If your mother were to sell you on the stock market today, she would get a lot less for you than she would have five years ago. And it's not just the wrinkles around your eyes, or the waning of your youth. It's ok. The same thing would happen to us, too. In fact, just five years ago, an individual life was worth almost $1 million more than it is today.
These are the cheerful findings of the Associated Press, which reviewed approximately 12 years of the Environmental Protection Agency's (EPA) “cost-benefit analyses.” Still, the agency's latest estimate of the value of a human life is about $6.9 million.
It might seem like a hefty sum for a life, but the consequences of this figure are big. Agencies like the EPA use this data to determine what regulations and restrictions are the most cost-effective, and if the price of a life does not exceed the cost of enforcing a particular regulation that will save it, the regs are out.
EPA officials say the agency's researchers “were just following what the science told them.” Further, they say the change is not actually that big and is based on better economics. But the environmental lobby says the Bush administration fixed the figures to avoid stricter regulations on things like pollution. So how did the EPA come up with its figure? It is in fact calculated primarily using payroll data, and, in some cases, opinion surveys. EPA economists examine what people are willing to pay to reduce risk and how much additional cash employers disburse to their employees to take more risks.
Why should you care? It's just something to think about. Putting a dollar value on one's willingness to take risks, these days — at least, in this market — is not an easy thing to do.