Naturally, this caught my eye. It's the label of a graph in "Pollution and the Firm", an environmental economics book by Robert Kohn. The graph is a standard exponential growth curve with probability of death as the x-axis and "willingness to pay" (WTP) on the vertical axis. (X=1 can also be an asymptote, meaning as X->1, WTP->Infinity, in which case the graph is no longer standard exponential.)

Now, all things are fair game in economics, which makes its business not of evalutating morals or "rightness" but rather efficiencies and relative worth. I can somewhat understand this, and during my environmental economics class I constantly told myself, "economics is just a tool". Important to remember,... very important.

But, let's just think about this. "The Statistical Value of Human Life" Now, I'll stay away from the arguments for the value of all life. We'll regress back to H. economicus for a bit and think of just ourselves.

"The statistical value of human life"

What this graph was showing was that as the probability of death increased, that our willingness to pay also increased. E.g. the more we believed that the robber with a gun to our head would shoot, the more we would offer not to have it happen. Or the more deadly we assumed the poison we had just been tricked into taking, the more we would pay for the antidote.

These examples show the meaning but not the context. Remember this book is titled, "Pollution and the Firm". Now, I have to admit that I didn't read the book (could ya' tell?) but it just simply scares me (in that slow dread, kind of way) that economic students are learning this.

Why? Well, not that it was exactly meant in this way, but essentially this is a threat. The more firms (i.e. mega-corporations and the sort) can threaten our lives with pollution, the more we would be willing to pay to have it stop. And, who would we pay?...

This is heavily related to the Coase Theorem. Robert H. Coase said that in the event of externalities (pollution is one) that the affected parties (polluter and pollutee) have an incentive to end the pollution to their mutual improvement (Pareto improvement). This is achieved in that the pollutee pays a certain amount to polluter in order to improve the (monetary) standing of both. The prime example of this is a farmer/rancher usage of mutual land. (see Coase Theorem) But, when this is taken to a different level, beyond just money and rather to the value of life, then things become rather disturbing.

Is that what was meant? I don't know. Maybe I'll go back and read the book. Nevertheless, now you know that there's such a chart out there, that someone is pondering over the statistical value of your life.

Sleep well.

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