Nova workboard

a blog from young economists at Nova SBE

How can you put a value on life?

If I was to ask you how much you consider your life to be worth, what would you answer?

Most of us can not give a definite number for the value of our lives, not even an approximation. Some would probably say that  the value depends on your expected future income and your life expectancy. Others might say that it is connected to risks and pay-outs, much like the approach used by insurance companies for deciding the premium and possible future payments connected to a specific insurance.

From an economic point of view the value of a life is connected to our opportunity costs, that is  the “cost” of the forgone products after making a choice. In economics we consider the value of a statistical life when putting a “price” on a human life. A statistical life is a notion for the value of saving the life of one person randomly picked from the population. This is very different than the individually percepted life value we assign ourselves or someone we know. Emotions make the difference between a subjective and an objective answer to this very difficult question. But questions are raised when we talk about a statistical life. Should every life have the same statistical value? Should the value change according to age, income, education or health status?

The reality is that the value of a statistical life do change with age, health status and so on. Recently there was a news story in Norway about a cancer medicine for a type of melanoma that could possibly extend a 68-year old man’s life extensively. Unfortunately the price of the medicine, approximately 100.000 euros per patient for the whole treatment, was too high compared to the expected effect it would have on the disease. Thus, a life and death decision was made on behalf of a small group of people with no other alternatives for leading a “normal” life. The 68-year old man with children and small grand-children could have enjoyed many more years, had he only been offered the medicine. From an economic point of view this may be a correct decision, but what about the ethical or social point of view? Is this man’s life worth less than 100.000 euros?

Problems arise when the health care systems can not always take the social or personal point of view into consideration. Is it possible that health care to a certain degree has become an institution based on profits, margins and return on investments? They can not take emotional considerations in the valuation of a life, because then the value of a life would reach astronomical heights and undermine the system in place. Unfortunately, the focus of health systems in most cases is not what we personally wish it to be. 

 

Lene Didriksen

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Author: studentnovasbe

Master student in Nova Sbe

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