What is Life Worth?

When I was in college, I took an economics class in which the professor asked us what a human life was worth. While my classmates argued that you couldn’t really place a value on life, I argued that somehow, you could. After all, if you were in a lifeboat and you had to dole out food and water to keep just one person alive, and on the boat with you was a genocidal maniac and a person who would publish a cure for cancer once she got back to shore, the choice would be easy. The maniac goes hungry. In that extreme-to-the-point-of-silliness example, it is easy to assign value; the cancer-curer is obviously worth more to those around her than the killer. Reality, of course, is not so cut and dry, but the truth of human value remains, as much as we would rather not think about it.

This came up recently when Indiana newspapers reported on how funds would be distributed to the various victims of the August 13 stage rigging collapse at the Indiana State Fair that killed seven people and injured numerous others. More than $1 million in total funds, much of which was donated, will be split among a pool of 28 victims, including the estates of those killed in the accident. But like any dispersal, there is controversy over who is getting the money and how much. One stage hand who claims he has not worked since the accident, is getting nothing and feels cheated, for example. Another victim has been offered compensation but claims it is not enough.

The line from this story that struck me was from Kenneth Feinberg, an adviser for the State Fair Commission, who asked the rhetorical question, what is a life worth? He defended how the State Fair Relief Fund dispensed some $400,000 to collapse victims, saying that the commission was doing the best it could what what would appear to be an impossible calculation. Feinberg, as you might recall, had a similar task when trying to get folks to join the September 11 Victim Compensation Fund, His job was no easier then.

However, lives do have value, regardless of any controversy involving the stage collapse. An interesting article by the Cato Institute from winter 2004-2005 discusses how the “value of a statistical life” is the benchmark for putting value on human life in general, but even then, there is no one single method for computing what we are worth. It notes the various methods used to calculate a life’s worth, and points out how different estimates come up with substantially different values. Most seem to come in around $2 to $3 million for a life, presumably an American one.

(I recall while writing an article on airline liability costs some 15 years ago that the average liability cost for a passenger fatality was north of $1 million for Americans, Canadians and western Europeans, slightly less for other people depending on what part of the world they hailed from. This is why families always sue airlines after a crash, by the way. The Warsaw Convention, created to limit airline liability in its early days now caps the liability cost for a passenger fatality at a mere $75,000 absent any sign of negligence, which always prompts survivors to sue airlines for negligence after a crash. Why the industry does not change that, when it would gladly settle for more to avoid unnecessary legal action, is beyond me.)