14 June 2019

What price a life?

By

The Guardian last week decided to tackle one of big questions: what is the value of a human life? The headline of the editorial announced its answer: “people are priceless”. Or, more precisely, the value of people cannot be measured economically. When it comes to the value of life, we have hit “the limits of economics”.

It is surprising to see The Guardian taking such a clear stand against the NHS. For not only do the boffins at the National Institute for Clinical Excellence (who guide the NHS on this matter) think that the value of a human life can be measured economically; they think they know its value. A British life is worth £2.5 million, and one year of life is worth £30,000. If a treatment that would give you one more year of perfectly healthy life costs more than £30,000, you won’t get it. Your life isn’t worth the expenditure.

Such estimates of the value of a statistical life are derived by observing what people are willing to spend on reducing their chance of death, for example, by paying more for a car with airbags. If airbags reduce your chance of dying by 0.01 percentage point and you are willing to pay no more than £500 for them, then you implicitly value your life at £5 million.

The Guardian‘s leader writers do not discuss this standard approach to valuing lives, which is peculiar in an article about the inability of economics to value lives. Perhaps they finds such economic reckoning too distasteful even to mention, human lives being priceless. Instead, they recommend the approach of the American writer Marilynn Robinson, according to whom, “We talk about the sanctity of an individual life, but we have let so much value leach out of the word ‘sanctity’, forgetting its old associations with beauty, mystery and inviolability”.

This isn’t an obvious advance on the economic approach, if only because it is incomprehensible. Armed with this non-economic estimation of the value of a human life, what treatments should the NHS offer? Treatments that are beautiful, mysterious and inviolable? Or perhaps it should offer treatment only to people who are beautiful, mysterious and inviolable. Who can possibly say?

Some may complain that this estimation of the value of life is not intended for use in deciding which treatments the NHS should offer. Okay, then, what uses is it intended for?

How about in the labour market? The Guardian starts its examination of human value by lamenting the fact that a report by the consulting firm McKinsey and Co. regarding the likely effect of artificial intelligence on employment “values … work entirely in terms of money”.

The complaint here must be that the authors of McKinsey’s report think that the only benefit people receive from work is the monetary income. It isn’t, of course. Workers also often enjoy camaraderie and a sense of achievement, for just two examples. But, then, no economist thinks otherwise. No economist thinks that monetary income is the only benefit of employment.

Nor does any economist believe what The Guardian later claims they do: namely, that people who produce nothing are still “needed to buy the things that must be sold to them to keep others in employment” (something the authors apparently believe, even if they think mere consumption insufficient for a valuable life).

To see the absurdity of this idea, imagine an island with just two inhabitants. Jill grows food while Jack produces nothing. With what will the Jack buy food from Jill? Consumption is not a contribution to society. People who consume without producing must make the other members of society worse off. In our imaginary case, Jack must deprive Jill of some of the food she would otherwise have.

But suppose, just to play along, that economists really do make these silly mistakes, and that “contemporary politics and culture” really do value people by how much they produce, as The Guardian claims (again, with no citations to back up this absurd claim). How would the labour market change if everyone instead adopted its alternative, sanctimonious valuation of human life? For example, when we recognise the importance of beauty, mystery and inviolability, will nurses by paid more or less? And how much more or less? Will vacations be longer or shorter? And, again, by how much?

The article is little more than a display of economic ignorance and empty waffle. That’s embarrassing for a newspaper that is supposed to cater to intelligent readers. But the article is worse than embarrassing. It is implicitly authoritarian.

Having declared that the value of life consists in beauty, mystery and inviolability, The Guardian complains that “these qualities are invisible to economics, which can talk only about preferences”.

In the sense that these things are invisible to economics, food, shoes, cars and houses are also invisible to it. In standard economics, they get their value from people’s preferences, not from anything inherent to them. Similarly, the value of beauty and mystery are determined by what people are willing to pay for them. A beautiful house, for example, is more valuable than an ugly one because people are willing to pay more for it. A mysterious house, by contrast, would probably trade at a discount.

In other words, beauty (and mystery and inviolability) are no more or less “invisible to economics” than anything else. Economics values them just as highly as actual people value them. Which is precisely what The Guardian objects to. Implicit in its rejection of the economic approach is the rejection of actual preferences as the basis of evaluation. Things should instead be valued by reference to the correct preferences.

To many of its critics, economics is the vice of “knowing the price of everything and the value of nothing” turned into an academic discipline. Economics is vulgar, because it gives equal weight to the preferences of vulgar people. And markets are dreadful for the same reason, giving reign to any old preferences, no matter how distasteful.

The value of things should instead be decided by morally superior people – the likes of the editorial staff of The Guardian – and “our politics and culture” should be corralled into operating according to them. And you should be grateful that such marvellous people care so much about you.

CapX depends on the generosity of its readers. If you value what we do, please consider making a donation.

Donate

Recurring Payment

Thanks for your support

Something went wrong

An error occured, but no error message was recieved.

Please try again, or if problems persist, contact us with the above error message. We apologise for the inconvenience.

Jamie Whyte is the author of 'Crime Against Logic'