The value of human life: A case for altruism

Natural Resources Journal

Volumn 48, Issue 3, 2008, Pages 541-564

  Brady, Kevin L ^a  

^a BRIGHAM YOUNG UNIVERSITY   (United States)

Author keywords

[No Author keywords available]

Indexed keywords

ALTRUISM; COST; ESTIMATION METHOD; HEALTH RISK; POLICY MAKING; STATISTICAL ANALYSIS; WELFARE ECONOMICS; WILLINGNESS TO PAY;

EID: 69949088461     PISSN: 00280739     EISSN: None     Source Type: Journal    
DOI: None     Document Type: Article

References (161)

1. John F. Morall III, Saving lives: A Review of the Record, 27 J. RISK & UNCERTAINTY 221, 223 (2003).
2. U.S. EPA, THE BENEFTIS AND COSTS OF THE CLEAN AlR ACT: 1990 TO 2010 101 (1999), available at http://www.epa.gov/air/sect812/1990-2010/chapll30.pdf (estimating that "$100 billion of the $110 billion total benefit estimate in 2010, or roughly 90 percent, is attributable to reductions in premature mortality associated with reductions in ambient particulate matter and associated criteria pollutants").
3. The acronym VSL is commonly used in place of "value of statistical life," a convention I eschew in this essay. See, e.g., Cass Sunstein, Valuing Life: A Plea far Disaggregation, 54 DUKE L.J. 385, 385 (2004) ("Each government agency uses a uniform figure to measure the value of a statistical life (VSL).").
4. See Anna Alberini, What Is a Life Worth? Robustness of VSL Values from Contingent Valuation Surveys, 25 RISK ANALYSIS 783, 783 (2005) ("The [value of statistical life] is a key input for computing the mortality benefits of environmental and safety policies that save lives.").
5. US. EPA, AGENCY GUIDELINES FOR PREPARING ECONOMIC ANALYSES 90 (2000), available at http://yosemitel.epa.gov/ee/epa/eed.nsf/webpages/Guidelines.html/ $file/ Guidelines.pdf.
6. Lisa Heinzerling, The Rights of Statistical People, 24 HARV. ENVTL. L. REV. 189, 191 (2000).
7. See infra text accompanying notes 24-26.
8. See BRIAN R. BINGER & ELIZABETH HOFFMAN, MICROECONOMICS WITH CALCULUS, 201-203 (2nd ed. 1998) or any standard microeconomics textbook.
9. See W. KIP VISCUSI, FATAL TRADEOFFS: PUBLIC AND PRIVATE RESPONSIBILITIES FOR RISK 39, 69 (1992).
10. See infra Part IIB. By way of definition, public risk reductions, such as improvements in air quality, apply to everyone; private risk reductions, such as seatbelts, affect only the direct consumer.
11. THE MIT DICTIONARY OF MODERN ECONOMICS 14 (David W. Pearce ed., 4th ed. 1992) [hereinafter MIT DICTIONARY].
12. See infra Part III.A.
13. Theodore C. Bergstrom, When Is a Man's Life Worth More Than His Human Capital, in THE VALUE OF LIFE AND SAFETY: PROCEEDINGS OF A CONFERENCE HELD BY THE GENEVA ASSOCIATION 3, 16-18 (M.W. Jones-Lee ed., 1982).
14. Paul Milgrom, Is Sympathy an Economic Value? Philosophy, Economics, and the Contingent Valuation Method, in CONTINGENT VALUATION: A CRITICAL ASSESSMENT 417 (J.A. Hausman ed., 1993).
15. Bergstrom, supra note 13, at 17.
16. Id. at 18 (arguing that to account for altruism "would lead to inefficiency").
17. See infra Part III.B.l.
18. M.W. Jones-Lee, Paternalistic Altruism and the Value of Statistical Life, 102 ECON. J. 80, 89 (1992).
19. See A.R. Prest & R. Turvey, Cost-Benefit Analysis: A Survey, 75 EGON. J. 683, 684 (1965).
20. See id.
21. See Sunstein, supra note 3, at 386
22. (citing STEPHEN BREYER ET AL., ADMINISTRATIVE LAW AND REGULATORY POLICY 120-35 (5th ed. 2002);
23. Federal Insecticide, Fungicide, and Rodenticide Act, 7 U.S.C. §136(bb) (2000); Toxic Substances Control Act, 15 U.S.G § 2605(c)(1) (2000);
24. Safe Drinking Water Act, 42 U.S.C. §300g-1 (b)(3)(c) (2000)).
25. Presidents Carter, Reagan, and Clinton have signed executive orders concerning CBA. Exec. Order No. 12,044,43 Fed. Reg. 12,661 (Mar. 24,1978); Exec. Order No. 12,291,46 Fed. Reg. 13,193 (Feb, 19,1981); Exec. Order No. 12,866,58 Fed. Reg. 51,735 (Oct. 4,1993).
26. Although cost-benefit comparisons may seem noncontroversial, numerous critics have attacked CBA. Much of the debate centers on the notion of potential Pareto improvements. According to this concept, one resource allocation is preferable to another if "the gainers from change are hypothetically able to compensate those who lose." MTT DICTIONARY, supra note 11, at 338. Many reject potential Pareto improvements as valid efficiency measures.
27. See John M. Gowdy, The Revolution in Welfare Economics and Its Implications for Environmental Valuation and Policy, 80 LAND ECON. 238, 242-45 (2004)
28. (citing T. Scitovsky, Note on Welfare Propositions in Economics, 9 REV. ECON. STUD. 77 (1941)) (claiming that it is not necessarily possible to prove that one allocation is unequivocally preferable to another);
29. FRANK ACKERMAN & LISA HEINZERUNG, PRICELESS: ON KNOWING THE PRICE OF EVERYTHING AND THE VALUE OF NOTHING 34-35 (2004) (criticizing the idea that gainers are not required to compensate losers);
30. Lisa Heinzerling, Discounting Life, 108 YALE L.J. 1911 (1999) (noting that the principle of non-compensation is especially troubling when the gains come now and the losses come far in the future, as is the case with policies concerning climate change or nuclear waste storage).
31. U.S. EPA, 2008 NATIONAL AMBIENT AIR QUALTTY STANDARDS FOR GROUND-LEVEL OZONE, EXECUTIVE SUMMARY, 1 (2008), available at http://www.epa.gov/ttnecasl/ regdata/ RIAs/ 0-ozoneriaexecsum.pdf.
32. A 20-percent reduction would imply that permissible PM2.5 levels are lowered from the current standard of 0.84 parts per million to 0.65 parts per million. See id. at ES-5.
33. Id. at ES-6.
34. See, e.g., Dorothy P. Rice & Barbara S. Cooper, The Economic Value of Human Life, 57 AM. J. PUB. HEALTH 1954, 1955 (1967).
35. See generally W. Cris Lewis & Tyler J. Bowles, Assessing Economic Damages in Personal Injury and Wrongful Death Litigation: The State of Utah, 18 J. FORENSIC ECON. 227 (2006);
36. Tyler J. Bowles et al., Assessing Economic Damages in Personal Injury and Wrongful Death Litigation: The State of Idaho, 17 J. FORENSIC ECON. 415 (2005).
37. E.J. Mishan, Evaluation of Life and Limb: A Theoretical Approach, 79 J. POL. ECON. 687, 689-690 (1971) (claiming that "most writers have mental reservations about [the discountedsum approach's] validity and tend to regard it as only part of the total measurement").
38. But see ACKERMAN & HEINZERLiNG, supra note 23 (positing that life is valueless; therefore, it is inappropriate to assign life a specific value);
39. STEVEN KELMAN, WHAT PRICE INCENTIVES? ECONOMISTS AND THE ENVIRONMENT (1981).
40. See, e.g., W. Michael Hanemann, Willingness to Pay and Willingness to Accept: How Much Can They Differ? 81 AM. ECON. REV. 635 (1991) (positing that finite WTP values are compatible with infinite willingness-to-be-paid values if substitutes are scarce or nonexistent).
41. See, e.g., VBCUSI, supra note 9, at 19.
42. Gary Fromm, Civil Aviation Expenditures, in MEASURING BENEFITS OF GOVERNMENT INVESTMENT 172 (Robert Dorfman ed., 1965).
43. Id. at 193.
44. id. at 194.
45. See Alberini, supra note 4, at 799.
46. Mishan, supra note 29, at 691.
47. Gary Fromm, Comment on T. C. Schelling's Paper "The Life You Save May Be Your Own", in PROBLEMS IN PUBLIC EXPENDITURE 166, 174 (1968).
48. See supra note 26 and accompanying text.
49. ROBERT C. MITCHELL, USING SURVEYS TO VALUE PUBLIC GOODS: THE CONTINGENT VALUATION METHOD 30 (1989) (emphasis added).
50. But see ACKERMAN & HEDMZERLING, supra note 23, at 68 (arguing that the benefits of risk-reduction programs should be measured according to the value of general risk reductions, an ex ante perspective, and the value of actual lives saved, an ex post perspective).
51. Alberini, supra note 4, at 784.
52. Sunstein, supra note 3, at 392.
53. Alberini, supra note 4, at 784.
54. Anna Alberini et al., Willingness to Pay for Mortality Risk Reductions: Does Latency Matter? 32 J. RISK & UNCERTAINTY 231, 241 (2006).
55. $1,589.46/0.0005 = $3.179 million. Id. at 243.
56. See, e.g., VISCUSI, supra note 9;
57. Kevin L. Brady, An Expressed Preference Determination of College Students' Valuation of Statistical Lives: Methods and Implications, 42 COLLEGE STUDENT J. 968 (2008).
58. See, e.g., U.S. EPA, 2008 NATIONAL AMBIENT AIR QUALITY STANDARDS FOR GROUND-LEVEL OZONE, ch. 6, at 25 (2008), available at http://www.epa.gov/ ttnecasl/ regdata/RIAs/6-ozoneriachapter6.pdf.
59. See supra text accompanying notes 36-38.
60. See infra Appendix.
61. VISCUSI, supra note 9, at 20.
62. Alberini, supra note 4, at 783.
63. See, e.g., Michael J. Moore & W. Kip Viscusi, The Quantity-adjusted Value of Life, 26 ECON. INQUIRY 386 (1988);
64. Robert S. Smith, Compensating Wage Differentials and Public Policy: A Review, 32 IND. & LAB. RELATIONS REV. 339 (1979);
65. PETER DORMAN, MARKETS AND MORTALITY: ECONOMICS, DANGEROUS WORK, AND THE VALUE OF HUMAN LIFE (1996).
66. See, e.g., Alberini et al., supra note 45;
67. Alberini, supra note 4;
68. Phaedra S. Corso et al., Valuing Mortality Risk Reduction: Using Visual Aids to Improve the Validity of Contingent Valuation, 23 J. RISK & UNCERTAINTY 165 (2001);
69. James K. Hammitt & John D. Graham, Willingness to Pay for Health Protection: Inadequate Sensitivity to Probability?, 18 J. RISK & UNCERTAINTY 33 (1999);
70. Brady, supra note 47.
71. VISCUSI, supra note 9, at 8.
72. Per-Olov Johansson, Altruism and the Value of Statistical Life: Empirical Implications, 13 J. HEALTH ECON. 111 (1994).
73. Alberini et al., supra note 45, at 235.
74. W. Kip Viscusi, The Value of Risks to Life and Health, 31 J. ECON. LIT. 1912 (1993).
75. U.S. EPA, supra note 5.
76. Id.
77. See, e.g., Sunstein, supra note 3, at 397.
78. See, e.g., Beverages: Bottled Water Arsenic Standards, 69 Fed. Reg. 70, 082 (proposed Dec. 2, 2004) (codified at 21 C.F.R. pt. 165) (stating that the Federal Food and Drug Administration "used a range of $5 to $6.5 million for the value of a statistical life.. .This range includes the VSL of $6.1 million that EPA used in their analysis").
79. See, e.g., Sunstein, supra note 3, at 396-98. But see Memorandum from Kirk K. Van Tine, Gen. Counsel & Linda Lawson, Acting Deputy Assistant Seć y for Transp. Pol'y, U.S. Dep't of Transp. (Jan. 29, 2002), available at http://ostpxweb.dot.gov/policy/Data/VSL02 guid.pdf (encouraging the Department of Transportation to use three million dollars as the value of life).
80. Mishan, supra note 29, at 198-201.
81. VISCUSI, supra note 9, at 21.
82. See infra Part III.B.2.
83. ACKERMAN & HEINZERUNG, supra note 23, at 69-70.
84. Dan Frosh & Jennifer Lee, Rescue Halted at Mine After 3 Deaths and 6 Injuries, N.Y. TIMES, Aug. 17, 2007, http://www.nytimes.com/2007/08/17/us/17cnd- mine.html?-r= 2&hp&oref=slogin&oref=slogin.
85. Id.
86. BARBEE WHITAKER & MARIAN SULUVAN, DEP,T OF HEALTH & HUMAN SERVICES, THE 2005 NATIONWIDE BLOOD COLLECTION AND UTILIZATION SURVEY REPORT 13 (2005), available at htrp://www.hhs.gov/bloodsafety/2005NBCUS.pdf.
87. Id. at 19.
88. See, e.g., Shalom H. Schwartz, Normative Explanations of Helping Behavior: A Critique, Proposal, and Empirical Test, 9 J. EXPERIMENTAL SOC PSYCH. 349 (1973) (arguing that people's willingness to donate blood is a function of the perceived moral obligation).
89. Arianne de Blaeij et al., The Value of Statistical Life in Road Safety: A Meta-analysis, 35 ACCIDENT ANALYSIS & PREVENTION 973 (2003).
90. Id. at 980.
91. See, e.g., id. (examining 20 public-risk WTP estimates and 75 private-risk WTP estimates, most of which were derived using different surveys).
92. W. Michael Hanemann, Valuing the Environment Through Contingent Valuation, 8 J. ECON. PERSPECTIVES 19, 26 (1994).
93. See, e.g., Magnus Johannesson et al., The Value of Private Safety Versus the Value of Public Safety, 13 J. RISK & UNCERTAINTY 263 (1996) (finding that public WTP is less than private WTP for road safety programs);
94. Lars Hultkrantz et al., The Value of Improved Road Safety, 32 J. RISK & UNCERTAINTY 151 (2006).
95. The following private risk-reduction scenario was used: Consider that a traffic safety device is developed which can reduce serious accidents. It can fully prevent fatal and severe injury risk for the users of this equipment within a city, e.g.[,] the urban area of Örebro. Pedestrians, bicyclists and car users can use the device. It reduces the risk for severe accidents within the urban area to zero only for the person that is using it; it can not be used by others, not even within the same household.
96. Hultkrantz et al., supra note 77, at 157.
97. The following public risk-reduction scenario was used: [Consider] a road traffic safety programme that will reduce the number of fatal and severe injuries within the urban area of Örebro with 16 persons within the urban area of Örebro during one year. The reduction applies to pedestrians, bicyclists and car users. Outside the urban area the number of road accidents will be unaffected.
98. Id. at 158.
99. See, e.g., Josephine Borghi, Aggregation Rules far Cost-Benefit Analysis: A Health Economics Perspective, HEALTH ECON. ONLINE Doi: 10.1002/ Hec.1304 (2007) (examining the value of statistical life under varying WTP aggregation methods).
100. Blaeij et al., supra note 73, at 979.
101. Jorge E. Araña & Carmelo J. León, Willingness to Pay far Health Risk Reduction in me Context of Altruism, 11 HEALTH ECON. 623, 624 (2002).
102. Id. at 625.
103. Id. at 634.
104. Id. at 625 (reducing the free-rider problem by including "a provision rule...stressing that the preventive campaign would be carried out only if everybody would agree to pay for the policy").
105. Id. at 630.
106. Bergstrom, supra note 13.
107. Id. at 17.
108. Id.
109. Milgrom, supra note 14.
110. M.W. Jones-Lee, Altruism and the Value of Other People's Safety, 213 J. RISK & UNCERTAINTY 213, 213 (1991).
111. Id. at 213-214
112. Id. at 213 (claiming that one person's WTP for another's safety should be fully included in the value of statistical life "if and only if altruism is exclusively safety-focused").
113. Jones-Lee, supra note 18, at 88.
114. Id. at 89.
115. Araña & León, supra note 82, at 630.
116. Janet Currie, Cutting the Safety Net One Strand at a Time, in THE ECONOMBTS' VOICE 194, 195 floseph E. Stiglitz et al. eds., 2008).
117. Id. at 196-197
118. Fredric Jacobsson et al., Is Altruism Paternalistic?, 117 ECON. J. 761 (2007).
119. Id. at 765.
120. Id. at 761.
121. Gowdy, supra note 23, at 241.
122. See, e.g., Alan Randall, Why Benefits and Costs Matter, 14 CHOICES 38 (1999) (endorsing CBA with specific qualifications, namely that policy decisions should not make decisions solely on the results of CBA).
123. Araña & León, supra note 82.
124. Jones-Lee, supra note 18.
125. Supra text accompanying notes 86,91-96.
126. See generally James M. Buchanan & Wm. Craig Stubblebine, Externality, 29 ECONOMICA 371 (1962).
127. U.S. EPA, SECTION 126 PETITIONS: FINAL RULE REGULATORY IMPACT ANALYSBSUPPLEMENTARY VOLUME: OZONE-RELATED BENEFITS OF RFXHONAL NOx EMBSION REDUCTIONS, ch. 1, at 1 (1999), available at http://www.epa.gov/ttn/oarpg/tl/ reports/ clsuppo3.pdf [hereinafter EPA SUPPLEMENTARY VOLUME, ch 1].
128. See generally U.S. EPA, REGULATORY IMPACT ANALYSE FOR THE FINAL SECTION 126 PETITION RULE (1999), available at http://www.epa.gov/ttn/oarpg/tl/reports/ 126fn0.pdf.
129. EPA SUPPLEMENTARY VOLUME, ch. 1, supra note 108.
130. Id.
131. $1,090 million/$l,360 million = 0.8015; U.S. EPA, SECTION 126 PETITIONS: FINAL RULE REGULATORY IMPACT ANALYSE - SUPPLEMENTARY VOLUME: OZONE-RELATED BENEFITS OF REGIONAL NOX EMBSION REDUCTIONS, ch. 4, at 2, available at http://www.epa.gov/ttn/ oarpg/tl/reports/c4suppo3.pdf [hereinafter EPA SUPPLEMENTARY VOLUME, ch. 4].
132. Id.
133. Economists Moore and Viscusi made the first attempt to value life years; Moore & Viscusi, supra note 53, at 373.
134. EPA SUPPLEMENTARY VOLUME, ch. 4, supra note 112, at 6.
135. Id.
136. ($1,000 million - $700 million)/$700 million = 0.4286; see id.
137. EPA SUPPLEMENTARY VOLUME, ch. 1, supra note 108.
138. For the Supreme Court decision, see Whitman v. Am. Trucking Ass'ns Inc., 531 U.S. 457 (2001).
139. U.S. EPA, 2006 NATIONAL AMBIENT AIR QUALITY STANDARDS FOR PARTICLE POLLUTION: REGULATORY IMPACT ANALYSIS, EXECUTIVE SUMMARY, ES-I (2006), available at http://www.epa.gov/ttnecasl/ regdata/ RIAs/ Executive%20Summary .pdf.
140. Id. at ES-8.
141. U.S. EPA, 2006 NATIONAL AMBIENT AlR QUALTTY STANDARDS FOR PARTICLE POLLUTION: REGULATORY IMPACT ANALYSIS, CHAPTER 9, 9-3 (2006), available at http://www.epa.gov/ttnecasl/regdata/RIAs/Chapter%209Comparison%20of %20Costs%20and%20Benefits.pdf [hereinafter EPA 2006, CHAPTER 9].
142. US. EPA, 2006 NATIONAL AMBIENT AlR QUALITY STANDARDS FOR PARTICLE POLLUTION: REGULATORY IMPACT ANALYSE, CHAPTER 5, 5-69 (2006), available at http://www.epa.gov/ttnecasl/regdata/RIAs/Chapter%205-Benefits.pdf.
143. EPA 2006, Chapter 9, supra note 121.
144. Id.
145. See, e.g., ADAM SMITH, THE WEALTH OF NATIONS 572 (Bantam Classic 2003) (1776) ("As every individual...labours...[h]e intends only his own gain...and he is in this, as in many other cases, led by an invisible hand to promote an end which was no part of his intention...By pursuing his own interest he frequently promotes that of the society more effectually than when he really intends to promote it.").
146. Professors Kenneth Arrow and John Hicks received the Nobel Prize in 1972 "for their pioneering contributions to general economic equilibrium theory and welfare theory." Press Release, The Royal Swedish Academy of Sciences, The Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel 1972 (Oct. 25,1972), http://nobelprize.org/ nobeLprizes/economics/laureates/1972/ press.html). Professor Gérard Debreu received the Nobel Prize in 1983 "for his rigorous reformulation of the theory of general equilibrium." Press Release, The Royal Swedish Academy of Sciences, The Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel 1983 (Oct. 17, 1983), http://nobelprize.org/nobel-prizes/economics/laureates/1983/press.html.
147. See HAL R. VARIAN, INTERMEDIATE MICROECONOMIC ANALYSE: A MODERN APPROACH 561-564 (5th ed. 1999).
148. See supra note 13 and accompanying text.
149. Kenneth J. Arrow, Uncertainty and the Welfare Economics of Medical Care, 53 AM. ECON. REV. 941,954 (1963).
150. Jones-Lee, supra note 91, at 213.
151. Jacobsson et al., supra note 99.
152. See, e.g., Michael C. Farmer & Alan Randall, The Rationality of a Safa Minimum Standard, 74 LAND ECON. 287 (1998) ("adherence to standard practices when an irreversible event is threatened is itself an overly rigid, restrictive, and inconsistent policy program");
153. John V. Krutilla, Conservation Reconsidered, 57 AM. ECON. REV. 777, 779-80 (1967) (stating that "maximum willingness to pay...may be significantly less than the minimum which would be required to compensate such individuals were they to be deprived in perpetuity of the opportunity to continue enjoying the natural phenomenon in question" if decisions are irreversible).
154. See, e.g. Sherwin Rosen, The Value of Changes in Life Expectancy, 1 J. RISK & UNCERTAINTY 285, 286 (1988);
155. Alberini, supra note 4, at 784;
156. Alberini et al., supra note 45, at 232.
157. C.f. Alberini, supra note 4, at 784 (deriving the value of statistical by implicitly differentiating Equation 1 rather than imposing the budget constraint in Equation 2).
158. Supra text accompanying notes 52-63.
159. i=0.
160. 1
161. Supra text accompanying notes 91-96.