The Price of Everything - Eduardo Porter [23]
In 1987, the federal government allowed states to choose the speed limit on interstate highways, freeing them from the 55 mph yoke imposed in 1974. A study of driving in twenty-one states that revised their speed limits up to 65 mph found that drivers increased their average speed by 3.5 percent. This both shortened their commutes and increased their chances of suffering a fatal crash. The researchers calculated that for each life lost, drivers were saving about 125,000 hours in shorter commutes. If each hour were valued at the prevailing wage, the drivers saved $1.54 million, in 1997 dollars, for each additional death.
In the 1960s, the American economist Thomas Schelling suggested using people’s willingness to pay for safety to determine the price tag they put on their lives. “Proponents of the gravity of decisions about life-saving can be dispelled,” he wrote, “by letting the consumer (tax-payer, lobbyist, questionnaire respondent) express himself on the comparatively unexciting subject of small increments in small risks, acting as though he has preferences even if in fact he has not. People do it for life insurance: they could do it for life-saving.”
A study of parents’ willingness to buy bike helmets for their kids concluded they valued their lives at anywhere from $1.7 to $3.6 million. An analysis of how home prices drop the nearer they are to a polluted Superfund site concluded homeowners were willing to pay up to $4.6 million to avoid the risk of getting cancer. Another way to measure life’s value is to look at people’s choice of jobs, deducing the value of life from the fact that riskier jobs pay more: say a worker accepted $100 more per year to take a job that increased his risk of death by one in 100,000. An economist would conclude from this that the worker valued his life at 100,000 times $100, or an even $10 million.
These techniques have gained traction in many countries to determine the costs society is willing to bear to avoid injuries and deaths. With their appeal to citizens’ own preferences they have a more democratic flavor than calculations based on economic loss or other objective criteria. If the Department of Transportation determines that Americans are willing to pay no more than $5.8 million to prevent death in a traffic accident, it can make a reasonable case against spending more than $5.8 million for each life it expects to save through road improvements that would reduce the risk of fatal crashes.
The Department of Agriculture used to value life much the way the 9/11 fund did, tallying lost productivity from premature death. But in the 1990s it switched its metric to value life according to people’s willingness to pay. Today, it has a nifty calculator where one discovers that 1.39 million cases of salmonella that afflict the United States in a year impose a social cost of about $2.6 billion. The biggest chunk of the cost stems from the 415 people killed by the disease, each of whose lives the agency values at $5.4 million.
Health agencies prefer to measure the value of living one more year, rather than that of an entire life, on the not unreasonable assumption that we are all going to die anyway and all government action can do is push death back a bit, not prevent it. The most sophisticated analyses take into account