How much is a human life worth?

We need increased precautionary measures at job sites. Photo: Adnan/ Driknews

A few days ago a news item caught my attention. It was reported that workers in the ship breaking industry receive little or no compensation for injury or death at the workplace. I also read on a website on Bangladesh that, "only a nominal amount of compensation is given and often only when there is public pressure." If this is the state of affairs in this large industry, one can surmise that the situation is not much better in other medium and small-scale industries in Bangladesh. Most of us would probably agree that this needs to change and the sooner the better.
The issue of the adequate workers compensation is tied to a larger topic: the value of life and health of Bangladeshi workers. The time has come for us all involved in policy discussion in the fields of environment, healthcare, energy, and education, to name a few, to take a fresh look at the whole matter, and explore a related and vital question: what is the value of life of a Bangladeshi? Some of our readers will undoubtedly be taken aback at the crass nature of this question. I will admit that even in very enlightened academic circles and conferences in the USA this question has often been met with surprise and disdain or both. A common reaction is: "of course, life is valuable, but how can you put a monetary value to it, at a par with other tangible objects?" Others have said, even if you can assign a numerical value, also known as a statistical value, to a human life, it is not to be used as a yardstick for any policy decisions. My goal in this article is share with you some thoughts and ideas that have been gaining ground in recent years.
Let us consider the case of the lives lost and the injuries caused by the incident that occurred during the demolition of Rangs Tower in Farm Gate. While I do not want to point fingers at anyone, I know in my heart that these deaths were preventable. Each of these construction workers had a family to support, and they were working in the demolition of the building without any understanding of the risks involved in the work they signed up for. It can be surmised that they were not told of the risks, nor do I think their wages included a premium for the higher risk involved in this type of work. I was informed that the families did receive some compensation, but even at a generous rate, their lost lives would not have been sufficiently compensated for, either for their family or their friends. My point is, if Bangladesh lawmakers pass a bill to require compensation for work-related deaths, in line with the concept of "statistical value of lives lost", developers and contractors will be paying more attention to safety and precautionary measures at job sites in future.
Other countries faced with similar situations have adopted this compensation practice. After the 9/11 attacks in the USA, when more than 2,900 lives were lost in the collapse of the World Trade Center, the US Congress decided to offer cash compensation to the families who lost a beloved one. One interesting aspect of the program was, the government used a well-accepted formula to calculate the value of each life, and, as a result, the amount offered to the survivors was not equal for each life lost. Some got as much as 10 millions while other received less than a million. While most people would be reluctant to assign a dollar value to the life of a dear one, nearly 98% of the families who lost a member in the 9/11 attack settled with the government, in other words they accepted the monetary compensation as adequate, or in simple terms, the price was acceptable.
How did this happen? Without getting into too much details, allow me to summarise the principle: the amount of compensation in each case was determined by a formula that gave consideration to a deceased's age, annual salary, field of profession, education, and a few other factors that were deemed relevant to an individual's lifetime earning capacity. For example, a lawyer from a top school making six figures was considered worth more than another middle-aged individual who made a five-figure salary working for a building maintenance company.
A few years ago, while working on Bangladesh national environmental policy, I proposed that in order to prioritise our environmental problems and to determine how much we could allocate to addressing these problems, it is worth looking at the number of lives saved and health outcomes of these actions. While my goal was not to suggest that, we can get all our priorities right using this approach, one might be able to shed light onto issues such as clean drinking water, avoidance of traffic congestion, and various health and sanitary measures. This rethinking can be achieved if one is willing to consider the currently accepted principle of welfare economics that considers life, health and other quality of life outcomes desirable.
Is there a downside to this "value of life" algorithm? Sometimes one could take the argument to extremes. A rumor going around in the current health care debate is the following story: In UK, a patient suffering from terminal cancer of the liver was considering a surgery to treat her cancer. The team of physicians assessing her prognosis thought the surgery would prolong her life for 6 months. However, the surgery itself was expensive and the National Health Insurance Authority was faced with the difficult decision of authorising or not approving the procedure. It is rumored that the board decided that given the fact that 6 months of the women's life was not worth the six-figure cost of the surgery, she was denied authorisation and duly expired.
The concept of value of life assumes enormous importance in the context of environmental and medical policy. If another major oil spill occurs in the USA causing loss of lives, or a chemical company is found to be illegally dumping toxic waste in the ground without any remediation and this causes cancer in the neighboring towns, the courts and civil administration have to make a determination of the cost of lives lost. The principle is of importance. If we ignore the principle due to philosophical or religious beliefs or do not give any importance to lives or health effects of any industrial or natural disaster, we cannot adequately determine the importance of projects that compete for limited funds. After the Bhopal accident in India, it became known that many cost-cutting measures contributed to the failures that caused the gas leak. However, if Union Carbide (UCC), a US company, had asked the simple question: What are the potential costs of failure and how much damage could it cause, even the low average compensation amount (Rs. 100,000) would have forced UCC to maintain the safety and maintenance protocols they had in place but never followed. If human lives are considered "free" and as expendable as clean air and water, we'll soon find ourselves making the wrong decisions in many other areas of public policy. Do we cut down trees in a park, only because there is no use for them except for recreational purposes? Is a reservoir to be drained and built over because its only use now is for swimming and boating?
Answers to these questions can be only explored if we are willing to grapple with the thorny issue of the "value of life".
Briefly, my point is that while paradoxical as it might sound, only if we put a monetary value to life would we be able to value and save human lives. If power generation has a market value, and human life does not, then soon we'll have power generation taking precedence over projects that positively affect human life and health, protect our ecology, and improve quality of life.
Dr. Abdullah Shibli taught Economics at Dhaka University, and has worked at Harvard University and the World Bank. He is Managing Partner of NAS Enterprises, LLC, an international consulting firm.