From a 2008 article in the Washington Post: Several federal agencies have come up with figures for the dollar value of a human life to analyze the costs and benefits of new programs they believe will save lives. A sampling:
According to the Principles of Economics by Gregory Mankiw, economics calculate the
value of a human life by looking "at the risks that people are voluntarily willing to
take and how much they must be paid for taking them".
For example, the decision to work as a contractor in Iraq involved placing a monetary value on
years of extended life. Assuming an annual risk of death of 0.004 and a salary
premium of $30,000 per year over comparable jobs in the United States, contractors in
Iraq are essentially compensated at a rate of $250,000 per statistical year of life. A recent survey of estimates based on occupational risk that found a range from $500,000 to $21 million per statistical life year depending on how dangerous the work is. If someone will accept a 1-in-10,000 chance of death for $500, then the value of life
must be 10,000 times $500, or $5 million.
An example of this kind of analysis was used by the federal Consumer Product Safety
Commission this year:A proposal to make mattresses less flammable was expected to cost the industry $343 million to implement. But, a spokeswoman said, the move was also expected to save 270 people. The commission calculated that each life was worth $5 million, which meant a
benefit of about $1.3 billion.
This total value can also be annualized. The World Health Organization has proposed $108,609 as the value of a disability-adjusted life year, while a recent study by Lee et al using Medicare willingness-to-pay, estimated it as $129,000. Lee notes that this figure compares to a range of $50,000 to $100,000 used in other countries, such as Australia and the UK, which run national health care systems in guiding their coverage decisions.
The fact of the matter is that monetary valuations of human life are a necessary step in triage. However, as Risk and Decision-Making researchers know, individual's valuations of their own and others lives is rarely consistent or logical. For example, many people complain bitterly about automobile or factory pollution, while themselves being one of the largest, willful, and unnecessary sources of pollution: