$1.54 million. Exchange rate — 190 million yen, 980,000 British pounds or one human life. That is the statistical worth of a person, according to studies by economics professor Orley Ashenfelter GS '70.
After years of conducting research on the effects of speed limit changes, costs involved and traffic fatalities, Ashenfelter and Michael Greenstone GS '93, an assistant professor at the University of Chicago, calculated the statistical value of a human life.
The pair began their research with data from 1987 because that year marked the U.S. government's decision to allow states to raise speed limits on rural roads by 10 mph.
"The average speed of the drivers on these roads went up by 2.5 mph," Greenstone said.
According to the study, the increase translated into a 35-percent rise in the fatality rate.
Confounding variables such as improved safety in cars were countered by comparing data from the roads with increased speed limits to similar, unchanged roads. "In total, 45 million hours were saved while 360 lives were lost, which averages about 125,000 hours per life," Ashenfelter said.
By taking this number and multiplying it by the average wage, the researches calculated the value of a human life.
"The main point of the study was to show how public choices about speed limits reflect implicit evaluation on the hours one saves by going faster and the inevitable fatality risks," Ashenfelter said.
People inadvertently place a value on human life when it comes to setting speed limits as well as in various other legislative actions, the researchers said. "Deciding what are the allowable levels of arsenic, what airline safety regulations should be and how much pollution companies should be allowed to release are all examples of the tension between economic progress and saving lives," Greenstone said.
Because of the abundance of real life trade-off situations, the $1.54 million figure becomes crucial to public policymaking.
"A lot of safety decisions are made when the government has to make a project so they use these type of studies — to try to get public decisions on safety align with public evaluations," Ashenfelter said.
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