Paul Pillar

Disregarding the Value of Life

An article this week in the New York Times addressed how parts of the federal government assign a monetary value to human life, for the purpose of analyzing the costs and benefits of life-saving regulations covering matters from drugs to automobile safety. The figures used by different departments and agencies agencies vary. The Office of Management and Budget suggests to agencies that a figure in the $5 million to $10 million range would be acceptable. Professor W. Kip Viscusi of Vanderbilt University, whose methodology (based on comparing wages of occupations with different risks of death) is most often used, comes up with a current figure of $8.7 million.

Many no doubt would be uncomfortable with trying to put any price tag on human life. Sure, it sounds rather crass and heartless. But how else can one assess whether a proposed initiative or regulatory requirement that is supposed to save lives is worthwhile? What is less defensible is not any attempt to price the priceless but rather the ways in which public policy and the discourse behind it diverge from the kind of sensible cost-benefit analysis that such valuations make possible. The Times piece notes that business groups such as the U.S. Chamber of Commerce, which previously favored such analysis as a way of forcing executive branch agencies to prove the worth of regulations that cost the private sector money, now believe they will have better luck by ditching analysis in favor of politics and urging Congress, with its Republican-controlled House of Representatives, to exert greater control over the rule-making process. The problems, however, go beyond this kind of calculated lobbying to larger inconsistencies in how we, the public, react to certain kinds of threats and evaluate certain kinds of initiatives.

Some inkling of such inconsistencies is noted elsewhere in the article. The Environmental Protection Agency said it was considering valuing the prevention of a death from cancer as 50 percent higher than the prevention of other deaths “because cancer kills slowly.” A report commissioned by the Department of Homeland Security suggested going EPA one better by valuing the prevention of deaths from terrorism to be twice as high as the prevention of other deaths (because terrorism kills quickly?) The dynamic at work is not a matter of fast or slow dying but instead our tendency to fear some things, such as snakes and spiders and cancer, more than other things that may be at least as deadly. A related example of illogical decision-making that behavioral economists have discovered is that many people will spend more to buy cancer insurance than they would to buy a less costly health insurance policy that covers cancer as well as other illnesses.

Much of our collective approach toward terrorism is like buying cancer insurance. This is less true of the sorts of specific security measures that DHS implements than of other policies sustained in the name of protecting us from terrorism. A current example is the war in Afghanistan. I have discussed elsewhere the reasons why continuation of the war probably is not making Americans safer from terrorism and in some respects may be counterproductive. But assume for the sake of argument that the counterterrorism rationale for the war is valid. Make the even stronger assumption that whether the war is prosecuted makes the difference between the United States suffering or not suffering another 9/11, with 3,000 people killed. Multiply 3,000 by Professor Viscusi's figure of $8.7 million per life and you get a life-saving value of $26.1 billion for preventing another 9/11. The United States is spending nearly four times that on the war each year—and, of course, is losing lives in Afghanistan as well. Even after factoring in the other economic impacts of a 9/11, and even with these unrealistically strong assumptions in favor of the war, that's not a good deal.

The inconsistencies can run in the opposite direction, as they are in some of the current budget-cutting frenzy. Consider as an example the Special Supplemental Nutrition Program for Women, Infants, and Children (also known as WIC). House Republicans want to cut the program's budget by some six percent. Using FY09 figures, the program served an average of 9.1 million people at an annual cost of 6.9 billion. That works out to a yearly cost of $758 per person. Divide that figure into the $8.7 million per-life price and the quotient is 11,478. That means that even if only at least one life was preserved out of, say, every 10,000 people the program serves—hardly an unrealistic expectation, even without figuring in issues of quality of life and not just outright preservation of life—the program is worthwhile. A cut in its budget does not stand up to rigorous cost-benefit scrutiny.

I realize the politics, the fears, and other human cognitive impairments make it unrealistic to expect that this sort of analysis will ever be consistently applied to issues as diverse as foreign wars and childhood nutrition. But our public policies will be more sensible and more effective the more that we can inject some of this sort of rigor in place of the pseudo-security and pseudo-green-eyeshade approaches that too often determine the shape of those policies.