£8 million: the price of a human life today

In the balance: Governments have to weigh up the economic and human cost of policies.

Can we measure the value of a life in money? It sounds unthinkable and heartless. But our world is shaped by mathematical models that calculate how much it is worth keeping each of us alive.

Some things in life are priceless. We can’t quantify the joy of time spent with friends, the beauty of a sunset, or the wonder of a starry sky. And we can’t put a price on human life.

Or so we thought. For centuries, religions and philosophers have insisted that life is sacred and without monetary value. But it turns out that economists have done the maths and come up with a number – and we’re each worth £8 million. More or less.

This is according to the world’s leading authority on cost-benefit analysis, the economist W Kip Viscusi, adviser to the US government and author of the book Pricing Lives. But how did he arrive at this figure? And why do we need to know how much we’re worth?

The problem starts with governments calculating the costs and benefits of policies that may save lives. They must decide how to spend a limited budget. For example, whether to ban smoking in public spaces or invest in treatment for patients with lung disease.

Most of this is easy enough to quantify: the cost of regulation, medicine, and medical care. But policymakers find it much harder to put a value on human life.

Leaving humans out of the cost-benefit equations leads to all kinds of problems. A study in the 1950s for the US Airforce recommended suicide missions – because it set the value of human life to zero. At the other extreme, if human life has an infinite value, the government would quickly run out of money trying to do everything possible to save life.

In 1968, Thomas Schelling came up with a solution. We cannot put a value on life, but we can find out how much money people will pay to reduce their own risk of death.

The maths turns out to be very simple. For example, how much more would you pay for a car that is slightly safer? If 10,000 people buy this car for an extra £800 each and save one of them from a fatal accident, the value of that saved life is 10,000 times 800 – or £8 million.

This is called the Value of a Statistical Life (VSL) and it gives governments and other organisations a means of putting a monetary value on a preventable death. It may seem cold and hard-hearted, but the VSL has one huge advantage over other ways of valuing life: it is the same for everyone. It ensures that the government treats everyone equally, regardless of how much you earn, your age, or your mental and physical health.

So, can we really measure the value of a life in money?

You’re worth it

No, we can’t. Putting a pound sign on human life only devalues it, treating humans like objects to be bought and sold. A person will always be worth incalculably more than a risk-assessment or a pay-slip. These mathematical equations encourage us to reduce the value of humans to the limitations of society, rather than improving society to treat everyone as though they were priceless.

Yes, we can and we must. In theory, life is priceless. In reality, governments must make difficult decisions that save and cost lives. Mathematical models allow us to make fair decisions based on risk and probability. Without maths, governments would make subjective choices, favouring one group over another. By giving a price to life, we ensure that all life is valued.

You Decide

  1. How much do you think a human life is worth?
  2. Do you think the government values everyone equally?

Activities

  1. Some things are beyond value. Draw a picture that includes as many priceless things as you can think of.
  2. Can you imagine a risk-free society? Write a science-fiction story where all dangerous activities are illegal.

Some People Say...

“The value of life itself cannot be estimated.”

Friedrich Nietzsche (1844 -1900), German philosopher

What do you think?

Q & A

What do we know?
The word “value” has two meanings. There is the qualitative value of something, which cannot be measured or expressed in mathematical equations. We value people, music, nature, and a good book in this qualitative way. But there are also quantifiable values which we can measure, like the price and weight of a sack of potatoes. The price of potatoes is determined by how much people are willing to pay. But we don’t buy and sell humans, which is why we find it so unsettling to put a price of human life.
What do we not know?
There are three types of question worth asking. Is the Value of Statistical Life accurate? There is so much we don’t know about risk and disease. Even if the models are correct, is it ethical to reduce human life down to a price tag? And, finally, how much do governments use these values to make policy decisions? Even when we try to put a monetary value on human life, governments are always under a lot of pressure from voters to treat all life as priceless.

Word Watch

Cost-benefit analysis
A systematic method for assessing the strengths and weaknesses of actions. Dating back to the 19th Century, it is the maths that underpins most decisions made by governments.
Pricing Lives
In his book, Viscusi argues that pricing human life actually makes society safer and more equal.
Limited budget
The UK government has a budget of £847.6 billion, of which it spends £162.0 billion on healthcare.
Suicide missions
Because the US military only had a limited number of nuclear weapons, they recommended overwhelming the enemy with unarmed planes. These suicide missions would allow the nuclear-equipped planes to get through the enemy defences.
Thomas Schelling
The Nobel Prize-winning American economist and strategist, Schelling applied his ideas to foreign policy and putting a value on the lives of those suicidal pilots.
£8 million
Over several decades, economists have analysed all kinds of data to arrive at this number. They look at surveys and questionnaires, as well as the additional money people earn for doing riskier jobs.
Everyone
The VSL gives an average value for the entire population. However, it varies by country because, in richer countries, the average person is able to pay more to reduce their risk of death.
Earn
Another common form of valuing life is life insurance and compensation. After the 9/11 terrorist attacks, the families of the victims received payments based on how much the victim would have earned in their lives had they lived. The victims included millionaires and porters, and their lives were valued very differently.

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