The Value of Life

r-man_small.jpg” alt=”” width=”360″ height=”240″ />FOOD FOR THOUGHT: A home on the east bench of Salt Lake City… $638,000, a two-week vacation to the Bahamas… $8,511, the value of a life… it depends. It depends on where you live, whether you are female or male, your age, and whether you are black or white. We inherently value people, but do we place an equal value on all life? The short answer is NO! Economists are often the social scientists charged with the task of valuing life. They do this when they determine insurance premiums, calculate damages for law firms, and conduct cost-benefit analyses when the auto-industry considers a massive recall. The value of life is also considered whether dividing funding dollars among countries with a residual landmine problem or assessing the benefits of providing safe drinking water to the citizens of a developing nation. What is the value of life? While various approaches to calculating life exist, the most commonly used and recognized method throughout the world is called “foregone earnings”. This approach essentially assigns a value of life in accordance with your earning potential. Accordingly, the average American is worth around $45,000 a year, while those living in Cambodia are worth only $.80 a day. This approach is real – not pretend. The ramifications of this approach are also authentic. Important decisions are made every day using this method of reasoning. You are worth what you make!

The consequences of life valuation methodologies have left more than half of the world in poverty. Not poverty in the U.S. sense of the word; where anyone making less than half of median income ($21,500 a year) is considered poor. I’m talking about poverty in an absolute sense – where people struggle to survive on under $2 a day. Always hungry – this sizable portion of humanity ekes out existence by finding one meal at a time and selling their labor. Anyone who only has their labor to sell is forever trapped – incapable of saving or

accumulating capital. This phenomenon, often characterized as the poverty trap, is a daily reality for the vast majority of the globe. Does it have to be? No! In order for this to change in a sizeable fashion – we need to first start valuing life equal. While this may seem too simplistic to make a difference – it may be all that is required. How can we do this? Stay tuned next month….

-Wade C. Roberts, Ph.D.
Director of Research, Global Outreach Foundation
Professor at University of Utah & Westminster College

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