Government regulators put a price on human life

The thought of putting a fixed value on life is unpleasant, but it is necessary for regulators to determine how resources should be spent on health and safety improvements, says economist Ike Brannon.

Furthermore:

Society cannot spend an infinite amount of money to protect and extend each person's life.

With a fixed amount of resources, government needs to approximate how much each life is worth called the value of a statistical life (VSL) in order to obtain the greatest benefit for each dollar spent in trying to save one.

Economists and other researchers in the U.S. have used a variety of methods to determine the value of a statistical life. Some of the most widely accepted studies have found that VSL ranges from about $2 million to $3 million. Government regulators have adopted similar figures:

The Department of Transportation uses a figure of $3 million.

The Environmental Protection Agency (EPA) currently uses a mean VSL of $6.3 million for its cost-benefit analysis; in reality, every regulation issued by the agency that spent less than $8 million to save a life has been approved.

While having different agencies use different valuations may seem illogical, people place different values on avoiding different types of risk for instance, people fear dying in a plane wreck much more than they fear dying in a car accident.

Source: Ike Brannon, What Is a Life Worth? Regulation, Vol.27 No. 4, Winter 2005, Cato Institute.

For text: http://www.cato.org/pubs/regulation/regv27n4/v27n4-8.pdf

For more on Regulatory Issues: Consumer Safety: http://www.ncpa.org/iss/reg/

FMF Policy Bulletin/ 22 March 2005

Publish date: 30 March 2005
Views: 373

Health Policy Unit, Regulation, Healthcare

The views expressed in the article are the author’s and are not necessarily shared by the members of the Foundation. This article may be republished without prior consent but with acknowledgement to the author.

Share this article

Help FMF promote the rule of law, personal liberty, and economic freedom become an individual member / donor HERE ... become a corporate member / donor HERE