I'm sorry to tell you that your life is worth only $5.9 million, a drop of nearly $1 million from five years ago. And that drop 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.
And how is that human-life value calculated? Potential earning capacity? Your ability to contribute to society? How much you are loved and needed? Oh, no, nothing that silly and inconsequential:
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.
Oh, good. That explains everything. Take us home, Mr. Seger.