THIS STORY HAS BEEN FORMATTED FOR EASY PRINTING

'Statistical life' isn't worth what it used to be

Email|Print|Single Page| Text size + By Seth Borenstein
Associated Press / July 11, 2008

WASHINGTON - It's not just the American dollar that's losing value. A government agency has decided that an American life isn't worth what it used to be.

The "value of a statistical life" is $6.9 million, the Environmental Protection Agency reckoned in May - a drop of nearly $1 million from five years ago.

The Associated Press discovered the change after a review of cost-benefit analyses over more than a dozen years.

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.

Some environmentalists accuse the Bush administration of changing the value to avoid tougher rules, an allegation the EPA denies.

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.

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