Valuing a Human Life

Some thoughtful commentators are trying to think seriously about the trade-offs between saving lives and all the other things we care about. Other less thoughtful commentators are demagoguing this issue, saying things like “You can’t put a price on a human life” or some other self-congratulatory nonsense. This is mostly with regard to the question of when the economy should “re-open” and how much illness and death are we willing to tolerate to get back to some semblance of a normal life. I want to tell this second group of commentators that they look childish. This is a really lame way to feel morally superior to your political opposites, and it doesn’t make you look good.

People place finite value on their own lives. We know this, because people don’t spend every last dollar of disposable income on safety. Also observe that people go out of the house for movies, plays, concerts, parties, and other reasons that are pure entertainment. Each venture outdoors entails a small chance of death, a car accident for example, but we deem the risk worth while. We even haul our beloved children along with us. We visit our elderly relatives during the peak of flu season without even thinking about it. We risk our own lives and those of our loved ones when the benefit exceeds the cost according to some arcane formula deep in our minds. The difference here is one of degree, not of principle. If it sounds cold and calculating to place a dollar value on a human life, recognize that we all implicitly do so all the time. It is hypocritical in the extreme to blast moral outrage at people who bring the topic into the light of day for an open discussion.

Economists have clever ways of computing the “statistical value of a human life.” They can figure out how much consumers are willing to pay, or forego paying, for a given safety feature on vehicles. If the safety feature costs X, and it has a probability p of saving your life, then, crudely, the statistical value of a human life is X/p. Similarly, if there are two approximately similar jobs, but one has a higher hazard of death, the difference in pay reflects the value that the workers place on their lives. If the pay differential, the “hazard pay”, is X and the difference in probability of death is p, then again the statistical value of a human life is X/p. Typically this comes out to about $10 million in the United States, although of course it depends on age, occupation and other demographics. In a portfolio sense, the auto consumers are willing to pay about $10 million per life saved, and the workers are willing to accept about $10 million in compensation for each on-the-job death (or input whatever figure you prefer for $10 million). 

If the government is going to use society’s resources and impose costs on us to save lives, it had damn well better be respecting our preferences. A government that tells us, “We’re going to spend $50 million per life saved” is declining to respect our true wishes, because that is way more than we're willing to pay as revealed by our own choices. A politician or government epidemiologist is of course free to idly wish we would make different choices. They are free to think we should make different trade-offs or to believe our actions are irrational. But they should not have a free hand to overrule us and make for us the choices that they think we should make. “I see you’re only willing to pay up to $50 for this safety feature, while the true cost is $100. Sorry, overruled. I’m going to make it mandatory anyway for all new vehicles.” Their role is to help us solve collective action problems and to realize our preferences as they are, not to change our preferences through social engineering and coercion.

I don’t know if various government imposed shut-downs are worth the cost. I do know that some commentators are making it impossible to have that conversation, and I wish they would stop their moral grand-standing. They are making it sound as though “the economy” is just the stock market or a big pile of money, categorically and infinitely less valuable than a human life. No. “The economy” is just a short-hand for “all the other things we care about and all the things we enjoy doing.” It's not mere crass materialism that we enjoy human contact.

I also want to push back against the overuse of the “precautionary principle”. There is no such thing as the precautionary principle when mistakes in all directions are costly. There is no safe harbor. You must confront the trade-offs with eyes wide open. I think some people are imagining that we can simply “buy” safety by spending mere dollars. There is some insurance broker into which we can just pump unlimited amounts of money and out of which comes safety and lengthened lives. No. To the extent that we use our resources to purchase other kinds of safety, we eventually hit a limit in which buying more insurance against the coronavirus means getting less overall safety. There are other potentially deadly effects, too. I dread the mental health effects of the lock-down. I am a well adjusted adult with a rewarding family life including small, delightful, loving children in the home, and even I am going a little stir crazy. Some people don’t have anyone right now. Some people have gone over a month with no human contact. Young, single people. Old divorced or widowed people. Some without even the companionship of a pet. There is a limit to how much isolation they will tolerate. (A Zoom call is not the same.) They might eventually decide it’s worth getting sick to see other human beings. The mental health consequences of unemployment are also looming large. We shouldn’t be making that decision for these vulnerable people. We shouldn’t even be telling them what they should want. I think there is a serious risk here that we exhaust everyone’s patience before the virus has truly gotten started. What if we’re using up all our ammo now, before a significant fraction of the population has immunity? Suppose there are no more levers to pull when the virus roars back? It does no good to claim that policy X or Y was done “out of an abundance of caution.” We need to take seriously the possibility that excessive caution makes people worse off and even causes more deaths.  

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Here is an excellent post by Bryan Caplan. He amusingly points out:

Economists are widely-seen as heartless.  Their use of the phrase “value of life” is often seen as damning confirmation of this heartlessness.  Nice people say, “You can’t put a value on a human life” and change the subject!
What’s striking, though, is that when you successfully cajole non-economists to put a dollar value on a human life, their numbers are vastly below the economic consensus.  Economists’ standard estimate is around $7,000,000.  Non-economists’ usually say under $1,000,000.

So what’s up, you heartless non-economists? Why do you put such a low value on human life? You might say, “I wasn’t asked, that’s not the answer I would have given.” But, c’mon. The $1 million answer comes from people basically similar to yourself, having the same visceral reaction to the question and using the same kind of rhetoric. But, sure, maybe you’re more sophisticated.

And because Bryan Caplan and Zach Weinersmith make such an excellent pairing, I find this SMBC appropriate right now.