£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.

For centuries, religions and philosophers have insisted that life is sacred and without monetary value. But it turns out, 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 or invest in treatment for lung disease.

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.

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

You’re worth it

No, we can’t. 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 reality, governments must make difficult decisions that save and cost lives. Without maths, governments would make subjective choices, favouring one group over another.

You Decide

  1. How much do you think a human life is worth?

Activities

  1. Can you imagine a risk-free society? Write a science-fiction story or create comic strip 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. We work out the price of potatoes 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 number on the value of human life, governments are always under a lot of pressure from voters to treat all life as priceless.

Word Watch

Cost-benefit analysis
A mathematical way of deciding on the strengths and weaknesses of actions. Dating back to the 19th Century, it is the maths behind 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 £162.0 billion is spent on healthcare.
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.
Fatal
Causing death.
£8 million
Over several decades, economists have looked at all kinds of statistics to arrive at this number. They look at surveys and questionnaires, as well as the extra money people earn for doing riskier jobs.
Monetary
To do with money.
Subjective
Based on personal feelings or opinions.

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