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IMAGE SOURCE: ©iStockphoto/ Direction of the dollar/ author:donamora
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You may not have noticed it, but last May the value of a statistical life was lowered by $1 million.
Who rates such things? The Environmental Protection Agency (EPA) for one.
When drawing up regulations to determine the cost of an environmental danger versus the benefit to cleaning up that toxin, the federal agency must calculate what a life is worth.
For example, if imposing a regulation costs $18 billion and prevents 2,500 deaths. At $7.8 million value per person, the lifesaving benefits of the regulation outweigh the cost of it. However, if the value of a life is $6.9 million, the rule doesn’t make economic sense.
The Associated Press reports the agency’s estimate of the "value of a statistical life" was quietly lowered down from the $7.8 million this past May.
Some believe the Bush administration wants to avoid imposing tougher rules, a charge the EPA denies.
"It appears that they're cooking the books in regards to the value of life," S William Becker, executive director of the National Association of Clean Air Agencies, said to The Guardian newspaper.
"Those decisions are literally a matter of life and death."
Dan Esty, a senior EPA policy official in the administration of the first President Bush said to The Guardian: "It's hard to imagine that it has other than a political motivation."
The value of life is not based on earning capacity or contributions to society, some of the yardsticks that an insurer may use, for example, when calculating the value of a life.
Instead, the calculations are based on what people are willing to pay to avoid environmental risks calculated from opinion surveys, and what employers are willing to pay employees who work in hazardous situations.
An economic approach to valuation might ask consumers how much they would be willing to pay for airbags in their car, then calculate in the risk of death. Valuations attempt to allow rational decisions about tradeoffs. Also known as risk management, calculations are frequently used in workplace safety and by the insurance industry to put a precise dollar value on a life.
The EPA says you shouldn’t consider it a price tag on life, but for the past two decades federal agencies have estimated the value of statistical life or death prevention in determining health, safety and environmental regulations.
Vanderbilt university economist Kip Viscusi, whose work was used by the EPA in evaluating whether to lower the value of a life, tells the AP the reduced valuation "doesn't make sense". "As people become more affluent, the value of statistical lives goes up as well. It has to.”
Sen. Barbara Boxer says she will introduce legislation to reverse the devaluation.
“EPA may not think Americans are worth all that much, but the rest of us believe the value of an American life to our families, our communities, our workplaces and our nation is no less than it has ever been," Boxer, a Democrat, said to The Guardian.
In 2002, the EPA valued the life of a person over the age of 70 at 38 percent less that that of younger people. The agency reversed itself after the public was made aware of the change. #