What’s your life worth to you? “Priceless” is the obvious answer, but in reality, you put a price on your life all the time.
Safety vs. money
Here’s a simple example: let’s say that you want to go on a two-hour scheduled flight, and that the odds of you dying on the flight come out to about 1 in 1 million (it’s actually lower, but let’s keep the math simple). Your ticket costs $400 with taxes.
Now, I start an airline that adds all kinds of extra safety features and procedures, and over the years, it proves itself twice as safe as the average, so your odds of dying are only 1 in 2 million. However, your ticket would cost $600 with taxes on my airline.
Will you buy the more expensive ticket? If not, then you’ve decided that your life is worth less than $200 million dollars (for every million people who paid the extra $200, one would be saved from death, in the unlikely event that I managed to get the simple math right) — a big number, still, but no longer “priceless”. Decide how much extra you would pay for the ticket ($5? $10? $50?) and multiply by 1 million — that’s what your life’s worth to you.
Safety vs. time and pleasure
Of course, time is as much of a commodity as money. How much time do you save by flying between cities instead of taking the train, or driving across town instead of taking the bus? How much extra risk of death did you assume by making that choice? Again, you can do the math, and decide what value (in saved time) you put on your life. Ditto for your hobbies — downhill skiing is more dangerous than playing Wii, but you’ve decided that the value of your life is less than the extra enjoyment divided by the extra risk of dying (where risk is < 1.0).
It’s perfectly normal
Risk taking is normal for humans, and most of the time we don’t actually do the math — we just make a snap judgement of the value of our lives and the effects of our choices based on instinct. This matters, though, because we (where “we” = American, Canadian, British, Australian, etc) are now electing governments that promise to spend more money to make us safer, and much of that money ends up going into blowing up central Asian villages, spying on our communications, and groping us at airports.
Valuing lives
Is it helping? If we’d spent the same amount of money building better flu clinics, fast intercity trains or even better-lit intersections, could we have saved more lives in our own countries? If we’d invested even one percent of that money into sewers, clean water or earthquake-resistant hospitals for the developing world, how many lives could we have saved there?
Putting a dollar value on a life isn’t a crass, corporate, conservative thing — it’s a way of deciding where to spend money most effectively. If I could save one life for every $2 million spent on road improvements, and one life for every $200 million spent on improved airport security, where should I spend that money?
Where are people dying?
Let’s end with fatality numbers for the U.S. in 2001, the worst year for terrorism on U.S. soil:
Influenza and pneumonia: 63,730
Traffic accidents: 42,196
Terrorist attacks: 2,973
If you’d had billions of dollars to spend to save lives nine years ago, where would you have spent it first? Where would you spend it now? That depends not only on the overall numbers, of course, but the amount you have to spend to save each life. I’m not sure we know that, but I suspect that it’s much higher for anti-terrorism efforts than for basic road or healthcare improvements.
Quoderat 
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.
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.
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.