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The Economic Value of Life Essay

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Updated: Apr 16th, 2022

Since time immemorial, the value of human life has been the issue of heated debates of philosophers, scientists, and governors. The very essence of this matter lies in the person’s recognition of oneself as a unique human being able to reflect on his or her role on this planet. While some may argue that numerical indicators cannot measure human life because of its divine nature, the reality is that it is impossible to do without the measurable characteristics of life in solving the health care, emergency, and social issues.

There is no doubt that from the philosophical, religious, and to a great extent from legal points of view, human life is priceless. The UN Universal Declaration of Human Rights states that “human beings are born free and equal in dignity and rights” (The United Nations, n.d., para. 9). The worth of the person is considered the fundamental precondition of any interaction between states and in society as a whole. Philosophers believe that the value of human life is endless and that any attempts to provide its monetary equivalent are morally unacceptable. Religion considers every human to be created as a supreme being in God’s image, and as well as God cannot be measured materially (Hammer, 2011).

Economics, however, is the realm where no abstract irrational characteristics can take place. The human is a “social animal” and his activities, performance, and conditions of staying in the society have to be measured at least approximately. The value of statistical life is therefore established to calculate various risk factors influencing the quality and expectancy of human life (Fourcade, 2009). Hammer (2011) notes that the term refers to some statistical but not specific life: “…It is not about the monetary value of concrete human life but the monetary valuation of the reduction of mortality risks” (p. 232). There is no shade of morality in this term; it is only about the objective evaluation of concrete aggregate indicators (Fourcade, 2009). Human life is infinitely valuable, but when it comes to safety and injury compensation issues, the price should be defined precisely.

Calculating the value of statistical life is crucial in many different situations. It is used to determine the amount of material compensation for the injury or death of people in the process of production, in industrial accidents, in natural and manmade catastrophes. The same can be said about compensation for terrorist acts or military actions. Moreover, the indicator of life value is important for the development of safety measures, for the planning of law enforcement, health care, and emergency services. Based on this indicator life and health insurance sums are paid (OECD, 2012). Nowadays the amount of VSL for an average worker ranges from $4 million to 9$ million dollars in developed countries (Ranke, 2015).

All things considered, it can be stated that the dilemma of the life monetary value in the modern world is rather far-fetched. If there were no value of statistical life indicator, it would be impossible to calculate the amount of compensation the state has to pay in case of emergencies. If human life were priceless in economic terms, the state wouldn’t be able to pay infinitely large amounts of money to every injured citizen. There should be a compromise. Human life should be considered priceless in the moral and philosophical dimensions, and the moral imperative should define the actions of a person. But in the economic system of coordinates, there should exist a rationally grounded equivalent of indemnification for damage to life.

References

Fourcade, M. (2009). The political valuation of life. Regulation & Governance, 3(1), 291-297.

Hammer, B. (2011). Valuing the invaluable? In K. Mathis (Ed.), Efficiency, sustainability, and justice to future generations. New York, NY: Springer Science & Business Media.

OECD. (2012). Mortality risk valuation in the environment, health, and transport policies. Paris, France: OECD Publishing.

Ranke, U. (2015). Natural disaster risk management: Geosciences and social responsibility. New York, NY: Springer Science & Business Media.

The United Nations (n.d.). The universal declaration of human rights. Web.

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IvyPanda. 2022. "The Economic Value of Life." April 16, 2022. https://ivypanda.com/essays/the-economic-value-of-life/.

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