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High-income people are willing to pay more than lower-income people to avoid the risk of death. Forexample, they are more likely to pay for safety features on cars. Do you think cost-benefit analysts should take this fact into account when evaluating public projects? Consider, for instance, a rich town and a poor town, both of which are considering the installation of a traffic light. Should the rich town use a higher dollar value for a human life in making this decision? Why or why not?
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Yi Chun Lin
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Public Goods and Common Resources
The Economics of the Public Sector
Introduction
Markets and Welfare
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when considering the allocation of public goods, we may sometimes be tempted to consider this value of human life. And some people may argue that we should value human life higher in rich areas versus poor areas because these higher income people within the rich areas tend to value safety more. However, that wouldn't be a fair comparison to make because we have to think about the differences in income levels. And people with lower incomes are more likely to spend their money on things that they deem more necessary rather than an additional safety feature. Potentially so. The short answer to this is no. We shouldn't be valuing any life, higher enriched towns and in poor towns. And really, what we've come across in a number of different studies is that the value of human life tends to sit right around $10 million. But with that aside, when we are create coming up with that particular value, we should hold constant all of these different education wage factors, experience factors and take into account mainly just their occupations, that they work that person's willingness to put themselves into a situation. So rather than valuing the human life based upon, Like I said, education and experience and age and whatnot and income. We should focus it more so on a more empirically straightforward assessment of that person's willingness to expose themselves to unsafe conditions. Potentially so, we really should not be making a difference between human life valuations across different towns.
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