From the Associated Press (via FP): The EPA has decided that the average American life isn't worth as much as it once thought. The agency lowered the statistical value of a life from $7.8 million to $6.9 million--about a $1 million drop from five years ago. The calculation is important because it figures into the agency's cost-benefit analysis of proposed regulations:
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.
The figure isn't based on people's earning capacity, societal contribution, or "how much they are loved and needed by their friends and family," the story assures us. Instead it reflects how much people are willing to pay to avoid risks, and how much employers will pay to have workers take on additional risks.
A spokesman for EPA claims that the reduction "reflects consumer preferences"--an explanation that definitely warrants further explanation. I'd think that our consumer preferences (in terms of the risks that we're willing to expose ourselves to) have made us more willing to spend money to protect ourselves, not less. Witness our outrage over toxic toys, produce, and other cheap goods, and our growing paranoia about protecting our children from environmental ills. Of course, such concerns are also class-bound, and they may well be off set by a growing underclass that wouldn't be willing or able to pay for such protections.
Either way, I'd think EPA should seriously re-examine the way it's coming up with these figures. The agency relied on two major studies to come up with the number, one that came up with a value of $8.8 million and another that said it was $2 million - $3.3 million. That's one big, yawning $5-million gap. As so much of U.S. environmental policy hinges upon cost-benefit calculations, I'd hope that the valuation of a human life would be examined with greater scrunity.
Update: The correct term is the "value of a statistical life," not the "statistical value of a life," as one of the commenters pointed out. Thanks for the correction.