Oil Prices Up, Food Prices Up, Utility Prices Up, EPA Drops the Value of an American Life Almost a Million Dollars

Submitted by Charles Frost on Sat, 07/12/2008 - 21:53.

EPA Drops the Value of an American Life Almost a Million Dollars

by Christine Lepisto, Berlin on 07.12.08

Headlines revealing the discovery that the US Environmental Protection Agency (EPA) has reduced the value of a statistical life by almost a million dollars abound. The news, as you might expect, generates some of the best humorous comments (quotes overleaf). But what does it all really mean? How does it affect your environmental quality? And how does it affect your finances, especially in a down economy?

Humorous Comments About EPA Reducing the Value of Life
All the reports say the same thing. The Associated Press discovered the change while reviewing EPA documents which apply the "value of life" figure to justify requiring expensive pollution controls. The drop occurred in two steps: an 8% reduction in the value of life made in 2004, and the removal of an inflation factor in 2008 for a total decrease of about 11%, down from around 7.8 million dollars. The news is spurring the best humorous comments:

I’m worth $6.9 million? Any chance I can cash out my statistical life worth right now? I’d be happy to sign a waiver to have the federal gov’t add me to their “Do Not Worry About” list.
--krazeeinjun at Think Progress

American "life" is worth $7 an hour. Unless you're lucky and get to work at starbucks or walmart, then it's eight. Corporations have won.
--SA at Huffington Post

This is good information to know. Next time I try and sell Americans, I’ll be sure to do it in Euros.
--toasterhead at Think Progress

Environmental Quality Regardless of Cost
But what does it all mean? First of all, it is important to understand that EPA is forbidden to consider costs when it sets the primary standards that protect Americans' health. A legal decision, Whitman v. American Trucking Associations, 531 U.S. 457, 465-472, 475-76 (2001), set the precedent that protects this most fundamental level of health-based decision making. Of course, this idealist precedent cannot prevent political pressures impeding environmental protection.

Cost Benefit Analysis in Environmental Assessments
The "value of life" comes up when the EPA is setting standards and regulations for how industry or government must attain the health-based standards. As the AP notes in an example: "Consider 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 Statistical Life is not a Human Life
It is important to note that this value is not supposed to represent lifetime earnings/contributions to society or the moral and emotional worth of a human being. The figure is calculated to approximate how much people are theoretically willing to pay to save a life. The calculation is based on studies of how much extra we actually pay for wages in high-risk jobs and opinion surveys.

Which raises a relevant question: If someone asked you to donate 7.8 million, or even 6.9 million, to save the life of a stranger would you do it? But it doesn't really work that way. Only a very small percent of the population is at risk of being a so-called "excess death", that is a death which occurs above and beyond the number of "natural deaths". Obviously, that is a pretty complicated statistic, because how do you figure out which deaths are natural and which are "excess"? The primary reference for this data is the National Morbidity, Mortality and Air Pollution Study (NMMAPS), as revised.

How Does EPA's Life Value Impact Your Finances?
Let's take a couple of real-life examples.

  • The NMMAPS predicts that 20 people per year could be saved if PM10 (very small dust particles) in Baltimore could be reduced by about 30% (or from 35 to 25 micograms/m3). Baltimore's population is 651,114. Would each citizen give $10.50 per person for each life saved, or $12 per person using the older life value?
  • Toronto estimates 1700 premature deaths per year from all air pollution. With a population of 2.48 million, would each person in Toronto be willing to kick in $2.78 per life saved? Seems like a bargain, but since it sums to over $4700 to save all 1700 people, the residents of the (presumably less at-risk) rural parts of the province may have to kick in a share as well.
  • Averaging the costs over the whole USA, assuming 64,000 air pollution deaths per year and 300 million inhabitants, pollution controls justified by the US EPA could cost about 1472 US dollars per year per person.

    So now that you understand these numbers in the context of reality, you can make your own conclusions. EPA's new value of life remains the highest of any Federal agency. Is it still too high? Or is this just another Bush administration maneuver to gut environmental protection regulations in the USA?


    From: http://www.treehugger.com/files/2008/07/epa-value-life-environment-protection.php