When the Environmental Protection Agency decides which regulations to create and enforce, just like any business deciding to pursue a project, it runs a cost-benefit analysis. While typical businesses might compare the costs of obtaining equipment and paying salaries with the anticipated income from the project, the EPA has to consider grander variables.

If the EPA is considering whether to adopt a regulation that would require all office buildings in the United States to reduce hazardous air particles, as an example, the organization would compare the cost of implementing and enforcing the regulation with the lives that would be “saved” by the regulation’s implementation.

The only way to do a direct comparison between an amount of money and a number of human lives is by giving each life a “value.” So how does the organization decide how much a statistical human life is worth? According to the EPA, the value of a human life has nothing to do with wealth or ability to earn income, so what you might receive in a wrongful death suit or insurance settlement is not related to this figure. The EPA chooses to value the human life by building an average figure based on two different studies with survey questions like, “How much more money would you expect to see in your salary if you took a job where your life is in danger?”

It’s interesting to note that this calculation values all human life equally. The value of a hedge fund manager, a CEO of a huge corporation, or a humanitarian doctor curing children from diseases in depressed countries is no more and no less than the value of a bum on the street. A newborn baby with almost a century of possibilities is worth no more and no less than the 105-year-old on life support in the hospital, nearing his last breath.

If all life is worth the same amount, what is that dollar figure? As a result of the latest calculation, the EPA’s valuation of a statistical life dropped significantly. Previously, the value of a human life was $7.8 million and the revised value is now $6.9 million. Here’s how the Associated Press describes a hypothetical result of this change:

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.

A lower value placed on an individual’s life for the purpose of statistics will result in fewer regulations passing. Additionally, the decreasing value of the dollar in comparison with the rest of the world currencies implies that human life is also decreasing value.

The $6.9 million is not a real figure. You cannot replace a person with this value of money or any other. So the calculation is arbitrary. The EPA can choose which studies it wants to include in its calculation. In fact, the EPA’s water division refuses to accept the larger organization’s most recent two decreases, using the earlier calculation of $8.7 million per person in today’s dollars.

One final note: This calculation is only valid for “American” lives, which I presume would mean anyone living in the United States. There is no indication of whether “foreign” lives would be worth more or worth less.

Do you think the change in valuation is necessary or fair? Is the Environmental Protection Agency serving a political agenda? Does this sort of valuation, where all American lives are valued the same, even make sense?

AP IMPACT: An American life worth less today, Associated Press

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