Friday, July 11, 2008

$6.9 Million for an American Life

So the federal government has determined that your and my life is worth precisely $6.9 million. This is a drop of about $1 million over 5 years. This number is used to calculate the cost of regulations. To give the example from the article: "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." This raises a few questions. First, how do they know that a given regulation will prevent 2,500 deaths? And if it turns out that the regulation doesn't prevent that number of deaths, shouldn't they then logically get rid of the regulation? Second, do they calculate the number of deaths a regulation will cause? I'm almost certain that they do not -- and to the extent that they do, my guess is that it's greatly underestimated. I'm sure some statistical methods are used, but how much of this is just someone's best guess? I also wonder if they take age into consideration. Surely a younger person is "worth more" than an older person, if we're calculating this according to number of years left to live. On the other hand, middle aged working people are contributing more tax money, so they might actually be worth more. But who can calculate the worth of the elderly in family and social contributions? (With the elderly, should we calculate it as age brings wisdom, or there's no food like an old fool?) Also, this seems like a number that applies to everyone. Certainly in certain spiritual calculations, all people are worth the same; however, in society, that's just not the case. Isn't someone who starts a company that ends up employing thousands to hundreds of thousands of people and provide a product that makes peoples' lives better worth more than a crack whore? And if that's the case the numbers should be more personalized. This would mean, then, that a regulation that prevented a high death rate among crack whores perhaps should not be adopted, while a regulation that prevented the death of just one CEO should.

The point of all this is that this is patently absurd. I don't buy what the government is trying to sell me with these numbers. This is a bookkeeping trick designed to justify regulations that more often than not have no demonstrable benefit, and more often than not harm people. After all, driving up prices is a harm that I'm guessing isn't properly calculated in justifying regulations either. So the FDA can continue to keep drugs off the shelves that could save millions of peoples' lives, and not have to worry, since nobody is going to call them out on it, since those deaths are certainly not calculated. Certainly we should not expect the news to announce with every drug that was approved by the FDA that, "If they had released it ten years ago shortly after it was first created, 10 million lives would have been saved."

BTW, why don't they use this calculation for murderers and make them pay the families of those they killed that much?
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