Whose life is worth more, a drug dealer's or a prostitute's?

The economic mysteries of daily life.
April 28 2007 7:27 AM

If God Were an Accountant …

Whose life is worth more, a drug dealer or a prostitute?

"Your money or your life." The choice traditionally presented by the highwayman is supposed to have only one sensible answer. Money is, after all, no use to a corpse. Yet, economists often study something rather like the highwayman's offer in an attempt to uncover the answer to an important question: How much is your life actually worth?

Like many awkward questions, this is one that has to be answered. Safety regulations save lives but also raise the cost of doing business, a cost we all pay through higher prices. Are they worth it? Our taxes pay for life-saving spending on road safety and firefighting. Are they high enough, or too high?

Advertisement

So, how much are we willing to spend to save a life? A traditional planner's approach used to be to measure the value of wages lost due to death or injury. That's dreadful: It confuses what I think my life is worth with what my boss thinks my life is worth.

So, an alternative is to ask people how much they would pay for a safer car or kitchen cleaner. But such surveys do not always produce sensible results. Our answers depend on whether we're being offered a safer $10 household cleaner and then asked if we want the more dangerous $5 version, or whether we're offered the $5 brand and then asked if we'll pay $10 for the safer product. People often answer "no" to both questions, contradicting themselves. These inconsistencies mean that we're either irrational or lying to pollsters, and perhaps both.

Economists therefore tend to prefer observing real choices. If you're willing to cross a busy street to pick up a $20 bill, the economist who put it there can infer something about your willingness to accept risk. More orthodox approaches look at career choices: If you're willing to be a lumberjack, part of that decision is to accept risk in exchange for financial reward.

Being a soldier is risky; so is being a drug dealer or prostitute. The difficulty, evidently, is to disentangle the health risk and the financial reward from all the other motivations to choose a particular way of life. That isn't easy, but economists try.

World Bank economist Paul Gertler and his colleagues reckoned that Mexican prostitutes valued their lives at about $50,000 per year, based on willingness to take money not to use condoms. At five times their annual earnings, that's a similar figure to workers accepting risky jobs in rich countries.

There are anomalies. Steve "Freakonomics" Levitt and sociologist Sudhir Venkatesh calculated that Chicago drug dealers seemed to value their entire lives at $50,000 to $100,000—low indeed, even for poor young men whose career choice indicates a taste for risks.

Whatever the frailties of these calculations, they are the best we have. And far from cheapening life, this sort of research often highlights just how valuable our safer, healthier modern lives really are. Kevin Murphy of the University of Chicago Graduate School of Business has calculated the value of health improvements in the United States since 1970.

They're vast—about $10 trillion in today's money. Looking further back, if you had to choose between the material progress of the 20th century and the improvements in health, it would be a tossup. The health gains are as valuable as everything else put together. Encouragingly, health in most developing countries has improved faster than in rich ones, suggesting that global inequality is falling.

And a more personal piece of good news: Murphy reckons the delicious cheeseburger I ate before interviewing him only cost me $2 worth of health. Talk about a good deal.

Tim Harford is a Financial Times columnist. His latest book, The Logic of Life, will be published in paperback on Feb. 10.

TODAY IN SLATE

Culturebox

The Ebola Story

How our minds build narratives out of disaster.

The Budget Disaster That Completely Sabotaged the WHO’s Response to Ebola

PowerPoint Is the Worst, and Now It’s the Latest Way to Hack Into Your Computer

The Shooting Tragedies That Forged Canada’s Gun Politics

A Highly Unscientific Ranking of Crazy-Old German Beers

Education

Welcome to 13th Grade!

Some high schools are offering a fifth year. That’s a great idea.

Culturebox

The Actual World

“Mount Thoreau” and the naming of things in the wilderness.

Want Kids to Delay Sex? Let Planned Parenthood Teach Them Sex Ed.

Would You Trust Walmart to Provide Your Health Care? (You Should.)

  News & Politics
Politics
Oct. 22 2014 9:42 PM Landslide Landrieu Can the Louisiana Democrat use the powers of incumbency to save herself one more time?
  Business
Continuously Operating
Oct. 22 2014 2:38 PM Crack Open an Old One A highly unscientific evaluation of Germany’s oldest breweries.
  Life
Gentleman Scholar
Oct. 22 2014 5:54 PM May I Offer to Sharpen My Friends’ Knives? Or would that be rude?
  Double X
The XX Factor
Oct. 22 2014 4:27 PM Three Ways Your Text Messages Change After You Get Married
  Slate Plus
Tv Club
Oct. 22 2014 5:27 PM The Slate Walking Dead Podcast A spoiler-filled discussion of Episodes 1 and 2.
  Arts
Culturebox
Oct. 22 2014 11:54 PM The Actual World “Mount Thoreau” and the naming of things in the wilderness.
  Technology
Future Tense
Oct. 22 2014 5:33 PM One More Reason Not to Use PowerPoint: It’s The Gateway for a Serious Windows Vulnerability
  Health & Science
Wild Things
Oct. 22 2014 2:42 PM Orcas, Via Drone, for the First Time Ever
  Sports
Sports Nut
Oct. 20 2014 5:09 PM Keepaway, on Three. Ready—Break! On his record-breaking touchdown pass, Peyton Manning couldn’t even leave the celebration to chance.