focuses on this passage from John Judis’s review of regulatory policy in the Bush and Obama years:
“Bush stopped weighing the costs and benefits of deregulation and issued an executive order allowing OIRA to intercede before agencies made their initial proposals, thereby providing industry lobbyists with a back door to block regulations. OIRA also instructed agencies to discount the value of future lives in constructing cost-benefit analyses by 7 per cent a year, so that 100 lives in 50 years would only be worth 3.39 current lives. (Such logic can be used by conservatives to argue that the present cost of regulating greenhouse gases outweighs the future benefits of stopping climate change.)”
There is a normative argument against valuing lives in cost-benefit analysis; some people think it’s just wrong. I don’t agree with that; I think that in practice, you either value lives implicitly or you do it explicitly, and so you might as well do it explicitly. And for what it’s worth, the practice of valuing lives is firmly entrenched in our legal system; the amount you pay in damages if you kill someone negligently depends primarily on that person’s future earning potential, and also on the monetary value of the benefits that other people gained from his or her life.
There is another argument against discounting future lives, however. The basic premise of discounting is that money in the future is worth less than money today. This has two components. One is the time value of money: $100 with certainty one year from now is worth about $99 today, because you can invest $99 in an FDIC-insured account at about 1% and get back $100 in a year. The second is risk: Future events are not certain, and the less certain they are to occurthe less valuable they are to you.
Does this apply to lives, however?
(photo credit: Valrico.Runner)