(Beyond Pesticides, July 14, 2008) According to calculations by the Associated Press (AP), the Environmental Protection Agencyā€™s (EPA) “value of a statistical life” is $6.9 million in today’s dollars, a drop of nearly $1 million from just five years ago. The AP discovered the change after a review of cost-benefit analyses over more than a dozen years.According to the federal government, the statistical value of a human life is calculated in the following manner. Suppose a new pesticide regulation reduces the annual risk of dying from cancer by 0.00001. In a population of 100 million, the regulation is expected, in a statistical sense, to result in 1000 fewer deaths from that cancer risk each year. If each person in that population of 1 million is willing to pay 7 cents a year for the reduction in mortality risks, $7 million is said to be the value of a statistical life (VSL).
While the $1 million devaluation of a statistical human life may seem like just another bureaucratic recalculation, it has serious consequences.
The AP proposes the following 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.
Many environmentalists and public health advocates believe the Bush administration has changed the figure to avoid tougher rules.
“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, which represents state and local air pollution regulators, told the AP. “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 and now director of the Yale Center for Environmental Law and Policy, said, “It’s hard to imagine that it has other than a political motivation.”
EPA denies wrongdoing, and says the new figures reflect consumer preferences. Al McGartland, director of EPA’s office of policy, economics and innovation, told the AP, “It’s our best estimate of what consumers are willing to pay to reduce similar risks to their own lives.”
Many economists, including Vanderbilt Universityā€™s Kip Viscusi, Ph.D., disagree. “As people become more affluent, the value of statistical lives go up as well. It has to.” Dr. Viscusi also said no study has shown that Americans are less willing to pay to reduce risks. EPA partly based its reduction on his work.
The second study EPA used to assign the new value of a human life, conducted by Laura Taylor, Ph.D. of North Carolina State University, values a statistical human life between $2 million and $3.3 million. Dr. Taylorā€™s figure was lower because it emphasized differences in pay for various risky jobs, not just risky industries as a whole. EPA took portions of each study and essentially split the difference.
Beyond Pesticides believes it is difficult to place a value on human life and favors a precautionary approach, rather than a cost-benefit analysis. Additionally, those who pay the costs and those that benefit under the current system are often different populations. For example, in the case of an EPA registration of a pesticide used on tomatoes, the beneficiary of lower crop losses may be a large agribusiness, such as Ag-Mart. However, farmworkers and their families who may suffer health impacts, as well as residents whose air or water may be contaminated, pay the costs.
The public interest organization Redefining Pprogress believes that if policymakers measure what really matters to peopleā€¯ā€¯health care, safety, a clean environment, and other indicators of well-beingā€¯ā€¯economic policy would naturally shift towards sustainability.
Redefining Progress created the Genuine Progress Indicator (GPI) in 1995 as an alternative to the gross domestic product (GDP). The GPI enables policymakers at the national, state, regional, or local level to measure how well their citizens are doing both economically and socially. The GPI starts with the same personal consumption data that the GDP is based on, but then makes some crucial distinctions. It adjusts for factors such as income distribution, adds factors such as the value of household and volunteer work, and subtracts factors such as the costs of crime and pollution. For more information, visit the Redefining Progress website.