Regulation: Putting a price on life

last updated 8 January 2015

“What is the value of a human life?” said Binyamin Appelbaum in The New York Times. For government agencies, that question isn’t theoretical. To judge the efficacy of the rules they impose on industry, agencies have to weigh the value of lives saved against the cost of regulation. Under the Obama administration, “one agency after another has ratcheted up the price of life, justifying tougher and more costly” regulations. Last year the administration demanded that automakers meet a more stringent and expensive standard for car roofs in order to save an estimated 135 people from dying annually in rollovers. By simply raising the value of each life saved—from $3.5 million under the Bush administration to $6.1 million today—the Department of Transportation made the aggregate value of the lives preserved higher than what it would cost industry to strengthen the roofs. A similar pattern throughout the government has resulted in “protests from businesses and praise from unions, environmentalists, and consumer groups.”

Yet not all lives—or deaths—are equal in this jerry-rigged system, said James Heiser in TheNewâ€‹â€‹American.com. While the transportation department values a life at $6.1 million, the Environmental Protection Agency pegs it at $9.1 million. The EPA has even said it might apply a “cancer differential,” arguing, in effect, that slow death by cancer is 50 percent worse than death by other means. Regulations “based on something as vague as a perceived sense of more or less desirable forms of death” show just how arbitrary the system is. And how “dangerous,” said David Ropeik in The Washington Post. The EPA is responding to the fact that most of us find cancer “scarier” than, say, heart disease. But heart disease kills 50,000 more of us per year. So while endorsing our “misperceptions,” the EPA is failing to do its job of properly assessing risk.

Regulators are only human, said Felix Salmon in Reuters.com, and their task is to make just these sorts of difficult distinctions. “Dying of cancer is a particularly gruesome—and expensive—way to go.” (Likewise, deaths caused by terrorism can cost billions; just look at what we’ve spent in the wake of 9/11.) So “a little bit of fuzziness” in these calculations seems entirely appropriate. You can’t simply ignore human impulses, or political ones, in a place like Washington. Given the even less rigorous alternatives, we should count ourselves lucky that bureaucrats are trying to base “these decisions on some kind of numerical argument” at all.