Is your life worth \$10 million?

# Is your life worth \$10 million?

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How the dismal science applies to your life.
March 3 2003 9:22 AM

# Is Your Life Worth \$10 Million?

## Nope. But your grandson's will be.

While touring the magnificent old Dupont estate, I overheard an awestruck gardener mutter, "You can see why these people would have hated to die worse than anybody." I know what he meant. Life is dear, but life is dearer when you're rich.

You're richer than your grandparents, so your life is worth more than theirs. That's why you live in a safer world than they did: As life gets more valuable, we strive harder to protect it.

What does it mean to say that one life is "worth more" than another? Aren't all lives infinitely precious? Well, no, at least not in any sense that's at all useful for making hard policy decisions about things like job safety and access to medical care.

Economists measure the value of a life by people's willingness to pay for safety. Suppose you'd willingly cough up \$50,000—but no more—to shave one percentage point off your chance of being killed in an accident. Then (except for some technical adjustments I won't go into) we infer that the value of your life is 100 times \$50,000, or \$5 million.

That's a useful measure because it bears directly on policy decisions. Take the decision of how much to spend on fire safety. Should a town of 100 people spend \$6 million on a piece of equipment that is likely, over the long run, to save one life? Not if a life is worth only \$5 million. Buying the equipment means forcing the average taxpayer to spend \$60,000 for a level of safety that's worth only \$50,000 to her.

Economists summarize that reasoning by saying, "It makes no sense to spend \$6 million to save a life that's worth only \$5 million." What we really mean by that is: "Let's not force people to buy more safety than they want to."