Saturday, March 01, 2008

ECON 260: Comment Thread Question for Monday 3/3

Instructions for these comment threads are in the recent email I sent regarding new rules for the class.

Do you think it is necessary to place a value on human lives in order to make environmental policy decisions? If so, what do you think is the right way to determine the value of a life? If not, how would you suggest evaluating policies that have potential trade-offs between different sets of lives (that is, policy A might lead to the loss of some lives but the alternative policy B might also lead to the loss of some other lives)?

I think that evaluating the value of a statistical life is crucial to make environmental policy decisions. Many environmental organizations value human health, and it is safe to say most humans value their life. Here is a link to the EPA's website for human health, reflecting the valuation of human life:

If one values human life, they will weigh the costs of human life in a cost-benefit analysis.

However, assigning a value of a statistical life by measuring risks of employment and times worked excludes the following ideas:

1) People who don't volunteer for the risk - they might have a higher WTA than measured
2) Social factors - benefits, income levels, position in society, and country of employment. These things change willingness to accept risk or extra wages.
3) Age - this measure essentially says that retired people have a much lower value of a statistical life.

Basically, this measure is limited and should incorporate other social factors into an individuals monetary worth.
To use an efficiency standard (which I prefer), it is neccesary to place a value on human lives. There could easily be policy decisions that would maximize efficiency that involve people dying.
Besides their work value, I think measuring the value of life (or cost of death) heavily depends on whose life it is, how they die and when they die.
A lot of the cost of people dying is in making other people upset or scared. If no one knows people are dying from water poisoning, no one gets upset! So a very public, gruesome death is more costly than a quiet one.
Here's an example for the importance of "when they die". Lving in a city and breathing in fumes and such may take 5-10 years of our lives. But whether we die at 75 instead of 85, we're still pretty old when we die, there is little work value in those last few years and few people will be very upset. But if children are dying at age ten (taking 60 years of life!) then thats a lot of work potential gone + makes people very upset.
Honestly, I have a really hard time placing a monetary value on something like human life. It's simple enough to think about illness and what pecuniary costs are associated with it. (hospital bills, medication, etc.) But the value of a person is entirely relative. If a woman is dying and you asked her boss how much her life was worth Boss might sight how productive she is in the company and how much it would cost to find a replacement. If you asked her significant other, he/she would tell you her life is priceless. How much would we have to pay this person in order for them to let their significant other die? Is that the value of her life to that person?
These are questions that I do not feel comfortable answering.
So where does that leave me? In order for environmental policy to be made there has to be some measure for human lives and what they are worth. Is anyone else having trouble with this?
I agree with Lacy, I find it very troubling and the value of a life points out some of the flaws I find with economics.

In my micro class someone did a report on the value of life; making the same argument that our book makes, that the value of life is their willingness to accept added danger based on wages. I asked whether people thought that since Iraq soldiers are paid less then American soldiers that they value life less and should therefore always be put in the front lines. Immediately everyone in the class took offense and said that you couldn't apply the value of life to that situation.

It is impossible to correctly determine the value of life. Like Amber said you have to take into account lots of variables, so many, and ones that are so large and complex that the use of creating a value of life becomes unhelpful. Life just isn't this rational.
I do think that you must include a valuation of human life when choosing or evaluating environmental policy even though it makes us feel uncomfortable. A major problem we run into is our desire to say that all lives are valued the same, however, we know that in our experience we don't value all lives the same. We care and place a higher value on the lives of people we know and love and people that we share things in common with. We do care about Iraqi soldiers, but we care about American ones more. It may be wrong, but collectively and generally we do. I think that economics is a descriptive rather than normative science, and thus does not and cannot artificially say that all lives are valued equally.
Having said that, however, I have no idea what would be the best weigh value human life. I think Amber did a really nice job of bringing up some of the key issues with our current method and I cannot think of any real ways to compensate for those problems. Overall clearly one should look for policies that hurt the least number of people, but all bets are off when you have two groups of equal number.
I’ll first agree with Amber’s notion of social factors that seem to be left unconsidered in the cost-benefit analysis – I'll add psychological factors. Though the VSL clearly does not price an actual life (rather the wtp for a higher risk of death), there are also psychological factors I feel we need to consider in valuing a life. As Elizabeth stated, lives closer to one’s own are typically valued more. However, it is also interesting to consider how someone’s value of life differs throughout psychological periods of life – such as directly after receiving a degree of education or recent marriage versus a period after a divorce or mid-life/identity crisis...Just a thought to consider.

Also in considering the value one gives to a human life, another issue I find intriguing relates to what Jasin said about the publicity of a human life – and the power and effect of media. The media often is able to intensify the public’s level of empathy to certain individuals, despite the distance factor just mentioned. It is interesting to think about how much money and valuation can be provided on finding one missing person/stranger in the wilderness versus the health of one's own child in the household of a regular smoker.

I also wonder about the use of VSL in making decisions when considering how yes, it could present two possibilities in terms of number and cost of lives, but in the end, after all these calculations, how much the decision is actually a choice made/not made by a certain individual/government in power. For example, if California or another state is individually going to ratify Kyoto or if a country such as Australia has recently declared ratification – what are those implications as for the VSL? Is the worth of the lives of these inhabitants now instantly changed even though residents may not have willingly accepted the policy?
whoops. forgot to put my name on that last post...
In order to avoid redundancy and to generate some new discussion, I'd be curious to find out what people think about receiving higher wages for more dangerous jobs on a personal level. I found an article from CNN on dangerous jobs which I've included the link to below:

One of the most dangerous jobs is fishing, which has a death rate 30 times higher than the rate of average workers (specifically high in New England). That's 118.4 deaths per 100,000 workers. Supposing that the typical (safe) job we might have at this point in our lives pays 10$ per hour, how much more would you need to be paid to be a fisherman? I'm curious specifically because college students tend to be exceptionally strapped for cash, and have a strong sense of invincibility. Perhaps you wouldn't need to be paid much more at all...
Can you calculate the value of a statistical life based on this number? Do you think that this survey style question is an accurate way of determining the value of a life?
A soldier's family receives 400-500k upon the death of that soldier. It usually takes between 2-3 million to carry out capital punishment, depending on what state you are in. The EPA, finally, values a life at 7.2 million.

I include the 2nd number because I think it is the most interesting. We put people to death who have generally committed more than one murder, so we have placed a minimum value on imposing "justice" for the loss of one person. It also gives us a pretty good idea of just how good we (or, mostly, the government) is at placing a value on human life -our soldiers, for instance, are worth less than the "justice" of putting someone to death. The range I've provided for a human life, moreover, is anywhere from $400k-7.2 million.

So what's the point of all this? I am hesitant to leave any one person or body or government the authority to enumerate the value of a human life. The reason we are in the mess we are in with global warming is because of poor calculations and government impotence.

What's the solution? Eclectic accountability and more responsible government spending. Is this possible? Probably not. But if the value of human life is infinite, then no amount of spending is too much to reach Pareto optimal, right?
We all seem to agree that any kind of regulatory (i.e. emissions control or pollutant clean-up mandates) environmental legislation inherently values human lives and human health in comparison to the marginal profit of a given industry. Such legislation benefits human and environmental health at a cost to industry—under the safety standard in particular, human health will be more highly considered unless the cost to industry is absolutely prohibitive. So, yes, it is necessary to place a value on human lives in order to craft environmental policy. However, I’m uncomfortable (and apparently not alone in my discomfort) with reducing human value to years of life and potential wages. Life has intrinsic value—how do we measure that against potential industry profits?

The difficult question is comparative – how much are these lives worth when they are weighed not against industry profit, but against each other? How do we evaluate the costs and benefits of trade-offs between human well being in the Global North and the Global South? This poses a huge ethical dilemma. Unless you want to make the argument that one group of people is worth more than another (either inherently, which seems medieval, or in terms of life expectancy/wages, which there is obvious discomfort with), we have to assume that we all have equal value and equal rights to life. Considering this, when we evaluate policy, we must do it with a mind to the greater good—but do we do that in order to make a bigger pie for all potential pie eaters, or do we do that to alleviate the suffering of marginalized populations? This depends on the goal of the particular environmental policy.
When I try to follow the logic of economics and the language of capitalism, there's really no escaping the discomfort of these comparisons. We have to prioritize values in major dilemmas where many things (lives, property, agriculture etc) are threatened, so we have to have a way to compare these values to each other. If there's no common currency, so to speak, then we quickly run into problems of subjectivity, distance, personal stake, etc, that can make pragmatic action/policy impossible. The economical solution to this dilemma is simple - capital. It only makes sense to put a price tag on everything, in efforts to be fair and to give a voice to every concern/value. Theoretically, that is. As much as capitalistic economics would like to tell us that WTP or WTA is the proper mechanism to level all playing fields, it's clear that this theory is flawed. But if we don't use money, what can be the standard of how we value things?

The same god rules the notion of the value of a human life: the contribution of an Indian villager to national or international GDP is miniscule compared to that of a recent college graduate in America. Economics has no response to the discomfort we feel towards this, because money is the fair standard.
Like Kiel, I see this as revealing yet another flaw in our economic theory.

Maybe green capitalists are right, and capitalism can work truly fairly and justly once we "get the prices right". But how do you get the price right on a human being?

All that said, I'm still inclined to acquiesce to a monetized value of life, for lack of anything else. If we can't prioritize policy with some idea of the cost to human life, we can't make informed decisions. It's a given that in reality we care more about ours' and others' lives than a simplistic monetary amount. I don't think economics can or should account for a true measure of value - rather, it's a tool to prioritize and set policy.
I am in agreement with Lacy as well. I believe that it is difficult, almost impossible, to accurately place monetary value on human life. Each person is unique. Who are we, then, to say that one person is more valuable than another? The lives of two different people, who may live almost identical lives, are still incomparable. No one person is exactly like another.

Hence, when I think of this question, I cannot help but assimilate our lives to our fingerprints. Each one, in itself, is unique. No duplicate can be found amongst an individual, or another person in this world. If then, we are like our fingerprints, how can we even begin to monetize uniqueness? What would we have to compare to? And what would be our standard?

I therefore cannot be comfortable in proposing any sort of environmental policy based upon human worth, unless these questions have distinct and relevant answers. Until then, policies should be evaluated based upon what they have to offer society; this can be in terms of use value, option value, or existence value.
I believe that it is absolutely necessary to place a value on human lives in order to make environmental policy decisions. This being said it sounds like I’m in good company in the fact that this idea makes pretty uncomfortable. When it gets down to specific numbers things seem to get a little sketch. I don’t think that there is one right way to determine the value of a life, but we need to come up with a better formula that can be generally applied to people everywhere, attempting to take into account some of the issues stated by amber. Maybe a little of John Rawls’ invisible veil would be in order to come up with a fair number. Also, as a little comment about the fishing industry, I’ve worked up in Alaska in a fish cannery and tried to get on a boat (which is still pretty hard for women to do). My Mom thought this was a great idea, but she also always told me I was priceless. Now having learned a bit about the valuation of a human life, my Mom’s position seems a bit strange.
I think while it is important to set a value to human life in order to be able to plug it into the whole cost-benefit analysis machine, it is important to take into account what exactly the process is. i would love to discuss this in class because i don't know anything about it but i assume that its basically the format that some people crunch numbers on how much a certain policy or program will cost and how much the benefits will be (whatever way they're measuring them) and then they present that data to some people to make the decision.
assuming that the people they're presenting the stuff to are human and have families and have some grasp of economics and the industry in question, shouldn't they be able to put their own value on life? would it be so bad if we just said, here are the costs we face and here are the lives that are at risk if we do nothing. this is the demographic that we're looking at, 60-70 year old immigrants or whatever. can't the people considering the problem come to their own decision on how much those lives are worth? why does it have to be one criterion? i think we should give ourselves a little credit. I mean i just hope that at least when monetary value is assigned to human lives, the real numbers and facts are also presented. i understand the text book is obviously dumbing it down and making it simple so we get it, too and these are just hypothetical examples that would in reality be much more studied. hopefully. i guess my point is we should leave it up to a large group of people to make their respective decisions based on their values and knowledge, rather than one unit of measurement making up the minds of everyone.
Although I think putting a monetary value on human life is helpful in making many decisions, I also believe that is is nearly impossible to find a figure that everyone can agree on. Danny said that the EPA put a $7.2 million dollar value on life, but I am curious as to how the EPA came up with this number. I think it would be interesting to find out what factors the EPA takes into account when coming up with this value.

The problem I have with putting a value on human life is how relative the process is. Because of this relativity, I do not think that putting a monetary value in life is a good way to do a cost-benefit analysis. One way that could help resolve this issue is doing a cost-benefit analysis based on the number of human lives. More specifically, we could compare the # of lives that are "harmed" by the policy & compare that to the # of lives benefited. Though I do not think that this is the perfect way of conducting analysis, but I think it does a better job of decreasing the variability among different types of people.
Placing a monetary value on human life is a necessary measurement when determining environmental policy decisions but it is a difficult task. It is difficult because it can never be for a specific person’s life; it is for the average human life. The value of a specific human’s life is relative to who you ask. If it is your own life or someone you really care about then it is priceless, but if it is the life of some faceless stranger, it is easier to put a dollar value on it. Conversely, that faceless stranger is someone else’s loved one.
I think the “right” way to determine the value of a life would be a time consuming and long process and that is not always possible due to time and money constraints. If one had all the time and money to research each individual affected by environmental policy decisions then a more accurate value could be placed on them depending on their contributions to society, family situation, salary, skills, ect. In my opinion, this would be the “right” way because it is looking at the individual subjectively, and not heartlessly objective.
Here's another blog which is addressing this topic of "putting value on human life"

And an Excerpt:
PERSON 1: "Human life is not a commodity. It cannot be traded against profits or exchanged for convenience. We have no right to decide that others should die to make us richer."

"But there are two problems with this indignant moral stance:
1. Moral indignation fails to recognize that valuation methods are not valuing individuals but are valuing changes in risk.
2. States and individuals make implicit trade-offs of life versus wealth/consumption/production all the time. Moral indignation arises when those trade-offs are made explicit."

Person 2 then goes on to say that it's not the economists who are putting a value on human life, it's the people; the economists are only using people's choices to see how much they value life.

To me, that seems to imply that we humans always know what we're getting into, and are completely rational people. When my friend jumps off a roof to experience the thrill of it, is that saying he's thinking rationally about the possibility of death or injury? Does he consider possible hospital costs? Maybe his parents are loaded so he figures he's safe. Maybe he's broke and figures any more debt is negligible. Maybe he doesn't think about consequences at all because that might stop him from jumping off the roof.

It seems to me that it is fallible to assume that common citizens are fully informed rational thinkers. Perhaps the economists that want to place a value on my life are, but to say that we (the citizens) are making those decisions for them is silly. The economists are basing their "human life" numbers on decisions that are being made with varying and usually non-economic mindsets. That being said, if it is essential to place a value on human life for their calculations, I couldn't think of a better way to do it.
Human life is important to value while making environmental policy decisions because with out this value, we will have no value for the res of the world either. Most policies would never occur if there was not a concern for human welfare. Humans care most about what gives them pleasure or is useful to humans. When determining the value of anything, we do so from the value it has for humans, not for the earth, or the species itself.

The correct value of human life is hard. In the most cold sense it would be what they contribute to society and how much that person makes, but being an environmentalist and having an interest in social justice, I believe that this is not an appropriate way of determining the value of any human. Humans are just as important to the earth as any other specie, and each person is worth a lot. How to determine this, however, seems to be impossible. I would like to say that human life is priceless, but everyone knows this is not true. Maybe an appropriate way of determining this is the value that each person puts on their own life, but that would be a very hard calculation to make. I really don't have a solution to this, but I feel important, at least to myself.
The logic behind valuing lives based on expected lifetime productivity at first seems sound, but if we're going to assert that relatively unproductive natural resources have value (recreation-purposed parks, scenic vistas, etc), it seems hypocritical to value human lives solely by their expected monetary contribution to world GDP. Good call on the "veil of ignorance," Rachel- given shape of the world's wealth distribution, the majority of the people would probably rather have lives valued equally and highly than priced based on their likely future productivity.
I feel valuing human lives when creating policies is obviously something that needs to be done. The policies are being created in general to help human life so there wouldn't be much logic in not taking the value of human life into consideration. As to how to place an accurate value on human life I think we need to stick to efficiency/ cost-benefit analysis. There certainly are other factors to be considered but it seems there are an infinite number of things that could be factored in once we get outside of cost-benefit
It seems that most of us are in agreement that it is hard to correctly calculate the value of human life even though it may be essential when analyzing environmental policy. I’m stuck on the moral issue of how you would fairly measure or value one person’s life against another just by looking at the risk of an individual’s job as our book explains. An average person with a regular, everyday job is going to be valued less, is this really fair?

I think Amber did a great job in explaining the other factors that we need to consider.
Also, I don’t know of this “veil of ignorance” but the concept of future productivity seems very interesting and something to be looked into when valuing a life. The problem we are struggling with is then, how do we more accurately define this value so as to encompass the entire importance and worth of human life? Is there even a way to standardize such an assessment?
While assigning a value to human life in monetary terms may sound inhumane it is a practical way of determining policies strengths and weaknessess. Human lives values are determined all the time, ie auto makers have decisions whether to make a car safer and spend a certain amount of money by doing so or paying for potential lawsuits or other such acts that would place the company in a decision of, do we invest in this or pay off the determined cost of a human life. To look at environmental policy in a different way may make it incompatible with the rest of the economic world thus slowing down the process, which could be dangerous for time is not abundent.
While the idea makes me uncomfortable, I believe there is a point where we are forced to put a value on a human life. "Overspending" on any single life can reach a point where one is forced to consider the potentially greater increases in welfare by allocating resources elsewhere.
When choosing between two policies that result in a negative net loss of lives quantity and equity should be the main considerations.
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