Some economic ideas thrive only in the darkness
Peter Dorman writes at Econospeak about economics insulated from the harsh light of day and evaluation of usefulness:
The Embarrassment Known as the Value of a Statistical Life
Some economic ideas thrive only in the darkness: they are simply too weird and half-baked to withstand public scrutiny. Perhaps no concept better exemplifies this than the value of a statistical life, the sum of money that supposedly measures the value of a life saved or sacrificed by a government program…
More over at Econospeak.
Price not value. There has always been a price relative to life. Value is a whole nuther kettle of fish.
Dilbert
I am not sure there has always been a price. People try to save life “regardless of the cost” when they can. On the other hand, governments don’t give a damn about your life.
Once in a while the people can force “the government” to enact laws that protect life. But soon as they do the anti-life forces get busy repealing or mooting it.
It’s not only the statistical life.. which is a number that can be gamed for political purposes. It is the “average”, as for example it is applied in calculating Social Security benefits for a whole generation, and as comparing one generation to another, that is profoundly misleading.
Social Security is insurance. So the “average return on investment” is meaningless. Even an honest average return in which your risk of needing the insurance is properly discounted is highly misleading.
There is a huge difference between paying a dollar more than you “needed” to, and ending up with a dollar less than it takes to feed yourself.
This also applies across generations… the early recipients might have gotten a better “return on investment” if you use the devil’s arithmetic, but they needed that return more than the “average” recipient will need if “we” are as rich in the future as we expect to be. The point of insurance is that you pay for the “worst case,” not the “average” case.
NASA, back in the day, gave a damn on the order of $1,000,000 per.
It is one of the reasons we workman’s comp.
dilbert
well, that’s interesting, and it may as far as i know be the only way to get any consideration of human life at all.
but the concept bleeds over until we lose that community spirit to help each other out ..
one thing i am thnking of… say it costs a million dollars to take care of a child who is almost certain to die of some disease that MAY be cured, but probably won’t be. by the time the accountants are done, he won’t get the care. and in the vast scheme of things maybe that’s the way it has to be. but i’d bet that without the accountants, the relevant professionals, and the neighbors would put together the resources to give it a try. and maybe learn something in the process.
and yes, i know you can’t save everyone. or live forever.
I think there is also a subtle this:
when the accountants put a “value” on a human life, we end up saying in effect, we won’t bother to save your life unless we can expect to be paid back.
i guess that’s what they mean by “enlightened self interest.”
i suspect you might have to do something like that if you are spending public money and you can see that to save every possible life in all imaginable situations will cost an infinite amount of money. but ethically it’s a slippery slope.
and, of course, as the article points out, in actual practice it isn’t even done honestly.