Britain Puts Monetary Value On Human Life

Solve Global Warming with Slave Trade Economics?
A major environmental UK report explains how human life can be priced and exchanged for goods and services.
Good intentions can run amok. It tells the story of how an honorable, intelligent man set out to avert environmental disaster and ended up accidentally promoting the economics of the slave trade. It shows how human lives can be priced and exchanged for goods and services.

When Sir Nicholas Stern published his study of the economics of climate change, environmentalists (myself included) lined up to applaud him: he had given us the answer we wanted.

On one side of Stern’s equation are the costs of investing in new technologies (or not investing in old ones) to prevent greenhouse gas emissions from rising above a certain level. These can reasonably be priced in pounds or dollars. On the other side are the costs of climate change. Some of them — such as higher food prices and the expense of
building sea walls — are financial, but most take the form of costs which are generally seen as incalculable: the destruction of ecosystems and human communities; the displacement of people from their homes; disease and death.

All these costs are thrown together by Sir Nicholas with a formula he calls “equivalent to a reduction in consumption,” to which he then attaches a price. Stern explains that this”consumption” involves not just the consumption of goods we might buy from the supermarket, but also of “education, health and the environment.” He admits that this formula “raises profound difficulties”, especially the “challenge of expressing health (including mortality) and environmental quality in terms of income.” But he uses it anyway, and discovers that the global disaster which would be unleashed by a 5-6° rise in temperature, and which is likely to involve widespread famine, is “equivalent to a reduction in consumption” of 5-20%.

It is true that as people begin to starve they will consume less. When they die they cease to consume altogether.
But Stern’s unit (a reduction in consumption) incorporates everything from the price of baked beans to the pain of bereavement. He then translates it into a “social cost of carbon”, measured in dollars. He has, in other words, put a price on human life. Worse still, he has ensured that this price is buried among the other prices: when you read that the “social cost of carbon” is $30 a ton, you don’t know — unless you unpick the whole report and its methodology and sources — how much of this is made of human lives.

The poorer people are, the cheaper their lives become. “For
example,” Stern observes, “a very poor person may not be ‘willing-to-pay’ very much money to insure her life, whereas a rich person may be prepared to pay a very large sum. Can it be right to conclude that a poor person’s life or health is therefore less valuable?” Up to a point, yes: income, he says, should be one of the measures used to determine the social cost of carbon. Sir Nicholas was by no means the first to use such a formula. What was new was the unthinking enthusiasm with which his approach was greeted. Stern’s methodology has a disastrous consequence, unintended but surely obvious. His report shows that the dollar losses of failing to prevent a high degree of global warming outweigh the dollar savings arising from not taking action. It therefore makes economic sense to try to stop runaway climate change. But what if the result had been different? What if he had discovered that the profits to be made from burning more fossil fuels exceeded the social cost of carbon? We would then find that it makes economic sense to kill people. This is what the government has done. Its consultation paper boasts that “our approach is entirely consistent with the Stern Review.” It has translated his “social cost of carbon” into a “shadow price of carbon”, which is currently valued, human lives and all, at £25 a ton.Convenience is weighed against human life. The richer you are, the more lives your time is worth.The people most likely to be killed by climate change do not live in this country. Most of them live in Africa and South Asia. Yet the government has calculated the economic benefits to the United Kingdom, weighed them against the global costs of climate change and discovered that sacrificing foreigners — especially poor ones — is a sensible economic decision.

I can accept that a unit of measurement which allows us to compare the human costs of different spending decisions is a useful tool. What I cannot accept is that it should be scrambled up with the price of eggs and prefixed with a dollar sign. Human life is not a commodity. It cannot be traded against profits or exchanged for convenience. We have no right to decide that others should die to make us richer.

In 2004 the US Department of Transportation put a better monetary value on human life.