Friday, April 11, 2014

Value of Life: The Singularity Speaks

Maybe I should, but I can’t let this one go by.  This morning on Economix, the prominent health economist Uwe Reinhardt writes that his view on the value of human life—that it is finite, determinate and should govern health-related policy decisions—“is shared by literally every American economist”.

Well, last time I looked in the mirror I was still there.  The book I wrote on this topic, Markets and Mortality: Economics, Dangerous Work and the Value of Human Life, still exists too.  Originally published in 1996, it was reprinted in 2009.  The argument it develops doesn’t lend itself to being condensed in a paragraph or two in a blog post, so I won’t try.  The book draws on the critique of utility theory, the social embeddedness of risk and health, and similar matters.  (It also goes after the hedonic wage regressions that are often used to put a price on deadly risk.)  I’ll admit my thinking has evolved since then, but not in Reinhardt’s direction.

Another nonexistent economist, by the way, is Frank Ackerman, who coauthored Priceless: On Knowing The Price Of Everything And The Value Of Nothing with Lisa Heinzerling.  He doesn’t buy the value of life business either.

I suppose I need to add that I don’t think that every expense should be borne in every circumstance to reduce the risk of premature death to its absolute minimum.  Obviously there are tradeoffs, but the question is whether attaching a fixed monetary value to “life” (or a life-year or whatever) helps us make them intelligently.  And I can certainly relate to Reinhardt’s outrage over the hypocrisy of politicians who grandstand about death panels but callously sacrifice the life chances of the poor, the military and others by denying them easily affordable protection.  My grumpiness is not about the politics of his piece, but the detail, minor in the larger scheme of things, of seeing myself drummed out of the economics profession.


Sandwichman said...

"is shared by literally every American economist"

Perhaps he meant "figuratively"?

Don Levit said...

How does an entity pay infinite benefits for a finite life?
The ACA provides for unlimited annual and lifetime maximums.
The insurer we are forming has been unable to get quotes from stop-loss insurers for they are unable to accurately price risk which is unlimited.
Don Levit
Principal of National Prosperity Life and Health