Putting a price on life

How much is a human life worth? It is a question that you often hear asked rhetorically in support of one cause or another and it is almost impossible to answer. But if you are the one who has to decide how limited resources are spent it is a question that you have to have a stab at.

Over the years this has been a much argued point when dealing with road safety. When we want to argue for increased Garda resources for example we have to be able to build a business case to support it.

It is familiar territory to insurers and actuaries. The number crunchers behind the scenes who decide how much people get charged for motor insurance are not using intuition and emotion to reach their conclusions. If they did they would be broke long ago.

Appalling as it seems when you are talking about a real person, you can actually calculate that for each road death the financial loss is €2.5 million. That is an estimate and has been disputed but there is a reasonably broad academic consensus around Europe that, with variations, accepts it to approximately correct.

In Ireland it stems from a research piece carried out by economic consultant Dr Peter Bacon commissioned by the National Safety Council (now replaced by the Road Safety Authority ) in 1999.

It is a holistic figure that calculates the cost based on a number of factors. These include demands on the emergency response services, hospital and rehabilitation services, investigative and coroner costs, cost associated with road closures following RTAs, and a loss to the economy based on the loss of the productive capacity of an individual when that individual dies. Almost all of those variables are debatable and will change from case to case.

It may be a monstrous thought but financially if a person who is killed is a dependent on the State, for reasons of advanced age or disability, then in theory the State saves money. At the other end of the scale if the person killed is at the beginning of a high-value career (a Junior Doctor or a young software developer for example ) then the loss is much larger, both in terms of lost future taxes and in terms of lost future productive contribution.

Of course these calculations ignore the human and social cost. Every human being is unique, precious and irreplaceable. Even so planners have to quantify if they are going to plan wisely. If for example we decided to fit top quality crash barriers to all of Ireland’s major roads we would indeed save some lives on the road but we would spend the cost of a new hospital in the process.

As insurance companies know very well the costs associated with a serious injury will actually be more expensive than with a death. This is because the loss of productive capacity is the same but medical and social costs of long term care also apply. Hence any figure used will only be an informed proxy and can’t be definitive.

So that €2.5 million has lots of compromises in it but it is a reasonable statistical guess. If you have any better ideas I would be pleased to hear them.

I’ll grant you that it does seem a bit de-humanising to reduce us all to numbers in this way. Society does not do it all the time and nor should we. In the wake of an earthquake or a natural disaster there is an outpouring of human emotion and sympathy.

Rationally you might conclude that it is foolish to spend large amounts of money and resources to rescue an individual elderly lady from the collapsed building. If a computer made the decision, even a compassionate computer, it might decide that it would be better for society as a whole to save the money and invest it instead recruiting more nurses, or buying a new ambulance.

Thankfully we don’t think or behave like that because, sums or no sums, there are times when you cannot put a value on a human life.


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