The Value of Life

"The Question" in Detective Comics #857 by Greg Rucka and Cully Hamner (2009)

Hmm...I don't know about that, Tot. I think people who sell human lives think of them as a pretty damn expensive commodity. After all, they know just high highly valued human lives are and are cognizant that certain types of people value them so highly that they'd be willing and able to pay very large sums for them. It's a money maker.

Economists value lives too, but in a different way. Actually, they have done considerable work on this. Of course, the economic "value of life" is a statistical in nature and should not be confused with value in the sense that "life if priceless." Rather, "value of statistical life" estimates see what people would be willing to pay or sacrifice to reduce the probability of death. The thing is that most of us (unless you were someone like, say, The Joker) would be willing to give up all of our wealth to avoid a 100% probability of death. Yet, when it comes to smaller probabilities, individuals make trade-offs between monetary wealth and safety every day. People pay for health insurance, get vaccines, buy alarms for their houses, etc. Similarly, people accept small risks in order to not expend anything. When someone jaywalks, for instance, that person is subject to a tiny increase in the probability of death for the payoff of saving a few seconds of time. These implicit trade-offs are what make up the value of a statistical life.

Economists, policymakers, federal agencies and others use such estimates to evaluate the potential benefits of public policy programs, particularly those involving health, environment, workplace safety and transportation regulations. There are numerous studies and methodologies to arrive at these estimates. Some use surveys that flat out ask what individuals would be willing to pay to diminish the probability of death. Others look at data on individual expenditures and purchases to construct variables that portray willingness to pay (i.e. pay for safety) or willingness to accept (i.e. get paid for a risk). For instance, this paper looks at the trade-off between worker fatality risks and wages using BLS data on worker deaths by occupation and industry. It estimated a value of $4.7 million for the full sample used, $7.0 million for blue collar males, and $8.5 million for blue collar females.

I haven't kept up with the research, but most estimates I have seen tend to hover around $7-$8 million or so. In June 2008, the EPA had estimated the value of a statistical life to be $6.9 million (about $1 million less than five years ago), which prompted the media to have a field day about the devaluation of human life.

Here's an NBER paper about general problems and uses of value of life estimates.

What do you suppose the human traffickers that Renee Montoya is hunting charge for lives they sell? I know that this is a different value than the one we just discussed, but do you think it's more than $7 million?

Edit: Apparently it's much less, according to a comment. The lesson here is that the economics in action movies are generally unreliable.