Suppose we want to add stringent standards for car tires for example. We know the cost of doing so. A cost-benefit study would require the estimation of how many lives would we save, multiplied by the price of one life, to compare against the cost of regulation. If the benefit is higher, we should regulate; otherwise, we should leave things as they are.

While the validity of this kind of study is debatable (on philosophical, moral, and social grounds), let’s just try to ask ourselves, what is a reasonable number we’d put in that equation. Even if we don’t know, then is there a way to estimate that number?

It’s hard, isn’t it. You can estimate risk. You can also estimate will. But estimating a value of one life is damn hard. If you try to do it, you better do it properly. Otherwise you run into peculiar situations. Below is an example from the book ‘Priceless, On knowing the price of everything and the value of nothing’: what happen when the cost of a death is evaluated as the potential earning a person might obtain had he survive normally.

… If society’s values were all about money, there might appear to be a net social benefit to something that kills a lot of older, retired people – such as tobacco… Why? Because smokers die early, saving their states the trouble and expense of providing nursing home care and other services associated with an aging population. According to Viscusi, the financial benefit to the states of their citizens’ premature deaths was so great that, if some of his results were ‘taken at face value,’ then ‘cigarrette smoking should be subsidized rather than taxed.’