News for February 2011

People Now Worth More

The New York Times published an article this week about how EPA and other federal agencies have quietly increased the dollar value assigned to a human life, to be used for regulatory impact and cost-benefit analysis.

According to the Times:

The Environmental Protection Agency set the value of a life at $9.1 million last year in proposing tighter restrictions on air pollution. The agency used numbers as low as $6.8 million during the George W. Bush administration.

The Food and Drug Administration declared that life was worth $7.9 million last year, up from $5 million in 2008, in proposing warning labels on cigarette packages featuring images of cancer victims.

The reason for the increasing value of human life? A combination of inflation adjustment and choice of methodologies. EPA has tended towards using a capitalized “risk premium” for hazardous occupations such as mining to set a “market price” for risk of death. Industry prefers to use surveys about the price the public would be willing to pay to avoid a statistical risk, or simply to add up lost wages, capping the value of a human life with her expected earnings until death. And therein lies a fundamental flaw in cost-benefit approaches — the illusion of mathematical certainty presented by comparing numbers, while hiding the policy and value assumptions underlying the calculation of these numbers.

Given that administrative policy is subject to change from administration to administration, and even from agency to agency within the same administration, perhaps the assignment of a numerical value for human life should not be left to the regulatory agencies at all. If Congress wants cost-benefit analysis to be part of the environmental regulatory calculus (as it has in TSCA section 6, and the Safe Drinking Water Act), then let Congress put a price on life — let’s establish by statute what value Congress wants to use. Many in the environmental community may fear that Congress would pander to industry and low-ball the number, but I think that the opposite might occur were Congress to have to explain exactly what they think their constituent’s lives should be worth.

Posted: February 23rd, 2011
Categories: Energy
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