Putting a price on safety, Part 2 (inflation gets personal)

Back in December, I wrote about the safety dynamic at airports, and how the tension between security and efficiency meant that we were effectively placing a price on our own safety. In the post, I made mention of the necessity for many businesses to place a number on the value of a human life. For a refresher:

Many attempts have been made to quantify the value of human life--a task which, unseemly as it may be, is necessary in fields from insurance to air travel and beyond--with estimates ranging anywhere from $1.54 million to $5 to 8 million. To run a profitable business (including an airline), it is absolutely essential to understand what value potential employees and customers will place on their own lives, as well as the lives of others. If you value human lives too little, you will find yourselves outcast as corporate pariahs, and end up in the poorhouse. But at the other extreme, if you value safety significantly more highly than do your customers, you are almost certain to lose customers as well--such is the predicament that our airlines now face.

That dynamic has managed to work its way back into the conversation, as an article from yesterday's New York Times attests.

To protests from business and praise from unions, environmentalists and consumer groups, one agency after another has ratcheted up the price of life, justifying tougher — and more costly — standards.

The Environmental Protection Agency set the value of a life at $9.1 million last year in proposing tighter restrictions on air pollution. The agency used numbers as low as $6.8 million during the George W. Bush administration.

The Food and Drug Administration declared that life was worth $7.9 million last year, up from $5 million in 2008, in proposing warning labels on cigarette packages featuring images of cancer victims.

The Transportation Department has used values of around $6 million to justify recent decisions to impose regulations that the Bush administration had rejected as too expensive, like requiring stronger roofs on cars.

And the numbers may keep climbing. In December, the E.P.A. said it might set the value of preventing cancer deaths 50 percent higher than other deaths, because cancer kills slowly. A report last year financed by the Department of Homeland Security suggested that the value of preventing deaths from terrorism might be 100 percent higher than other deaths.

First of all, well played, Homeland Security. Your attempts at self-justification know no bounds--terror deaths are twice as "valuable" as other deaths? Sure, guys. Whatever makes you feel alright about your bloated budget.

But setting all of the bizarre, chest-pounding, bureaucratic "our cause is more important than your cause" competitiveness in Washington aside for a bit, the economist in me looks at this situation and wonders. With the persistent population growth that our country and the world continues to experience, shouldn't the value of a human life be declining if anything, given the increased supply? That is, of course, unless demand for human beings is growing, which... doesn't really seem to be the case.

Yeah, I know, we're talking about human beings here, so it probably seems crass to apply supply-and-demand curve logic to the human condition. But economists are crass by nature--it's the "dismal science" for a reason--and that character flaw doesn't mean that their insights can't be valuable.

Ultimately, I take this as more of a sign that inflation via a debased dollar is very real, and applies not only to corn, gold, cotton, oats, sugar and oil, but to human lives as well. So, yeah. Inflation just got personal. Good work, Bernanke.

[New York Times]