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Pricing the Priceless: the perils of cost-benefit analysis
I've just added a fine interview from issue #23 to our online magazine archives:
Pricing the Priceless: How much would you pay for a case of chronic bronchitis? What is a humpback whale worth? And how many poor kids can your company kill per year? Frank Ackerman and Lisa Heinzerling discuss the sordid world of cost-benefit analysis. (See also: The Costs and Benefits of Setting Yourself on Fire.)
Posted by Carrie McLaren on 05/17/2005 | Permalink
Comments
I will say this, we do implicitly put a value on human lives. I am willing to pay for a safe car, but I won't spend the extra cash to get a Volvo. I drive a Toyota. Also, I could take the time to wait for the light before crossing, but instead I jay walk because I value my time more than I value to chance I might get hit (or get a ticket). It's not ridiculous to value a life--we do it everyday. Economist just tally up what we are all already doing.
Posted by: Charlie | May 18, 2005 1:32:52 AM
While I doubt very strongly that you make a cost-benefit analysis when deciding about jaywalking, that is hardly the point.
The better thought experiment is this:
You are driving to the lottery office with the winning Powerball ticket in the waning minutes before in closes on the last day that your ticket is valid. There is someone in the crosswalk. Do you run them over?
Posted by: Charles Star | May 19, 2005 12:22:32 AM
Of course you do not run them over, though, some sicker people might consider it. Another question you might ask is this, you are driving with your dying child to the hospital and seconds will mean the difference between life and death. An old man you do not know is lying in the cross walk. Do you run them over? Certainly many people might, and most would consider it. The point is simply that we do these calculation (or act as if we do) whether we realize it or not.
Posted by: Charlie | May 22, 2005 7:07:45 PM
That isn't an economic calculation, Charlie - it is a moral choice with what I would argue are non-quantifiable family loyalties in play. It has nothing to do with how governments or corporations use cost-benefit analysis to make decisions (particularly thought-out decisions).
Posted by: Charles Star | May 26, 2005 2:19:56 PM
