Much like environmental valuation, “value of a statistical life” (VSL) is a fascinating, if potentially morbid, aspect of benefit-cost analysis in the environmental policy world.
The same way that a dollar value can be placed on the ecosystem services of a wetland in order to, say, estimate the true costs of destroying it to create a theme park, the EPA routinely assigns a dollar value to human life in order to weigh the financial “benefits” (in human lives saved) of a policy that would, say, reduce pollution in a certain area against the costs of implementing that policy.
And what exactly is the current going rate for human lives? According to this recent AP article, the value of life “quietly” dipped from $7.9 million to $7 million under the Bush administration (making policies that protect human lives less financially “beneficial”), but bounced back up to $7.9 million shortly after Obama took office.
Sensitive to society’s general aversion to having a figurative price tag tied to their wrist, the EPA has been working to revamp the image of VSL. In addition to a change in terminology (the EPA will now refer to this kind of analysis as “mortality risk valuation” or “VMR”), the units used to aggregate and report the data will also change – all to “more accurately describe the health risk changes that are being analyzed.”
You can read more about how the EPA estimates and uses VSL in the 2010 Guidelines for Preparing Economic Analyses. Specifics of the proposed changes can be found in the draft white paper published last month or in the set of Frequently Asked Questions the EPA has made available on their website. (Also, check out this cool infographic from Compliance and Safety!)