August '08 | Costs and benefits of a life
Have you
ever noticed how
the GM issue is always turned into one of
'costs and benefits'? The big UK debate on GM in 2002 included a
whole 'National Dialogue' on the subject. Even the director of the
International Assessment of Agricultural Science and Technology for
Development (see GM SPIN AT ODDS WITH THE
EVIDENCE
– News, May 2008) which
concluded that GM crops had little role to play in combating hunger
and poverty, said “they could contribute. We must understand
the
costs and benefits”. Try doing a search for 'GM food, costs
and
benefits' and you'll get 244,000 references to keep you
occupied.
But, have you ever wondered what the concept of a
cost-benefit analysis really entails in practical terms?
A
recent example of how the America government goes about such an
assessment appeared in the press recently.
Basically, the
decision-making authority works out the “value of a
statistical
life”. It then calculates the cost of implementing safety
measures
and how many lives will be saved by them. After that, the arithmetic
is simple: if the value of lives saved adds up to more than the cost
of the safety measures, the regulation will be considered; if the
cost of adopting the safety measures is more than the value of the
lives saved, the regulation is abandoned.
Hands up who is
wondering at this point how you calculate the 'value' of a life?
The
short answer seems to be, make it up as you go along. Different
departments in the US administration apparently use different
parameters. What they don't use are the sorts of understandable
measures used by insurance companies and law courts, such as people's
earning capacity, their potential contributions to society, how much
they are loved, needed or depended upon by their friends and family
etc. Instead, a life is worth what people are willing to pay to avoid
certain risks, and how much extra employers must pay their workers to
take on additional risks. Most of the data are drawn from payroll
statistics and from opinion surveys.
The US Environmental
Protection Agency (EPA), which has a role in some aspects of GM
safety regulation, has been in the media spotlights recently for
adjusting its bases for working out its 'costs' of lives. Earlier
this year the Agency removed the adjustment for inflation from the
equation, and has now factored in the results of
“better”
economic studies plus an new parameter, “consumer
preferences”.
The “better studies” largely consisted of
two large reports: one came up with a value of $8.8 million per life,
the other came up with a range of £2-3.3 million per life.
These studies are clearly inconvenient to the EPA. They disagree by a
factor of more than 4: the higher one would mean more safety
regulations falling within the definition of 'beneficial' (and
therefore require implementation and funding), while the lower one
would result in such a huge drop in its definition of 'costs' that
questions would be asked. The problem was solved by simply splitting
the difference. This reduced the final 'cost' of lives but not by so
much as to sound unreasonable.
The “consumer preferences”
factor consists of “what consumers are willing to pay to
reduce
similar risks in their own life”. This also reduced the final
'cost' of a life.
Comments from the author of the $8.8 million
per life study were that the EPA's method “doesn't make
sense”,
and that no study has shown that Americans are willing to pay less to
reduce risks.
The EPA's attitude to this 13% ($1 million)
reduction in the value of a life over the past four years seems to be
to trivialise their actions. They suggested we shouldn't look on
their figures as a price-tag on life (So what should we look on it
as? A game?), and that their adjustments are 'not significant' (The
dead and the bereaved might give them an argument). While Agency
officials say they were “just following what the science told
them”, the chairman of their own Science Advisory Board said
that
the “number-crunching ... is not a scientific
issue”.
OUR
COMMENT
The EU is obviously not alone in playing around with
safety thresholds to save money and trouble (see KING
COMMERCE
–
News, August 2008). Whether it is 'science' or not, the analysis of
costs and benefits for safety regulation is literally a life or death
issue on any continent. Tax payers in a democracy expect safety to be
something more than bureaucracy cooking the books to shift around the
thresholds at which legislation must be produced, enforced and paid
for.
The BIG question avoided by this fancy number-crunching
is why should value-for-money safety precautions, or any other safety
precautions for that matter, be measured in numbers of corpses?
Chronic disease does not come into the safety equation, anywhere. In
the case of GM foods, unpredicted qualities leading to chronic
disabilities are a much more likely side-effect. This cost represents
a much greater practical problem. And is another reason to avoid
eating GM foods.
SOURCE
- EPA: Value of American Life Drops to $6.9 Million, FOX News, 11.07.08
- David Adams, GM will not solve current food crisis says industry boss, Guardian 27.06.08
