Comments on: What's the value of a life?

By: Tom

Tom — Mon, 18 Jan 2010 01:27:48 +0000

John is right. People are terrible risk assessors, and we tend to rank possible deaths by how horrible we think they might be, and how little control we would have over the outcome. If the average person doesn’t do the math, then they haven’t set a price. They’re just so terrified of falling out of the sky, they don’t want to think about it that much. Same goes for the thought of a plane flying into their place of work. It’s instinct, not numbers, that shapes their reality.

By: davidmegginson

davidmegginson — Sun, 17 Jan 2010 22:33:13 +0000

John – both good points, and last I remember from The Economist, economists are still discussing the second one: that money lost is worth more to you than money gained. I don’t think it’s even as complicated as economists make it out to be: if I have $50K, losing $25K means that the amount I lost is equal to 100% of my remaining wealth, while gaining $25K means that the amount I gained is equal to only 33% of my new wealth.

For most people who use airplanes at all, however, an extra $200 for an airplane ticket is a small enough proportion of income or net worth that we can disregard the above, and use the older economics approach ($200 is $200) as a good-enough approximation.

I don’t have anything clever to say about the fear of different kinds of deaths, except to acknowledge its truth. As a parent and husband with the stereotypical protective instinct, my own biggest fear is the death of other family members.

By: John Cowan

John Cowan — Sun, 17 Jan 2010 20:07:57 +0000

This analysis neglects at least two significant effects. One is that people, rightly or wrongly, fear some kinds of deaths more than others. Many fear dying in a plane accident, but few fear dying in a (statistically more likely) bus crash.

The other is more subtle, and goes back (in this example, at least) to Samuel Johnson. You should not risk $10,000 to win $101 even if the odds are 100:1 in your favor, unless a loss of $10,000 is something you can shrug off.