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Products Getting Safer as Human Life Becomes More “Valuable”

You are probably familiar with the adage: you can’t put a price on human life.  It turns out that indeed you can, and that price is actually a significant driving force behind our country’s regulatory system.  Much to the chagrin of some in the business community, life is more valuable than ever.
The New York Times published a fascinating story in February on how the government uses cost benefit analysis, with one of the variables being the “value” of human life, to determine the safety standards required by agencies like the Food and Drug Administration (FDA) and the Environmental Protection Agency (EPA). You can read the full story here.
So what is a human life worth?  According to the New York Times, it depends on who you ask.  Under Obama, the EPA values human life at more than $9 million.  In theory, this means that if the EPA devises a new standard that it calculates will save one human life, it’s considered a reasonable investment as long as the cost of implementation does not exceed $9 million.  If two lives can be saved, then that figure moves to $18 million, and so on.  Of course, this is only a framework.

It’s a wildly imperfect system.  For starters, each agency sets its own value.  While the EPA says a human life is worth $9 million, the FDA says it’s actually worth a little less than $8 million.  Moreover, the determined value of human life within a particular agency can change drastically over time.  Under the Bush Administration, the EPA used figures as low $6.8 million.  It shouldn’t be surprising that the Obama administration has proposed much tougher pollution standards than did President Bush.
There are other factors at play as well.  A long drawn out death from cancer is considered more costly because of the pain and suffering involved.  Preventing a death caused by terrorism is valued significantly higher than others (this helps explain the justification for the country’s massive defense budget in recent years).
The whole system of pricing human life has historically been championed by the business community.  Industry groups, fed up with what they viewed as arbitrary regulations, pressured the government to adopt a more quantifiable system.  But as the value of human life has gone up, so too have the costs imposed on industries who must now adopt tougher safety standards.  This has many in the business community reconsidering the system’s effectiveness.  Meanwhile, some consumer groups aren’t fully on board either.  They argue that the government typically undervalues human life.
While this all might seem a bit abstract, there is actually some evidence from the government’s perspective that the system is working.  For example, new statistics show traffic deaths are down to their lowest level in more than fifty years – down three percent from last year and twenty-five percent from 2005 (CNN story).  Experts say better safety standards in cars and trucks are largely to thank.


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