The EPA air chief is caught with her numbers down.
Heartland’s James Taylor writes at Forbes.com:
… I asked EPA Assistant Administrator Gina McCarthy how her agency arrived at the calculation that for each life an EPA regulation allegedly extends, that extended life creates $9.1 million in benefits.
“I can’t answer the question,” said McCarthy, the second most powerful person at EPA…
Estimating the value of a human life is standard economic practice, and indeed done by mechanisms such as willingness to pay for a given level of risk reduction. It is not surprising that an EPA official would not know the details, and be limited to the conclusion- she is not an economist. $9.1 million is pretty standard, and an unexceptional figure. I dislike the EPA as much as anyone, but on this issue they are innocent. I have seen ridiculously inflated figures used by government at times to support their policies.
Yes, the figuere is (mostly) unrelated to actual expected earnings. It is derived from how much people value their own lives, not how valuable they are in the commercial sector. Mothers, babies and retirees aren’t worth anything ‘commercially’, but they still value their own lives.
There was another question about where they got their numbers that they couldn’t answer. Maybe someone is keeping score.
There is an arcane rig-a-ma-roe for value of life figures based on how much people would pay (less wage) for a given level of risk reduction. Somewhere along the line people let pass that society would lose more than a lifetime of income for each life saved. $50,000 times 40 years = $2 million. In the subject case one would lose 4 lifetimes of earnings for each life saved. And a life saved is not a full life (perhaps hours) nor a productive life in most cases. Common sense left the house years ago.
Sadly, smart people like Paul Krugman seem unaware of this level of foolishness. They rely on the expertise of well intentioned public servants. Steny Hoyer got caught in this fallacy with respect to his impassioned defense of Ray LaHood, the public official who works for car safety. Congressman Hoyer, a terrific legislator, forgot about the Toyota fiasco and how Mr. LaHood was a complete fool in that case.