The value of life
What is a life worth? One can approach this question from a religious, philosophic or economic point of view. Let’s start with an economist’s perspective.
This type of question arises quite frequently in discussions of safety regulation, and in legal disputes where someone has died as a result of someone else’s possible negligence. British Petroleum will face this question when it has to defend itself in lawsuits involving the death of 11 people on the oil-rig that exploded n the Gulf.
For most economists the answer is straightforward – the present value of a person’s expected future income stream. Of course, there will be disputes over the discount rate, future income and age of retirement. But there is little disagreement about the methodology for estimating the value of one’s life.
Many people might be disappointed to learn that the value of the life of a 30-year old hedge fund partner is far greater than that of a 50-year old teacher, a 60-year old Nobel Prize winner in medicine, or a 40-year old CEO of a major non-profit organization. And similarly, people might be disappointed to learn that LeBron James is worth much more than a university president, the Prime Minister of Britain or a lead ballerina.
Some might argue, from a religious perspective, that one cannot place a value on a person’s life. Indeed, in the extreme, this line of argument generally concludes that each life has an infinite value. For economists this is a foolish argument.
If one accepts this conclusion about the value of life, then all activities, which augment the probability of death, should be outlawed – travel by all modes, cigarettes, drugs, alcohol, recreational activities such as skiing, mountain climbing and sailing solo around the world. Would we really be better off if we modeled our lifestyles after the Amish?
However, it is a straightforward exercise for an economist to demonstrate that we would be worse off if such activities were not permitted.
Furthermore, if we could not place a value on a life, we would need to invest much more in health care to save lives, even when the costs of heroic efforts far exceed the potential economic benefits. Does it really make sense to spend tens of thousands or hundreds of thousands of dollars to extend the life of someone in his 80s by a few weeks or months? Of course not, but we continue to do so because politicians have not addressed this particular problem and the valuation of life. Maybe they will have to as the population ages and health care continues to eat up an increasing proportion of GDP.
In some cultures, the value of a woman’s life is very small. If women are not allowed to be educated and/or participate in the labor market, then their lives, from an economist’s perspective, are not valuable. Malthusians might even argue that, since the primary role of women in such cultures is to produce babies, the value of their lives is negative.
Many people might be offended by such conclusions, just as they are are likely to be offended by anyone who advises others that if they are going to drink and drive, they should restrict their driving to poorer areas. The value of the life of a poor person is much smaller than that of a rich person.
Being offended does not change the situation or the valuations. Promoting education, meritocracy and economic growth will do more for enhancing the value of peoples’ lives.
The opinions expressed in this blog are personal and do not reflect the views of either Global Brief or the Glendon School of Public and International Affairs.