Faculty of Economics
There is increasing debate on the question in what value should be placed upon human life. Numerous agencies and policy makers have taken great interest in tackling the issue of human life valuation. Although there is increasing controversies that surround producing estimates for valuing a human life, it is imperative to understand the importance of reaching an economic value attached to a human life. The ability to successfully quantify an individual’s life would provide policy makers a type of compass that would aid them in creating advantageous health policies for an entire society. This paper aims to analyze the methods that have been developed in valuing human lives. It will aim to compare the selected methods and contrast them among each other. The limitations of each method would be critically analyzed, while advantageous characteristics also mentioned. It should be noted however that reaching an empirical value on human life is one aspect of a bigger picture that could be deduced. Truly valuing a human life should take into account more than just an empirical value but also the value of pain and suffering. There is increasing debate on which method policy makers should utilize when attempting to empirically valuate human life. This is due to the fact that while each method tackles the matter from a creative and unique perspective, certain limitations exist in every method. Certain methods are heavily reductive in their methods and lack an element of social concern. Therefore it is imperative to begin my giving a brief introduction on each model and compare and contrast the selected model with the rest.
While subject of valuing a human life is controversial as much as it is important to understand. When looked upon on an individual level, the value of human life is infinite. One could hardly imagine anyone being able to place a monetary or empirical value upon the lives of their loved ones. However, policy makers and health policy analyzers in a society cannot reasonable place an infinite value on one human life. There needs to be a method in which a human life is given an empirical value, in order for policy makers to have a guiding compass when deciding and enacting health policy rules and regulations. Card & Mooney first raise the importance of empirically valuing a human life by stating that “In deciding what types of health care to provide value-judgments inevitably to be made. Should we save more lives, provide greater care for the elderly, increase prevention, improve the quality of nursing, increase patient satisfaction, and shift the balance of care? To make such decisions judgments are required on the relative benefits associate with the different outcomes of the health care system. This requires a decision theory model, in which we need to know the monetary value of various outcomes, the probability that these outcomes will occur from a particular point of action, and the cost of the course of action”, (Card & Mooney, 1977).
The model that was pioneered in tackling with the issue of valuing human lives was the human capital (HK) approach, which has been the classical perspective in valuing human life. The HK approach was introduced by the works of Petty and Farr, and valuates a human life on the production potential of that life on society. The value of a human life to a society is basically the earnings of the individual, net of consumption. Landefeld & Seskin, whom studied the different models used, state, “Since standard HK estimates are constructed from society's perspective, labor earnings are evaluated before taxes as representing the actual component of GNP, rather than after-tax earnings, which represent the relevant magnitude to the individual. In addition, non-labor...