Social costs and double-counting
Things that save lives often cost money, and governments and individuals around the world need to decide how much they are willing to give up in order to save one life or prevent one serious injury. These decisions imply some value for a death prevented, and under some moderately unrealistic assumptions about how people think, you could argue that the implied values should be consistent for different decisions, giving us social costs of various policy issues.
But if you are going to say, as Stuff quotes Godfrey Bridger saying
“There’s also the enormous saving in human suffering and misery which isn’t captured in these statistics. A national road lighting upgrade is a no-brainer.”
you can’t also quote costs that do ‘capture the human suffering and misery’, such as
the estimated $1.2 billion annual cost of night-time road deaths and injuries.
The estimated $1.2 billion annual cost is for 61 deaths and 1538 injuries on the roads at night. It’s immediately obvious that these can’t be actual cash costs — nearly a million dollars per injury — so they must include some sort of value of a life. It’s less clear whether they also include physical and emotional pain from injuries, but if they don’t, the estimated value of a life lost must be very high. This is one the journalists should have caught: the basic journalism rule for numbers is “if you have two numbers, do something with them”. In this case, divide them.
You can either separate out monetary and non-monetary costs, on the grounds that different people weigh them differently, or combine them, on the grounds that government spending should treat all lives the same, but you can’t have it both ways.
Thomas Lumley (@tslumley) is Professor of Biostatistics at the University of Auckland. His research interests include semiparametric models, survey sampling, statistical computing, foundations of statistics, and whatever methodological problems his medical collaborators come up with. He also blogs at Biased and Inefficient See all posts by Thomas Lumley »
Professor Lumley makes a relevant point. The paper we wrote uses much researched Ministry of Transport guidelines for the economic value of an avoided death or injury. I do not know whether the figure of $3.5 million per life included “human suffering and misery” so that comment was not my most scientific contribution!
12 years ago
1. NZTA’s VSL (Value of Statistical Life) measure comes from a survey conducted a while back where people were asked how much they would be willing to spend on a roading improvement that would save one life. That number’s been inflation-adjusted upwards since then. It presumably includes all of the losses that society feels when somebody dies, so should never be added to lost production and the like – NZTA’s Social Costs of Accidents measure is careful on this point and only counts the VSL costs in traffic fatalities (along with the costs of cleaning up the mess); injury costs include pain & suffering as well as forgone productivity.
2. There’s no problem in counting VSL as a social cost of accidents; it’s the most important cost.
3. There’s reasonable argument that NZ’s VSL should be higher – perhaps on the order of $5m. But that’s second-order relative to the gains we get from simply having a consistent VSL for use across all policy areas.
12 years ago
So it does include everything it’s supposed to include. Good.
I agree it’s both convenient and likely to improve policy to have a stable VSL. I just think the case for there being a unique, well-defined, ascertainable value as a logical necessity is oversold in decision theory.
12 years ago