EPA drops value of human life by $900k

[Surlethe]

MSNBC

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 in today's dollars, the Environmental Protection Agency reckoned in May — a drop of nearly $1 million from just five years ago.

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

"It appears that they're cooking the books in regards to the value of life," said S. William Becker, executive director of the National Association of Clean Air Agencies, which represents state and local air pollution regulators. "Those decisions are literally a matter of life and death."

Dan Esty, a senior EPA policy official in the first Bush administration and now director of the Yale Center for Environmental Law and Policy, said that "it's hard to imagine that it has other than a political motivation."

Agency officials say they were just following what the science told them.

How figure is reached
The 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. According to the EPA, people shouldn't think of the number as a price tag on a life.

The EPA made the changes in two steps. First, in 2004, the agency cut the estimated value of a life by 8 percent. Then, in a rule governing train and boat air pollution this May, the agency took away the normal adjustment for one year's inflation. Between the two changes, the value of a life fell 11 percent, based on today's dollar.

EPA officials say the adjustment was not significant and was based on better economic studies. The reduction reflects consumer preferences, said Al McGartland, director of EPA's office of policy, economics and innovation.

"It's our best estimate of what consumers are willing to pay to reduce similar risks to their own lives," McGartland said.

Economist at odds
But the EPA's cut "doesn't make sense," said Vanderbilt University economist Kip Viscusi. The EPA partly based its reduction on his work. "As people become more affluent, the value of statistical lives go up as well. It has to." Viscusi also said no study has shown that Americans are less willing to pay to reduce risks.

At the same time that the EPA was trimming the value of life, the Department of Transportation twice raised its life value figure. But its number is still lower than the EPA's.

The environmental agency traditionally has placed the highest value of life in government and still does, despite efforts by administrations to bring uniformity to that figure among all agencies.

Not all of the EPA uses the reduced value. The agency's water division never adopted the change and in 2006 used $8.7 million in current dollars.

From 1996 to 2003, the EPA kept the value of a statistical life generally around $7.8 million to $7.96 million in current dollars, according to reports analyzed by The AP. In 2004, for a major air pollution rule, the agency lowered the value to $7.15 million in current dollars.

Just how the EPA came up with that figure is complicated and involves two dueling analyses.

Viscusi wrote one of those big studies, coming up with a value of $8.8 million in current dollars. The other study put the number between $2 million and $3.3 million. The co-author of that study, Laura Taylor of North Carolina State University, said her figure was lower because it emphasized differences in pay for various risky jobs, not just risky industries as a whole.

Advisor: 'Numerology,' not science
The EPA took portions of each study and essentially split the difference — a decision two of the agency's advisory boards faulted or questioned.

"This sort of number-crunching is basically numerology," said Granger Morgan, chairman of EPA's Science Advisory Board and an engineering and public policy professor at Carnegie Mellon University. "This is not a scientific issue."

Other, similar calculations by the Bush administration have proved politically explosive. In 2002, the EPA decided the value of elderly people was 38 percent less than that of people under 70. After the move became public, the agency reversed itself.

I don't really have much comment myself right now, but I think that this might stir some interesting discussion here.

[Jaepheth]

Do they just calculate cost-benefit using the current population?

It'd seem to me that as long as the value of human life was greater than 0 the number of people a policy effects would approach infinity as time t approached infinity. Or do they only look a short distance into the future?

Of course, if you discount the value of human life in the future then the value of human life approaches zero as t approaches inf. So, there's that too...

[Kanastrous]

The present administration pretty much seems to discount the value of any human life - if it happens to be on the daylight-side of the birth canal.

[DesertFly]

I know it may not be a practical policy, but if I was in charge the value of human life, at least where it came to safety regulations, would be infinite: if pollution or whatever is going to cost even one person their life, the regulation needs to be tightened.

[Sikon]

I know it may not be a practical policy, but if I was in charge the value of human life, at least where it came to safety regulations, would be infinite: if pollution or whatever is going to cost even one person their life, the regulation needs to be tightened.

There are ways in which $1 billion can be spent in a manner giving a moderate chance of saving 1 life, and there are also ways in which the same available funds can instead statistically save 10000 people on average.

Since it isn't possible to spend infinite millions of dollars per individual, with neither government revenues nor total economic output being high enough, the real-world result of situations in which the former is done is that funds aren't available for the latter ... and statistically thousands of unnecessary deaths occur due to the emotional reaction of refusing to make rational calculations.

For example, it isn't possible to spend $100 billion per life saved on all possible measures doing that. Attempting to do that would only mean neglecting other methods saving more lives. In the real world today, it is possible through the right methods to save statistically an American life for on the order of $100000 or a third-world life for as little as $1000.

The great majority of people do not understand and quantify the risks we face.[...]

That doesn't mean that we should not try to minimize our risks, but it is important to recognize that minimizing anything must be a quantitative procedure. We cannot minimize our risks by simply avoiding those we happen to think about. For example, if one thinks about the risk of driving to a destination, one might decide to walk, which in most cases would be much more dangerous. The problem with such an approach is that the risks we think about are those most publicized by the media, whose coverage is a very poor guide to actual dangers. The logical procedure for minimizing risks is to quantify all risks and then choose those that are smaller in preference to those that are larger. [...]

There are many ways of expressing quantified risk, but here we will use just one, the loss of life expectancy (LLE); i.e., the average amount by which one's life is shortened by the risk under consideration. The LLE is the product of the probability for a risk to cause death and the consequences in terms of lost life expectancy if it does cause death. As an example, statistics indicate that an average 40-year-old person will live another 37.3 years, so if that person takes a risk that has a 1% chance of being immediately fatal, it causes an LLE of 0.373 years (0.01 x 37.3).

It should be clear that this does not mean that he will die 0.373 years sooner as a result of taking this risk. But if 1,000 people his age took this risk, 10 might die immediately, having their lives shortened by 37.3 years, while the other 990 would not have their lives shortened at all. Hence, the average lost lifetime for the 1,000 people would be 0.373 years. This is the LLE from that risk. [...]

LOSS OF LIFE EXPECTANCY (LLE) DUE TO VARIOUS RISKS [...]

Activity or risk* LLE (days) [...]

Cigarettes (male) 2300 [...]
Heart disease* 2100
Working as a coal miner 1100
Cancer* 980
30-lb overweight 900 [...]
All accidents* 400
Vietnam army service 400
Motor vehicle accidents 180 [...]
Pneumonia, influenza* 130 [...]
Homicide* 90
Air pollution* 80
Occupational accidents 74
AIDS* 70
Small cars (vs midsize) 60 [...]
Falls* 39
Poison + suffocation* 37
Radon in homes* 35
Fire, burns* 27 [...]
Hurricanes, tornadoes* 1
Airline crashes* 1
Dam failures* 1
Living by nuclear plant 0.4
Nuclear power (NRC)* 0.04

*Asterisks indicate averages over total U.S. population; others refer to those exposed. [...]

Even very tiny risks often receive extensive publicity. Perhaps the best example was the impending fall of our orbiting Sky-Lab satellite, which gave us an LLE of 0.002 seconds. Heavy publicity surrounded leaks from radioactive waste burial grounds, although these have not given any single member of the public an LLE as large as 10 seconds. [...]

Surely it is unreasonable to spend a lot of money to reduce one risk if we can much more cheaply reduce a greater risk but are not doing so. [...]

As an example, getting a Pap smear to test for cervical cancer requires making an appointment and going to the doctor's office; most women would be willing to do equivalent chores for a payment of $10. A Pap test costs about $20, so we add the $10 for time and effort and take the total cost to be $30. Each annual Pap test has 1 chance in 3,000 of saving a woman's life; thus for every 3000 tests, costing (3,000 x $30 =) $90,000, a life is saved. The average cost per life saved is then $90,000. About 50% of U.S. women of susceptible age now have regular Pap tests. If you are among the other 50%, you are effectively deciding that saving your life is not worth $90,000. [...]

If there were smoke alarms in every home, it is estimated that 2,000 fewer people would die each year in fires. Even with a generous allowance for costs of installation and maintenance, this works out to a life saved for every $120,000 spent, but less than half of American homes have smoke alarms.

On the other hand, a great many Americans purchase premium tires to avert the danger of blowouts. If everyone did, this would cost an aggregate of about $10 billion per year and might avert nearly all of the 1,800 fatalities per year that result from blowouts, a cost of nearly $6 million per life saved. Many Americans buy larger cars than they need in order to achieve greater safety, which costs something like $12 million per life saved.

There is clearly no logical pattern here. It is not that some people feel that their life is worth $12 million while others do not consider it to be worth even $90,000 — there are undoubtedly many women who buy larger cars for safety reasons but skip their regular Pap test. And there are millions of Americans who purchased premium tires with their new cars but did not order air bags, even though the air bags are 10 times more cost effective. The problem is that the American consumer does not calculate cost effectiveness. His or her actions are governed by advertising campaigns, salesmanship, peer group pressures, and a host of other psychological and sociological factors.

But what about the government? We pay a large share of our income to national, state, and local governments to protect us. The government can hire scientists or solicit testimony from experts to determine risks and benefits, or even to develop new methods for protecting us; they have the financial resources and legal power to execute a wide variety of health and safety measures. How consistently has the government functioned in this regard? [...]

First let us consider cancer-screening programs. The government could implement measures to assure that much higher percentages of women get annual Pap smears; this has been done in a few cities like Louisville, Toledo, Ostfold (Norway), Aberdeen (Scotland), and Manchester (England). Ninety percent participation was achieved by such measures as sending personal letters of reminder or visits by public health nurses. Such measures would involve added costs, but tests would be cheaper when done in a large-scale program — a Mayo Clinic program did them for $3.50 in the 1960s and a British program did them for $2 apiece in l970. Thousands of lives could be saved each year at a cost below $100,000 each. [...]

Nevertheless, only a small fraction of American adults are screened each year, and there has been little enthusiasm for large government-sponsored programs. [...]

An especially effective approach to saving lives with medical care is with mobile intensive care units (MICUs), well-equipped ambulances carrying trained paramedics ready to respond rapidly to a call for help. [...] Experience in large cities has shown that MICUs save lives for an average cost of about $24,000; consequently, every large city has them. However, for smaller towns the cost goes up. When it reaches $60,000 per life saved — the cost for a town with a population of 40,000 — and MICU is often considered too expensive. In effect, it is decided that saving a life is not worth more than $60,000.

To summarize our medical examples, there are several available programs that could save large numbers of lives for costs below $100,000 each, and many more for costs up to $200,000 per life saved. These, of course, are American lives, with some chance that they may be our own.

There are numerous opportunities for highly cost-effective lifesaving in underdeveloped countries. The World Health Organization (WHO) estimates that over 5 million childhood deaths could be averted each year by immunization programs at a cost ranging from $50 per life saved from measles in Gambia and Cameroon to $210 per life saved by a combination of immunizations in Indonesia. These costs are for complete programs that provide qualified doctors and nurses, medical supplies, transportation, communication, and the like. WHO also estimates that about 3 million childhood deaths each year could be averted by oral rehydration therapy (ORT) for diarrhea. This consists of feeding a definite mixture of salt, sugar, baking soda, and "sodium-free" salt with water on a definite schedule. The cost per life saved by complete programs range from $150 in Honduras to $500 in Egypt.

Other low-cost approaches to lifesaving in the Third World include malaria control ($550/life saved), improved health care ($1930), improved water sanitation ($4030) and nutrition supplements to basic diets ($5300). [...]

According to a recent report by the U.S. Department of Transportation, current programs save 79 lives per year with improved traffic signs, at a cost of $31,000 per life saved; 13 lives per year with improved lighting, for $80,000 per life saved; 119 lives per year with upgraded guardrails, for $101,000 per life saved;28 lives per year with median barriers, for $163,000 per life saved; 11 lives per year with median strips, for $181,000 per life saved; 75 lives per year with channelled turn lanes, for $290,000 per life saved. [...]

Presumably, these programs could be expanded, with an overall cost of something like $150,000 per life saved. [...]

In its regulation dealing with air pollution control equipment for coal-burning power plants, it [the EPA] frequently requires installation of sulfur scrubbers, which corresponds to spending an average of $1 million per life saved. [...]

Where radiation is involved, the EPA hastens to go much further. [...] Radium is a naturally occurring element that is found in all natural waters. This has always been so, and it always will be so. However, the EPA is now requiring that in cases where radium content is abnormally high in drinking water, special measures be taken to remove some of it. This, it estimates, corresponds to spending $5 million per life saved. [...]

In 1972, the Office of Management and Budget recommended that nuclear reactor safety systems be installed where they can save a life for every $8 million spent. The NRC requires a $4 million expenditure per life saved in controlling normal emission of radioactivity from nuclear power plants (see Chapter 8 Appendix). But the NRC has special rules for special substances — regulations on emissions of radioactive iodine correspond to spending $100 million per life saved. In Chapter 12 we will see that our radioactive waste management programs are spending hundreds of millions of dollars per life saved. [...]

From the above discussion one gets the impression that the American public is willing to go to extremes in spending money for protection against radiation. But then there is the case of radon in our homes. Government policy here is to provide information and guidance to help citizens to protect themselves from radon, utilizing the services of private industry. The cost to the citizen for implementing this protection is about $25,000 per life saved. A great deal of publicity has been given to this problem, but the public has shown little interest. Only about 2% of Americans have taken even the first step in this process of measuring the radon level in their homes, which costs about $12.

From here

[Sikon]

So, as an example, if one wants to reduce public radiation exposure, the figures from the above quoted passage illustrate that one could get as much done per $100,000 spent on paying people to check homes for radon as per $100,000,000 on some current radioactive waste disposal programs.* Of course, that is not to say the latter should be canceled, just that the amount of extra funds spent on it should be kept under control.

Pour too much more funds into the latter while neglecting to spend almost anything on the former, and a lot less is accomplished.

* The reason this is the case is because a certain statistical number of homes cause even thousands of mrem per year exposure to their occupants, and cheap investigation for tens of dollars per home can determine the small percentage of homes that could appropriately use further treatment for thousands of dollars each.

[Sikon]

Other, similar calculations by the Bush administration have proved politically explosive. In 2002, the EPA decided the value of elderly people was 38 percent less than that of people under 70. After the move became public, the agency reversed itself.

A classic example. If there is a one risk that would increase my chance of dying at 30 instead of 75 by 0.01%, while another risk would increase my chance of dying at 70 instead of 75 by 0.01%, I'd rather have a bit more funds spent on avoiding the former. The former is 0.0045 years of life expectancy on average, while the latter is just 0.0005 years on average.

But many (most?) people in the public can't think straight like that without an emotional reaction as the above quote from the opening post news article illustrates.