Sunday, December 26, 2010

What is a human life worth ?

The debate over the cost of healthcare and security revolve around an very important concept. What is a single human life worth ? The answer has implications in economics, insurance, law-enforcement, safety, and environmental regulations.

We all know human life is precious. We are all taught you cannot put a price on a life. However, to have a rational and coherent debate about many areas where money is spent you must make an estimate. You can never put an exact price on a life, you can put and approximate value. The value helps us make good, fair economic decisions for society.

While we may be unconfortable with the concept, businesses and government routinely make the calculation for US. Life and health insurance conpanies have sophisticaed acturial models. The government uses the value in calculations of pensions and social security. State and local governments calculate survivor benefits. So does the military.

Another, related concept is whether one specific person's life is worth more than another. And, if so, is the concept important ? Should it be used to make decisions in society ??

The answer seems to depend on the event causing the loss of life. Individual events would require individual estimates.

Juries and judges currently pay amounts based on a persons projected life earnings. Payout from the government were based on life earnings.

However, the special master of the 9/11 victims compensation fund has said that the system rewards bond-traders and Enron lawyers as much as fire and policemen. It may be time to consider a fixed, equal payout in certain circumstances.

According to Time Magazine.

1) National Healthcare systems including Canada, United Kingdom and Netherlands value each additional year at $50,000
2) Research on kidney failure patients states each individual year may be worth as much as $129,000

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