk jobs, such as service jobs, have suddenly become very high risk, something to keep in mind during debates about reopening the economy.
All lives are worth the same amount, too. In 2003, the Environmental Protection Agency reasoned that because the elderly have fewer years to live and breathe clean air, their VSL should be less than younger people’s in their policy calculation. Critics called it the ‘’senior death discount,” and the plan was quickly scrapped amid public backlash: But it was an economically sound calculation.
Ultimately, we’re talking about economics here, and not philosophy or ethics. It’s not the business of economics to determine whether something is fair, only whether it’s efficient from a cost-benefit perspective.
