The Price of Everything - Eduardo Porter [24]
To decide whether to redesign or rebuild a road, for instance, the Department of Transportation values injuries along a scale: a minor injury costs 0.0002 percent of a statistical life; a critical injury is worth more than three quarters. The FDA estimates that the victim of a coronary disease loses thirteen years of life, on average, which is worth—to the victim—about $840,000.
These tools have become the standard in several countries to evaluate and shape government policies. In 2003, for instance, the economic analysis unit of Australia’s health department proposed changing warnings on packages of tobacco products. It based its analysis on the fact that it would save about four hundred lives a year—which added up to a benefit of some 250 million Australian dollars a year—at an annual cost of about 130 million Australian dollars in lost excise taxes because Australians would smoke less.
These techniques provide a new measure of the wealth of nations. Economists at the University of Chicago added up the value to Americans of their increased life expectancy to conclude that increases in longevity between 1970 and 2000 added $3.2 trillion per year to the national wealth of the United States.
DO WE KNOW HOW MUCH WE ARE WORTH?
Despite its democratic appeal, this metric too is troubling. Using people’s own choices to determine the price we are willing to pay to save lives could lead society down some uncomfortable paths. Given the choice between pulling a dozen thirty-year-olds from a blazing fire or saving a dozen sixty-year-olds instead, it might be an odd choice to save the seniors from the point of view of social welfare. For starters, saving the young would save many more years of life than the old.
Cass Sunstein, the legal scholar from the University of Chicago who currently heads the White House’s Office of Information and Regulatory Affairs, which oversees these valuations, has proposed focusing government policies on saving years of life rather than lives, even though that would discount the value of seniors. “A program that saves younger people is better, along every dimension, than an otherwise identical program that saves older people,” he wrote. But just try making this case to somebody over sixty-five. Not only do they value their remaining lives as much as the young do, they have enormous political clout and will vote against anyone who says otherwise.
In 2002 the Environmental Protection Agency introduced a novel element into its analysis of how the Clear Skies Act—which regulated soot emissions from power plants—reduced premature mortality. Rather than evaluate every life saved at $6.1 million, as it had done in the past, it applied an age discount—implying that the life of somebody over seventy was worth only 67 percent of the life of a younger person.
The backlash by the American Association of Retired People and others was so fierce that EPA administrator Christine Todd Whitman was forced to abandon the approach. “The senior discount factor has been stopped,” she said. “It has been discontinued. E.P.A. will not, I repeat, not, use an age-adjusted analysis in decision making.” When the EPA again adjusted the value of life by age to measure the benefits of regulating exhaust from diesel engines, it bent over backward to please seniors. To come up with a system that valued the life of retirees the same as that of younger Americans, it had to price each year of remaining life expectancy at $434,000 for people over the age of sixty-five and only $172,000 for those younger.
The risks of relying on people’s choices to put a value on their lives can be seen in opinion polls showing Americans believe a life saved from a terrorist attack is worth two lives saved from a natural disaster. This bias may explain the indifference with which the United States government