I am puzzled by your conclusion and the idea that you claim to support - "I don’t know what the value of a human life should be. All I do know is that they are too high". I can normally follow your argumentation, but there is too much elided here for me to really grok why one should arrive at something akin to "society should spend less money on saving lives, particularly poor lives" based on evidence/logic. When you notice something like "small changes = absurd conclusions", my first instinct is to question the validity of the absurd conclusions and look for the signals that aren't being accounted for, rather than barrel towards extrapolation station.
Your last paragraph could reveal a lot about your implicit philosophies - but you don't dive into them; perhaps you haven't evaluated why you hold these views yourself? Particularly: "It may be socially corrosive, but our value of a human life should vary with class or intelligence, because richer and smarter people will benefit others more. The value of lives should be higher in richer countries, again simply because they will experience more." It might be wise to include a contrasting statement that reflects that you (if you were in charge) would not be tempted to implement some kind of death panels that deny care for poor sick people who are "too socially expensive" to save. Otherwise, I think it is reasonable to be unsure what your perspective is. Do you actually believe that people who are rich or smart deserve more life than those who are dumb or poor? If you do, how do you measure rich and poor, smart and dumb? (to me, this is where things get more interesting, and we can learn more about how economics reflects our philosophy).
It is useful and important to discuss the economics of human lives! That said, economics divorced from any underlying philosophical argumentation feels hollow and incomplete to me. I believe you are a conscientious person, but the analysis you presented here lacks humanity to me.
I agree. I mostly followed but I think this article should have been much longer with more depth and clarification so as to do less hand waving. Perhaps he will write something longer at a later date
Presumably as you increase Medicaid spending the marginal lives saved return on the dollar decreases considerably from $179k or whatever it is currently. So "this implies we should spend our entire GDP on Medicaid, which is nonsense" does not follow because approving the marginal dollar spend at ~$179k (or whatever it is currently) does not imply continuing to spend after you've already increased spend and thereby reduced your additional marginal return.
I would very much think it's the opposite. As you increase Medicare spending, to continue to save lives you need to spend higher and higher amount of marginal dollars per life year.
If you think it's worth it to spend $179K per year to save a life, then that entails that if (counterfactually) you could spend N * $179K per year to save N lives, you would.
Not sure about that, because as the spending increases, even if you hold the marginal benefit constant, the marginal opportunity cost still increases. I might start by reallocating my first $179k from a fairly wasteful alternative, but as I keep redirecting money to this program, I'd be forced to give up more and more rewarding spending alternatives.
You could artificially hold both the marginal benefit and marginal opportunity cost constant. Then maybe it's just fine to keep spending $179k per QALY?
I think when you're evaluating program costs you should envision realistic outomces at the margin: something like this program will cause taxes/national debt to rise by this amount. You can't just say you will unilaterally solve the problems of public choice and gut the most wasteful program in government, otherwise essentially any program passes the cost/benefit test, including the buy Philip a pony program.
I don't see how it's just fine to keep spending the country's average product on QALY. We all live to be 120 but we just live in mudhuts?
In particular your reducto ad absurdum about mud huts doesn't follow because either (1) we artificially specify that marginal benefits and opportunity costs are constant at the current margin (in which case we never get to mud huts), or (2) more realistically we acknowledge both marginal benefits and opportunity costs change as spending on saving lives increases and we stop well before we have to exchange our comfortable apartments and wood framed single family homes with mudhuts
The current marginal opportunity cost of Medicaid isn't less housing consumption, it's whatever basket of goods the government and taxpayers are currently consuming that they'll have to give up to pay for the Medicaid. Housing is the last they'll give up so it'll be on average the more wasteful programs in govt, and for consumers, the more discretionary purchases they can easily do without, including status goods and the least values part of their current basket of recreational goods. Maybe there's some consumers out there for whom the additional Mediaid tax make the difference between upgrading the housing or not, but it won't in America mean moving into literal mudhuts.
I think you and OP are probably right about QALY, just find myself being unsure about it and I don't think the original argument OP proferred really makes the right case.
Excellent article. However, I think in the case of violent death (murder, war) we need to assess a higher economic cost, and something like $10 million per death is more appropriate. This is due to retribution, vigilantism, and political instability.
Probably right (although the Insurance value is not relevant).
But how much of a problem is it in practice. Is the reason we regulated nuclear power almost out of existence becasue of too high a value on life? What Medicaid decision was (coud have been) taken in error becasue of a too-high estimate?
I cam here specifically for a graph of different "value of life" metrics from different institutions that was teased in Notes, but lo, it was not here! I feel robbed.
Best part about STEM conquering nature is we're forced to interrogate primitive axioms and become as gods - but minor ones that still need toilets.
Another issue may be excise taxes on consensual mortality or hospitalization risk. Value differences make this incredibly impossible. Co-pays seem like it might mollify outrage because it introduces the individual into the narrative.
Yet, I think this means governance is forced to adopt enough pro-economic laws and pay attention in econ 101++ to pay for it.
the dumbest example was in COVID, where people used the bogus "$10m per life regardless of QALY left" and then concluded that lockdowns were dirty cheap.
just accepting that average death from COVID was ~4 qaly lost, and that you need to account for qaly reduces the value x20!
I agree that the current model is impractical and unsustainable. But I don’t think that having different values based on the experiences of the region is the answer either. I’m not sure if this is solvable without use of force. Perhaps the best method is no method at all. I believe we’ve backed ourselves into a corner and there is no good move from here.
I am puzzled by your conclusion and the idea that you claim to support - "I don’t know what the value of a human life should be. All I do know is that they are too high". I can normally follow your argumentation, but there is too much elided here for me to really grok why one should arrive at something akin to "society should spend less money on saving lives, particularly poor lives" based on evidence/logic. When you notice something like "small changes = absurd conclusions", my first instinct is to question the validity of the absurd conclusions and look for the signals that aren't being accounted for, rather than barrel towards extrapolation station.
Your last paragraph could reveal a lot about your implicit philosophies - but you don't dive into them; perhaps you haven't evaluated why you hold these views yourself? Particularly: "It may be socially corrosive, but our value of a human life should vary with class or intelligence, because richer and smarter people will benefit others more. The value of lives should be higher in richer countries, again simply because they will experience more." It might be wise to include a contrasting statement that reflects that you (if you were in charge) would not be tempted to implement some kind of death panels that deny care for poor sick people who are "too socially expensive" to save. Otherwise, I think it is reasonable to be unsure what your perspective is. Do you actually believe that people who are rich or smart deserve more life than those who are dumb or poor? If you do, how do you measure rich and poor, smart and dumb? (to me, this is where things get more interesting, and we can learn more about how economics reflects our philosophy).
It is useful and important to discuss the economics of human lives! That said, economics divorced from any underlying philosophical argumentation feels hollow and incomplete to me. I believe you are a conscientious person, but the analysis you presented here lacks humanity to me.
I agree. I mostly followed but I think this article should have been much longer with more depth and clarification so as to do less hand waving. Perhaps he will write something longer at a later date
Presumably as you increase Medicaid spending the marginal lives saved return on the dollar decreases considerably from $179k or whatever it is currently. So "this implies we should spend our entire GDP on Medicaid, which is nonsense" does not follow because approving the marginal dollar spend at ~$179k (or whatever it is currently) does not imply continuing to spend after you've already increased spend and thereby reduced your additional marginal return.
I would very much think it's the opposite. As you increase Medicare spending, to continue to save lives you need to spend higher and higher amount of marginal dollars per life year.
Yes that is what I meant, the spend increase and the marginal return per dollar decreases.
If you think it's worth it to spend $179K per year to save a life, then that entails that if (counterfactually) you could spend N * $179K per year to save N lives, you would.
Not sure about that, because as the spending increases, even if you hold the marginal benefit constant, the marginal opportunity cost still increases. I might start by reallocating my first $179k from a fairly wasteful alternative, but as I keep redirecting money to this program, I'd be forced to give up more and more rewarding spending alternatives.
You could artificially hold both the marginal benefit and marginal opportunity cost constant. Then maybe it's just fine to keep spending $179k per QALY?
I think when you're evaluating program costs you should envision realistic outomces at the margin: something like this program will cause taxes/national debt to rise by this amount. You can't just say you will unilaterally solve the problems of public choice and gut the most wasteful program in government, otherwise essentially any program passes the cost/benefit test, including the buy Philip a pony program.
I don't see how it's just fine to keep spending the country's average product on QALY. We all live to be 120 but we just live in mudhuts?
In particular your reducto ad absurdum about mud huts doesn't follow because either (1) we artificially specify that marginal benefits and opportunity costs are constant at the current margin (in which case we never get to mud huts), or (2) more realistically we acknowledge both marginal benefits and opportunity costs change as spending on saving lives increases and we stop well before we have to exchange our comfortable apartments and wood framed single family homes with mudhuts
If we specify that marginal benefits and costs are constant at the current margin, why don’t we get to mudhuts?
The current marginal opportunity cost of Medicaid isn't less housing consumption, it's whatever basket of goods the government and taxpayers are currently consuming that they'll have to give up to pay for the Medicaid. Housing is the last they'll give up so it'll be on average the more wasteful programs in govt, and for consumers, the more discretionary purchases they can easily do without, including status goods and the least values part of their current basket of recreational goods. Maybe there's some consumers out there for whom the additional Mediaid tax make the difference between upgrading the housing or not, but it won't in America mean moving into literal mudhuts.
I think you and OP are probably right about QALY, just find myself being unsure about it and I don't think the original argument OP proferred really makes the right case.
Excellent article. However, I think in the case of violent death (murder, war) we need to assess a higher economic cost, and something like $10 million per death is more appropriate. This is due to retribution, vigilantism, and political instability.
Probably right (although the Insurance value is not relevant).
But how much of a problem is it in practice. Is the reason we regulated nuclear power almost out of existence becasue of too high a value on life? What Medicaid decision was (coud have been) taken in error becasue of a too-high estimate?
As David Fridman says, money is no good to you as a corpse, hence the value of life insurance is useless.
>Other studies infer the value placed on life from which cars people buy, or whether they are willing
I think something significant got lost from the end of this sentence.
I cam here specifically for a graph of different "value of life" metrics from different institutions that was teased in Notes, but lo, it was not here! I feel robbed.
Best part about STEM conquering nature is we're forced to interrogate primitive axioms and become as gods - but minor ones that still need toilets.
Another issue may be excise taxes on consensual mortality or hospitalization risk. Value differences make this incredibly impossible. Co-pays seem like it might mollify outrage because it introduces the individual into the narrative.
Yet, I think this means governance is forced to adopt enough pro-economic laws and pay attention in econ 101++ to pay for it.
the dumbest example was in COVID, where people used the bogus "$10m per life regardless of QALY left" and then concluded that lockdowns were dirty cheap.
just accepting that average death from COVID was ~4 qaly lost, and that you need to account for qaly reduces the value x20!
I agree that the current model is impractical and unsustainable. But I don’t think that having different values based on the experiences of the region is the answer either. I’m not sure if this is solvable without use of force. Perhaps the best method is no method at all. I believe we’ve backed ourselves into a corner and there is no good move from here.