During a recent Zoom lecture, Terry Iverson, an economist at Colorado State University, posed a question to the students in his introductory economics course. It was one that Americans have been mulling all year. “What’s the value of a life?” he asked. “And how do we compare lives saved with the value of lost economic activity?”
For professors, particularly those in the social sciences, COVID-19 has provided a real-time trove of case studies on which to center syllabi. Iverson began developing his course, The Economics of COVID-19, in April. He specializes in climate change, and as lockdowns were starting he began to draw connections between ecological disaster and global pandemic. In the lecture, he told his students, “If we think about COVID, we might want to add up the costs and benefits of social distancing.” Iverson, who is forty-four, had a salt-and-pepper beard and wore black-rimmed glasses. “Suppose the state of Colorado is going into lockdown for two weeks,” he said, and explained how to conduct a cost-benefit analysis, weighing the advantages against the potential economic losses.
The critical factor in making such an assessment, he said, is determining the “value of statistical life,” a variable that calculates a fractional risk for an entire population. “If we have a million people and each person has a one-in-a-million chance of dying, that would count as one statistical life.” He went on, “Does anybody have any idea what they think the value of a statistical life should be in the U.S. in 2020?” Although participation, according to the class syllabus, accounts for ten per cent of a student’s grade, no one jumped to answer. “Make a guess,” he prodded.
“Twenty-four thousand?” a young woman asked, haltingly.
Iverson seemed taken aback. “Twenty-four thousand . . . dollars?” he asked. “Uh, to put that in perspective, that’s about half the median income of a person in the U.S. Do you think that a life is only worth six months of income?”
The girl laughed nervously. “No.”
“If we looked just at people’s wages, what would be the right amount of wages?” he continued. “A year of wages, their whole lifetimes of wages? That’s an interesting question.” He asked the students why focussing on wages might understate the value of a life.
“Emotional impact,” a student said. Bingo. Iverson said, “That pain and trauma—the consequences kids have if they lose a parent—can have big impacts.”
Using Zoom’s chat feature, a student ventured, “How much you are worth with your organs and such on the black market was what I thought of,” she wrote. “100,000.”
Another young woman chimed in: “Could it also be a person’s wage or jobs? Like, a C.E.O. of a company has a really high income, then a doctor has a lower one. Then you’d say that the C.E.O. has, like, a more valuable life?”
“Excellent question,” Iverson said. “Should society view a richer person being worth more than a poorer person?” He guided the students back to looking for a figure more representative across a population. “Throw out a number that you think is too high, since we have a number that’s too low.”
“I’d say half a million, or anything in that range, would be too high,” a young man offered.
“Half a million feels too high?”
“Assuming I had the money to save someone’s life, how much would I spend just to save some random stranger’s life?” the student went on. “I wouldn’t spend that much, because that would possibly bankrupt me. And I would also feel like, Why is this person special? Why not help save this other person?”
“What if that person was you, or someone you cared about?” Iverson asked. The class began to feel more like philosophy than like economics.
“It’s supposed to be an anonymous person,” the student noted. “It would suck, but, at the same time, I can’t really help the fact that they don’t know me.”
Iverson was unpersuaded. “It’s more like, What should society at large be willing to spend to avoid loss of life in general?” He mentioned the way in which seat-belt laws constrain personal liberties but save thousands of lives. In the chat, a student wrote that, when seat-belt laws were first passed, “people would cut them out of their car.” Iverson ignored the comment and told the class that the government actually has a number. “The number tends to be a little higher when the President is a Democrat and a little lower when the President is a Republican,” he said. “They tend to range from about five to ten million dollars. So it’s quite a bit higher than what you guys have thrown out there.”
“How’d they get to that number?” someone asked.
“It’s actually quite an interesting puzzle,” Iverson said. But the class was over. They’d have to wait till next time. ♦
