Perhaps no topic generates such bewilderment between economists and the general public as the monetary valuation of human life, or the value of a statistical life (VSL) to use the term preferred by professional economists. Economists insist that longevity is a commodity bought and sold on markets like anything else, which means it has a price and an underlying schedule of willingness to pay just as we would find for any other good or service. Most noneconomists regard this as madness: surely the value of a human life can’t be expressed as the equivalent of a certain number of pizzas, even a very large number of pizzas. But, respond the economists, you do trade off longer life against pizzas, or at least the money that could be used to buy them, since there is a limit to how much you’ll spend to reduce a physical risk. And then there is a reply to the reply: yes, but that has nothing to do with the value of being alive, which can’t be reduced to a monetary price. And it goes back and forth from there, with neither side able to understand the other.
Elsewhere I have made substantive arguments for why we are better off without putting monetary values on our lives, but I won’t get into that here. My interest at the moment is the incomprehension on all sides of the VSL debate.
Here’s what I think it comes down to: the metaphor of choice. This metaphor is so deeply ingrained in economic analysis most economists can’t think beyond it, but the moment it is invoked the very notion of what it means to be alive rather than dead is rendered irrelevant.
No need to reinvent the wheel. I discussed the metaphor of choice in my introductory micro text:
What about the metaphors used in economics? First consider choice. Much of what we do in the economy does involve choosing: we choose where to work, where to live, and paper or plastic in the check-out line. No doubt many of the choices we make are unconscious, but it might not be too far off the mark to think about them as if they were conscious and “rational” as we will describe in the following section. Nevertheless, the metaphor of choice can be misleading in some instances. There are two reasons for this.
First, many of the actions we undertake are governed by a process very different from conscious choice….
Second, many activities are not choices at all. You can choose whether to buy white or red potatoes, but cooking the potatoes is an act of (household) production, not a choice. Working, doing the actual tasks that make up a job, is not choosing; it is working. Spending days or weeks searching for a new house is not making a choice; it’s doing a search. Of course, subject to the qualification we made in the previous paragraph, all these activities lead up to or follow from a choice. In other words, what the metaphor of choice is telling us is that what is deemed important about any economic activity is the element of choice connected to it. This is a simplification of great power, because it enables us to make general statements that apply to the many aspects of life through their common element of choice, but it downplays the economic importance of the non-choice element.
This applies in flashing neon to the valuation of life. To an economist, it is obvious that the salient moment, the one that determines everything else, is when you make a choice about something that increases or decreases the probability of an early death. The tradeoffs you make in that moment, or that are implicit in it and could be teased out using statistical methods, are the very substance of value. When a normal person—someone who hasn’t been trained to view existence as nothing more than a sequence of instantaneous choices—thinks about life, however, they think about living (and dying). What’s the value of that? It might have something to do with the attitude you felt when you were making a choice that changed your odds of survival, but that barely begins to cover it. The value that matters is the value of being, to you and to those who know and care about you.
What’s the lesson here? It’s not that economists are “wrong” to reduce all of being and doing to choosing; there is great power in this simplification, and few insights of modern economics would be attainable without it. But economists would do well to remember this crucial step and acknowledge it limits the scope and applicability of what they think they know. Allowing that there are values to being alive that VSL doesn’t begin to address would be a useful place to start.
“Economists insist that longevity is a commodity bought and sold on markets like anything else, which means it has a price and an underlying schedule of willingness to pay just as we would find for any other good or service.”
If this is what economists truly believe, then their formulation is incomplete, and leads to inaccurate conclusions. Longevity is not a “product” that can be bought and sold like potatoes.
“To an economist, it is obvious that the salient moment, the one that determines everything else, is when you make a choice about something that increases or decreases the probability of an early death.”
Again, the framing of the question indicates the problem – which is that the economist’s oversimplification ignores the actual mechanics of the decision-making done by human actors. The actual mechanics of all choices, conscious or unconscious, involves an estimation of the decision’s impact on the quality of one’s life for the foreseeable future.
Before rushing into the burning building to save one’s own child, one is not simply considering whether one might survive. One is considering the many ramifications of losing one’s child on the quality of one’s future life.
What economists are doing is to claim that their simplifications allow them to study one specific ramification – the potential for loss of one’s own life – and that this is sufficient to justify reaching a formal conclusion about the economic value of life.
That is, quite simply, sloppy thinking at best, and bad science.
Welcome to Angry Bear. First time comments always go to moderation to weed out spammers and advertising.
I am soon to be 68 yoa.
I have made some choices, mainly “risk reduction” as my PCP put the usefulness of taking a statin, quit smoking, do the annual blood test and concern for lipids and PSA……..
I did over diagnose a lesion removing the entire thyroid, but my excuse is “there was a chance is was cancer, and 2 there was a chance with partial thyroid I would need replacement of T hormone. I am doing well with the artificial hormone one pill same time each day. The thyroid was not a cancer issue after the full pathology.
I am studying the LAMA report on approaches to prostate testing and responses to (often over diagnosed as my thyroid example). I am leaning toward their observation that after age 70 ignore a raised PSA result because the lesions are slow and the prospect for 10 year survival is very good and “something else is liable to do an American male in by 80…..”.
I agree with this “avoid over diagnose approach particularly factoring in quality of life and complications form the two most performed responses to early observe prostate cancer. I will see if my PSA starts going up!
Quality of life becomes interesting after 70…… my observation having participated in my grandmother reaching 101 is “only a person that is 98 wants to live to 99……….
Is there a regret matrix for doing things that cause one to live too long?