The Value of Life: Editor's Introduction

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Issues pertaining to the value of life involve some of the most fundamental concepts in the area of risk and uncertainty. Individual perceptions of mortality risks have long served as the reference point for assessing how people think about risk. Since the time of Adam Smith economists have focused on market choices involving fatality risks, particularly those on the job, in order to assess how reliably individuals make choices in risk contexts and how markets respond to their expressed risk preferences. More recently, the value of life has become an explicit issue in policy debates. In the United States government, agencies have been explicitly valuing statistical lives using appropriate value-of-life methodologies for over a decade. The policy issues are intertwined with a wide variety of concerns pertaining to how people think about risk and how they make decisions involving mortality risk. These policy concepts raise other pertinent concerns as well. Life-saving efforts do not confer immortality, but extend life probabilistically. How should the framers of government policy incorporate recognition of the duration of life lost and the quality of those life years? Timing also enters in other ways as lives saved now may have a different value than lives saved in the future. The first part of the special issue on the value of life appeared in the Journal of Risk and Uncertainty in Volume 14, Number 3, and the second segment of papers appears in this issue. Whereas the previous issue is more wide-ranging in focus, this issue focuses almost exclusively on timing and duration issues. The first of the value-of-life journal issues began with a paper by Viscusi, Hakes, and Carlin. Their catalog of the risks of death by cause was distinctive in that it distinguished not only overall mortality risks but the duration of life lost as well. Doing so increases the relative importance of accidents as compared to deferred illnesses. Using these estimates, the authors showed that many well-known perceptional biases can be traced to a failure to adjust for the duration of life lost. The paper estimated the implicit rate of discount that people use in assessing the discounted expected life-years lost to various causes of death, which they find to be between 3.3 and 12.4 percent. Their calculations of the cost effectiveness of regulatory policies are in terms of the cost per discounted life-year saved, decreasing the relative efficacy of regulations affecting health as compared to those affecting safety. The paper by Jenni and Loewenstein explores the “identifiable victim effect.” It has long been observed that people are willing to pay more for saving an identified life than saving a statistical life. The classic example in the literature pertains to the amount society would pay to save a trapped girl in a well. Is this attachment to identified lives irrational, or is the lower value attached to statistical lives a reflection of people’s failure to think