Problem: One study completed for the American Enterprise Institute estimated the cost per life saved in several programs supported or mandated by the government. The following results were reported:
estimates of cost per life saved
recommended for cost-benefit analysis by the national
safety council for traffic safety $37,500
kidney dialysis at home $99,000
instructions to military pilots on when to crash-land airplanes $270,000
Consumer product safety commision´s proposed lawn
mower safety standards $240,000 to $1,920,000
OSHA-proposed acrylonitrile exposure standar $1,963,000 to $624,976,000
OSHA coke-oven emission standard $4,500,000 to $158,000,000
Other analyses indicated that a proposed plan to further reduce carbon monoxide auto emissions would cost $1 billion in increased costs of production and costs to the consumer and that the plan would prolong two lives in 20 years. This ratio could be compared with the $200 it would cost to prevent each of 24,000 premature deaths per year by installing cardiac care units in ambulances.
Some studies of the value of a human life computed an implicit value in the range of $200,000 to $700,000. These studies examined wage differentials for hazardous jobs and provided estimates of what people are willing to pay for a small decrease in risk.
a) Given these estimates of the value of a human life, which of the programs discussed do you think should be pursued?
b) How can you explain the actions of a mine operator who may spend $5 million to free a trapped miner?