Valuing Life_ A Plea for Disaggregation

2004] VALUING LIFE 403
produced a significant undervaluation of the monetary value of the
lives at stake; the $6.1 million figure reflects no adjustment to account
for changes in national real income growth. 73 In principle, the failure
to undertake an adjustment is a serious mistake. The actual mean
WTP might be substantially higher. 74
Even more fundamentally, the relevant numbers deserve respect
only if they do not result from bounded rationality or an absence of
information on the part of the people whose choices generate them.
Suppose, for example, that workers do not know the risks that they
face or that their decisions are products of the availability heuristic or
optimistic bias. 75
In either case, regulators should not use, for
purposes of policy, a finding that workers are paid $60 to run a risk of
1/100,000; by hypothesis, that number does not reflect a rational
tradeoff by informed workers. I return to these points below. 76
Current practice is based on an assumption, not that all or even most
workers make informed choices, but that market processes ensure the
right “price” for various degrees of safety. 77 Compare pricing for soap,
cereals, and telephones: most consumers do not have full information
and use heuristics that lead them astray, but market competition
produces a sensible structure of prices, at least most of the time.
73. The EPA has updated the relevant numbers for inflation, but it has not otherwise made
adjustments. Sunstein, supra note 54, at 2284.
74. See Dora L. Costa & Matthew E. Kahn, The Rising Price of Nonmarket Goods, 93 AM.
ECON. REV. PAPERS & PROC. 227, 229 tbl.1 (2003) (suggesting a likely current value of $12
million); Viscusi, supra note 16, at 252 tbl.5 (finding values as high as $15.1 million for white
males). In the context of arsenic regulation, the EPA also noted in its sensitivity analysis that
the appropriate adjustment would increase the VSL from $6.1 million to $6.7 million. National
Primary Drinking Water Regulations; Arsenic and Clarifications to Compliance and New
Source Contaminants Monitoring, 66 Fed. Reg. 6976, 7012 (Jan. 22, 2001) (codified at 40 C.F.R.
pts. 9, 141, and 142). Recent evidence suggests that the current VSL is $4.7 million for the entire
population, $7 million for blue-collar males, and $8.5 million for blue-collar females. Viscusi,
supra note 55, at 39.
75. The availability heuristic suggests that people will overestimate risks when an event is
readily “available” to people’s minds, and underestimate risks when no such event is available.
Timur Kuran & Cass R. Sunstein, Availability Cascades and Risk Regulation, 51 STAN. L. REV.
683, 685 (1999). Optimistic bias suggests that people will be excessively optimistic about risks
that they themselves face. Cass R. Sunstein, Hazardous Heuristics, 70 U. CHI. L. REV. 751, 772
(2003).
76. See infra Part III.A.2.
77. See VISCUSI, supra note 9.