"Economists might not be able to say how much an individual person’s existence is worth, but they have figured out a way to calculate how much the average person is willing to pay to reduce the risk of death — which allows them to put a price tag on the collective value of saving one life. That figure, which currently hovers somewhere around $9 or $10 million, is known as the “value of statistical life,” (VSL) and it’s the basis for all kinds of high-stakes decisions that involve trade-offs between public safety and economic cost — from
food and
automobile regulations to
our responses to climate change.
Spencer Banzhaf, is an economist at Georgia State University
who has written about the history of the VSL. The VSL, instead of trying to sum up the value of a life, approaches the question from the other direction — how much are we willing to spend to reduce the odds of dying? Economists draw the numbers from multiple sources, including surveys and assumptions about our own choices, like
how much additional money people earn for especially dangerous jobs, or
how much a premium they’ll pay for a safer car. The estimates do vary, but they fall in the same basic range — the EPA’s valuation falls around $9.4 million, while Viscusi’s latest calculation is $10 million. “Essentially, we’re trying to figure out what our society is willing to pay to reduce the risk of mortality,” said
W. Kip Viscusi, an economist at Vanderbilt University and
one of the leading experts on these calculations. To put it another way, Viscusi’s estimate means that if a group of 10,000 people is facing a 1-in-10,000 risk of death, they’re willing to pay $1,000 per person to reduce the odds that any given member of the community will die.