How Can You Put a Price on Human Life?

Any human life is worth a certain amount of money. I think this is an obvious, almost trivial truth. (It’s not obvious what the amount is, but it’s obvious that there must be an amount.) Your life has finite value. A dollar also has finite value. So there must be a ratio of the one to the other. That ratio is the monetary value of your life.

But I think there might be some readers who don’t find this so obvious. Some might even think the idea is “ridiculous” or “monstrous”. So I guess it might be worth taking a minute to discuss it, so we can all get clear on it.

Confused objection: Would you sell your life?

You might be tempted to say that there can’t be a monetary value of a life, because no person would sell their life for any amount of money (where the money is paid upon your death).

Now, this need not even be true — some people would in fact give up their lives for a large sum of money, which would be paid to their family or other loved ones.

But even if it’s true (say you’re among the people who would not sell your life for any amount), it’s hardly relevant. The reason you wouldn’t sell your life for a billion dollars is not that your life is worth more than $1 billion. The reason is that you would never in fact receive the price, since you’d be dead at the time you fulfilled your part of the contract. In the same way, e.g., I wouldn’t agree to sell my car, if I knew that I’d never actually get the money (say, if the money was to be paid upon my death) — that doesn’t show that my car is priceless.

A similar point applies even if you get paid shortly before you die — you wouldn’t have time to get the full value out of the money. I wouldn’t sell my car for $1 million, if I had to give up the car now, but I’d get the money only 5 minutes before I died. That doesn’t prove that my car is worth more than $1 million.

There are ways around this problem, though. One way is to imagine trading a risk of death for some amount of money. People in fact do that all the time; we call it “hazard pay”. You do some work that involves a risk of death (a risk that is small in absolute terms but higher than that involved in most normal jobs), and you get paid extra for it.

Side point: The problem of diminishing marginal utility of money makes it difficult to compensate for high risks of death. E.g., there may be no amount that would compensate for a 50% risk of death. But that’s okay. As long as there is an amount that would compensate for, say, a 0.001% risk of death, we can infer that you ascribe a finite monetary value to your life.

Another way of getting at the implicit value of a life is to imagine trading a part of a life for some amount of money. Again, diminishing marginal utility of money makes this difficult for large life-portions. But we can very well imagine a trade working out for small life-portions. E.g., if you’d agree to give up 1 day of life for some amount of money (where the money gets paid now, and your life gets shorter by one day overall), then you ascribe a finite monetary value to your life.

I think it’s obvious that you should accept some trades of these kinds; so it’s obvious that your life has some finite monetary value. By the way, if you claim that you wouldn’t accept any trades of these kinds, you’re probably just confused. For instance, if you would agree to drive someone to the airport in exchange for $1000, then you would in fact accept a risk to your life for some amount of money.

Interpersonal Comparison

Now you might feel like saying, “It’s all well and good for you to trade off risks to your own life against money for yourself. But there’s no price at which you may trade risks to someone else’s life for money for yourself.”

That’s false. It has to be permissible to impose some risk of death on others, for the sake of some benefit to oneself, because otherwise, life is impossible – i.e., all actions would be morally prohibited, since literally every action creates some nonzero risk of killing another person. Usually, of course, the risk you’re imposing on others is very small. If I go outside, I create some nonzero risk of transmitting a deadly disease to someone else. (Even before the Covid-19 pandemic, this was true – it’s just that the probability used to be much smaller.) But surely it can’t be that it’s morally impermissible to ever go outside.

Now, if the risk is too high, then the action becomes impermissible. That’s why, e.g., it’s impermissible to drive while drunk, but okay to drive normally. It’s okay, for example, to drive normally in order to make $50 from some minor job. This shows that you can permissibly treat other people’s lives as having some finite value, compared to the value of money for yourself.

The Transitivity Argument

Besides the above points, there is another intuitive argument, based on the transitivity of "better than". Basically, you can imagine a series of things that are less bad than a death, getting progressively less bad until you reach “the loss of $1.” For each item in the series, there is some number of occurrences that would make it worse than one occurrence of the previous item. By transitivity of “worse than”, there is some amount of money whose loss is worse than a death.

E.g., maybe 10 people being paralyzed for life is worse than 1 person dying. And 100 people losing an arm is worse than 10 people being paralyzed. And 1000 people losing a finger is worse than . . . and so on. You continue that way until you get to something of the form “x people losing a dollar” (for some large number x). By the transitivity of “worse than”, it follows that x people losing a dollar is worse than 1 person dying.

Of course, it doesn’t matter if you disagree with the specific numbers I’ve given above; e.g., maybe you think you need more than 10 people being paralyzed to outweigh 1 death. Just put in whatever numbers you think make the comparative claims true. (Unless you think no number would do it – but that’s very implausible.)

This type of argument is defended at length by my colleague, Alastair Norcross (though he uses headaches in place of small monetary losses) in “Comparing Harms: Headaches and Human Lives”, https://spot.colorado.edu/~norcross/Comparingharms.pdf

Government Policy Needs a Price of Life

All this is relevant to government policy, because government regulatory agencies, to do their jobs, need a figure for the value of a human life. Agencies have to decide when to make a regulation that (a) costs some amount of money, and (b) reduces risks (including risks of death) to people by some amount. To make such decisions, they need to know how much – how many dollars – a human life is worth. In the U.S., the government values a life at around $10 million (varying between agencies) (https://www.npr.org/transcripts/835571843).

There are two extreme positions that might avoid this:

1. Always make any regulation that saves any number of expected lives. But this is completely unreasonable. It entails shutting down modern civilization. I’m pretty sure that you don’t want that.

2. Never make any regulations aimed at reducing risks. That’s also completely unreasonable. Even if you’re a libertarian, and thus want to greatly reduce regulations, you should still think there is some level at which private agents should not be allowed to impose risks on others. E.g., if a company is pouring toxic chemicals into the environment, which have some high probability of causing cancer in innocent third parties, surely at some level that should be prohibited.

So some risk-reducing regulations should be made, and others should not. Presumably, it has something to do with the level of risk and the cost involved, where higher risks make the regulation more worthy, and higher monetary costs make it less worthy. So you have to have a way of trading off costs with risks – which, if you do it consistently, is going to implicitly or explicitly give you a value for a statistical life.

By the way, this is true even if you’re a deontologist, as long as you’re not an insane one. (E.g., you don’t claim that we have to make either all or none of the regulations that reduce risk, and you don’t claim that costs and benefits are irrelevant.)

So, next time someone says “How can you put a price on life?”, tell them all that.