Lec 6: The Value of Life

Question 1

Name 4 reasons we put a value on life?

Answer 1

economists do it to determine financial compensation
- age, income, # of dependents, and # of years you were supposed to work after the incident determine price tage

for the approval of new medical tech

• healthcare is rationed
• too expensive medication is not provided by governments
• if extending life by one healthy year costs more than 30 000, they won’t give you the medication

to chose policies
- in choosing speed limits, there’s an efficient number of deaths

to estimate the negative effects of climate change

Question 2

What is the economist’s method of valuing life?

Answer 2

The WTP approach in the contingent valuation method

- how much are you willing to pay to preserve x,y,z?

Question 3

What are 3 ways we discount human life?

Answer 3

the WTP approach

• discounting the value of present lives
• people living at a same point in time are willing to pay different amounts, depending on their situation

pure time preference
- discounting the value of future things

the identified victim bias
- discounting the value of statistical lives

Question 4

Do longtermists discount future lives?

Answer 4

No! they say that future and present lives should have equal value

Question 5

According to the Stern Review and William Naurdhaus, by how much can we discount future lives?

Answer 5

1.4% and 3%

Question 6

What is the identifiable victim bias due to?

Answer 6

cognitive bias
- psychologically, greater sympathy is triggered when there is one identifiable victim

legal bias
- statistical lives do not have moral standing

political bias
- politicians care about identifiable victims, not statistics

ethical bias
- the rule of rescue: have a duty to save someone who is in danger

Question 7

What are the requirements for statistical victims do file a class action?

Answer 7

• the class needs to have boundaries
• the class needs a representative
• the size of the class must be determined
• what is typical within the class must be determined
• there must be a fair representation of the class

Question 8

Why is the statement “all human lives are equal” false?

Answer 8

because we discount the lives of people in poor countries, people in the future, and statistical lives

Question 9

How is people’s intuition exploited?

Answer 9

charities use specific images to provoke sympathy and empathy