An American life is worth $1m less than it was 5 years ago

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(Agencies)
Updated: 2008-07-11 09:09

Instead, economists calculate the value based on what people are willing to pay to avoid certain risks, and on how much extra employers pay their workers to take on additional risks. Most of the data are drawn from payroll statistics; some comes from opinion surveys. According to the EPA, people should not think of the number as a price tag on a life.

The EPA made the changes in two steps. First, in 2004, the agency cut the estimated value of a life by 8 percent. Then, in a rule governing train and boat air pollution this May, the agency took away the normal adjustment for one year's inflation. Between the two changes, the value of a life fell 11 percent, based on today's dollar.

EPA officials say the adjustment was not significant and was based on better economic studies. The reduction reflects consumer preferences, said Al McGartland, director of EPA's office of policy, economics and innovation.

"It's our best estimate of what consumers are willing to pay to reduce similar risks to their own lives," McGartland said.

But EPA's cut "doesn't make sense," said Vanderbilt University economist Kip Viscusi. EPA partly based its reduction on his work. "As people become more affluent, the value of statistical lives go up as well. It has to." Viscusi also said no study has shown that Americans are less willing to pay to reduce risks.

At the same time that EPA was trimming the value of life, the Department of Transportation twice raised its life value figure. But its number is still lower than the EPA's.

The environmental agency traditionally has placed the highest value of life in government and still does, despite efforts by administrations to bring uniformity to that figure among all agencies.

Not all of EPA uses the reduced value. The agency's water division never adopted the change and in 2006 used $8.7 million in current dollars.

From 1996 to 2003, EPA kept the value of a statistical life generally around $7.8 million to $7.96 million in current dollars, according to reports analyzed by The AP. In 2004, for a major air pollution rule, the agency lowered the value to $7.15 million in current dollars.

Just how the EPA came up with that figure is complicated and involves two dueling analyses.

Viscusi wrote one of those big studies, coming up with a value of $8.8 million in current dollars. The other study put the number between $2 million and $3.3 million. The co-author of that study, Laura Taylor of North Carolina State University, said her figure was lower because it emphasized differences in pay for various risky jobs, not just risky industries as a whole.

EPA took portions of each study and essentially split the difference _ a decision two of the agency's advisory boards faulted or questioned.

"This sort of number-crunching is basically numerology," said Granger Morgan, chairman of EPA's Science Advisory Board and an engineering and public policy professor at Carnegie Mellon University. "This is not a scientific issue."

Other, similar calculations by the Bush administration have proved politically explosive. In 2002, the EPA decided the value of elderly people was 38 percent less than that of people under 70. After the move became public, the agency reversed itself.

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