ann asked what a person’s life is worth. in health economics there are two methods for determining the value of a life.
the human capital approach equates the value of a life to the market value of output produced by an individual during his lifetime and involves estimating the discounted value of future earnings resulting from an improvement in or an extension of life.
the willingness-to-pay approach, on the other hand, is based on how much money people are willing to pay for small reductions in the probability of dying.
here’s an example:
a diabetic woman quit her job last year because of physical problems, including blurred vision and a general loss of sensation. she was so desperate that when she heard about an unproven treatment that might help her, she decided to borrow $20,000 from relatives to pay for it. even if the chances are one in a million, she was hoping she would be the one.
using the human capital approach, the value of her life is zero because she is currently unemployed. pretty sad, huh?
now, using the willingness-to-pay approach, she is willing to pay $20,000 on an unproven treatment that could reduce her probability of dying by one in a million, so her life equals $20,000 ÷ 1/1,000,000 = $20,000,000,000. quite a large difference, eh?
i find both of these methods for estimating the value of a person’s life rather inaccurate, and even disturbing. i don’t think you can quantify a person’s value based on how much they make at work or how much they are willing to pay for life-saving treatment. even if you add in the monetary value of all their time, there is still so much more to life! i don’t think you should use economic principals used for products on human life.
the human capital approach equates the value of a life to the market value of output produced by an individual during his lifetime and involves estimating the discounted value of future earnings resulting from an improvement in or an extension of life.
the willingness-to-pay approach, on the other hand, is based on how much money people are willing to pay for small reductions in the probability of dying.
here’s an example:
a diabetic woman quit her job last year because of physical problems, including blurred vision and a general loss of sensation. she was so desperate that when she heard about an unproven treatment that might help her, she decided to borrow $20,000 from relatives to pay for it. even if the chances are one in a million, she was hoping she would be the one.
using the human capital approach, the value of her life is zero because she is currently unemployed. pretty sad, huh?
now, using the willingness-to-pay approach, she is willing to pay $20,000 on an unproven treatment that could reduce her probability of dying by one in a million, so her life equals $20,000 ÷ 1/1,000,000 = $20,000,000,000. quite a large difference, eh?
i find both of these methods for estimating the value of a person’s life rather inaccurate, and even disturbing. i don’t think you can quantify a person’s value based on how much they make at work or how much they are willing to pay for life-saving treatment. even if you add in the monetary value of all their time, there is still so much more to life! i don’t think you should use economic principals used for products on human life.
3 Comments:
human life is impossible to quantify. all we can do is appreciate it as much as we can.
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Anonymous, at 10/08/2005 7:41 PM
it's impossible to quantify, yet it needs to be quantified in order to decide where to put our healthcare dollars. So they quantify it in relative terms. I think in a money driven world, everything can be measured in money. By the way, I loved Indecent Proposal.
By
Anonymous, at 10/08/2005 7:42 PM
Dave, I'm willing to give you $100 for Snuffles, but I get to keep him forever. Deal?
By
Anonymous, at 10/08/2005 7:42 PM
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