The Price of Everything - Eduardo Porter [22]
It is only natural that societies will try to protect themselves from risks. But it is easy to go overboard when we ignore the costs involved. Because the truth is, we can’t afford it all. While the price of protecting ourselves may be hidden from view—when we insist on eliminating even the tiniest risks, the price tag can be staggering. When we fail to account for the costs and benefits of public policies, we often find ourselves spending enormous amounts in an intervention that will save a handful of lives while neglecting others that would provide more life for the money.
During the administration of George W. Bush, John F. Morrall III, an economist at the White House’s Office of Information and Regulatory Affairs, published a study of the costs and benefits of dozens of regulations. Some turned out to be astonishingly expensive: a 1985 rule by the Occupational Safety and Health Administration to reduce occupational exposure to formaldehyde would save only 0.01 lives per year, at a cost of $72 billion per life.
The 1980 law that established the “Superfund” to clean heavily polluted sites across the United States assigned some of the highest values ever placed on human beings. Since 1980 the fund has appropriated $32 billion to clean hundreds of polluted sites that could constitute a hazard to human life. But in many cases there were few or no humans at the sites. The EPA determined the need to clean them up by assuming people would settle on them in the future. The lives of these hypothetical settlers were expensive.
A study in the mid-1990s of population records around ninety-nine Superfund sites concluded that only one presented a substantial risk of pollution-induced cancer, one of the most important areas of risk evaluated by the EPA. But while cleaning the PCB-laced site of the old Westinghouse transformer plant in Sunnyvale, California, would avert 202 lifetime cancers, according to the analysis, cleaning up the other ninety-eight sites would prevent only two deaths from cancer in total. At six sites the implicit cost of the program ranged from $5 million to $100 million per each life saved. At sixty-seven sites, the cost of saving a life exceeded $1 billion. And at two sites no deaths were prevented—so the costs were infinite.
While these programs might be nonetheless beneficial to the environment, this price tag might seem high in a world with other, perhaps more pressing needs. Flood protection in New Orleans comes to mind, or fighting malaria. A World Bank study determined that continuing with the World Health Organization’s strategy to combat tuberculosis in sub-Saharan Africa would cost $12 billion between 2006 and 2015. But in Ethiopia alone the program would save 250,000 lives. Today, about 92 of every 100,000 Ethiopians die of tuberculosis each year.
PRICE YOUR OWN LIFE
If the government must tally costs and benefits to evaluate public policies, the obvious question is how should human lives be valued? Feinberg’s approach—measuring our life’s worth by our contribution to GDP—is perhaps too cold-blooded. But there is an alternative, famously articulated nearly sixty years ago by the comedian Jack Benny.
In March 1948, The Jack Benny Show broadcast one of the most famous comedy skits in American radio history: a mugger—voiced by fellow comedian Eddie Marr—accosted Benny as he was walking home from his neighbor’s. “Now, come on. Your money or your life,” the mugger demanded. Benny, a notorious scrooge, didn’t immediately answer, so after a long silence, the robber repeated his threat. “Look, bud,” he said. “I said your money or your life.” Benny snapped back: “I’m thinking it over.”
Benny’s skit suggests a solution to this toughest of evaluations. In their efforts to perform better cost-benefit analyses to guide rule making and allocate public resources, governments only have to let people determine the value of their own lives.
We may not be willing or able to put a price