the observatory

How Much Are You Worth?

The AP gets the scoop on the EPA's decision to devalue a "statistical life"
July 11, 2008

Last month, I wrote a column about the challenges journalists face in covering the ethical decisions that affect humanity’s response to global climate change. Well here’s a doozie: What is a human life worth — not in any abstract, existential sense, but in cold, hard dollars?

That was the subject of a keenly important article by The Associated Press’s Seth Borenstein yesterday, who discovered that the U.S. Environmental Protection Agency has discounted the “value of statistical life” by almost $1 million over the last five years. The practice of monetizing life at all sounds nefarious, but, according a Forbes article from last January, it “makes sense” in a world in which we expect government to protect its citizens from things like global warming:

Although some may consider it immoral to even raise the question of the dollar value of life, risk regulation agencies can’t avoid doing so. We would soon exhaust all of our resources if we tried to do everything that would make our lives safer. A zero pollution, risk-free society is unattainable.

Borenstein’s piece for the AP reflects this same rationale:

The EPA figure is not based on people’s earning capacity, or their potential contributions to society, or how much they are loved and needed by their friends and family — some of the factors used in insurance claims and wrongful-death lawsuits.

Instead, economists calculate the value based on what people are willing to pay to avoid certain risks, and on how much extra employers pay their workers to take on additional risks. Most of the data is drawn from payroll statistics; some comes from opinion surveys. According to the EPA, people shouldn’t think of the number as a price tag on a life.

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When it comes to the agency’s latest changes to the value of a statistical life, however, Borenstein adds an extremely important caveat:

Though it may seem like a harmless bureaucratic recalculation, the devaluation has real consequences.

When drawing up regulations, government agencies put a value on human life and then weigh the costs versus the lifesaving benefits of a proposed rule. The less a life is worth to the government, the less the need for a regulation, such as tighter restrictions on pollution.

Consider, for example, a hypothetical regulation that costs $18 billion to enforce but will prevent 2,500 deaths. At $7.8 million per person (the old figure), the lifesaving benefits outweigh the costs. But at $6.9 million per person, the rule costs more than the lives it saves, so it may not be adopted.

A specific regulation would be something like a cap-and-trade scheme for reducing greenhouse gas emissions. In my column about covering the ethics of such legislation, I quoted a long feature from the May issue of Scientific American that explained how the difference between economic projections that say the costs of inaction outweigh the costs of action and those that say the opposite comes down to a set of moral decisions. Among these considerations, the author wrote, is the fact that:

Many people, some living, others yet to be born, will die from the effects of climate change. Is each death equally bad? How bad are those deaths collectively? Many people will die before they bear children, so climate change will prevent the existence of children who would otherwise have been born. Is their nonexistence a bad thing? By emitting greenhouse gases, are the rich perpetrating an injustice on the world’s poor? How should we respond to the small but real chance that climate change could lead to worldwide catastrophe?

Obviously, if the EPA says that a life is worth $1 million less than it used to be, it becomes less economically “practical” to enact something like cap-and-trade and energy efficiency standards. Unfortunately, the press generally covers environmental regulations in only the broadest sense, without delving into the important details, as Borenstein did, that shape arguments about their practicality and viability. Journalists should be more attentive. As the Forbes article quoted above noted:

The Environmental Protection Agency created a political firestorm back in 2003 with an analysis that calculated that the lives of those over age 70 were worth 37% less than the lives of younger people. Citizen groups for the elderly were outraged at this “senior death discount” and ultimately the EPA withdrew the report. Discussion of age distinctions are off the table now…

Borenstein actually broke that story back in 2002 when he was with the now defunct Knight Ridder news agency, a number of months before other major news outlets caught on. But there has certainly been no such “firestorm” surrounding the agency’s more recent and generalized devaluation of individuals. As Borenstein observed in yesterday’s piece, “EPA traditionally has put the highest value on life of any government agency and still does, despite efforts by administrations to bring uniformity to that figure among all departments.” But whereas the EPA has been “trimming” its figure, the Department of Transportation has twice increased its own.

Whatever the rate may be, these are the kinds of inconspicuous, but eminently consequential, details that reporters must begin paying attention to. It should come as no surprise that Borenstein (a self-professed “data geek” who likes to find stories in numbers) unearthed this particular tale, however. He had been tracking the EPA statistical-life figures ever since the “senior death discount” affair in 2002.

Curtis Brainard writes on science and environment reporting. Follow him on Twitter @cbrainard.