At 6.9 million, that's still quite a bit more than the value assigned to life in medical cost/benefit analysis.  In medical CBA, you ususally look at $$$ per QALY, or quality-adjusted life year saved, and in practice, the annual cost of hemodialysis treatment for kidney failure is taken as a reasonable benchmark for the "value" of a QALY.  If a particular intervention costs significantly more per QALY than dialysis, it may be considered cost ineffective.  The last time I checked--several years ago now, so things have probably shifted a little--dialysis cost about $40,000  per patient per year.  Assuming that on average people live about 70 years (a good assumption, for while LIFE EXPECTANCY, i.e. how long a child born today can expect to live, is now 78, the average age at death in the US, a better measure of how long people already alive are surviving was less than 68) that works out to only $2.8 million.

I suppose, though, that you have to take into account that these are QUALITY ADJUSTED life years, and that life on dialysis is of diminished quality.  Personally, given the choice between renal failure with dialysis support and going to Federal prison, I'd choose prison.  

I'm a little surprised by how high that number is, actually.  My economics professor always said that the highest valuations of the average human life were in the $5 million range, and that most fell in the range of aeromonas's value, $1-3 million.  Calculating revealed preferences is very tricky, and the things that Khimm cites are considered to be inherently problematic for including in calculations. The class example is that if someone sticks a gun to your head and says how much is your life worth, you're going to say everything (or something along those lines). This isn't a practical value for human life, though. If we place an infinite value on human life, than we can justify insane policies on the grounds of saving life.  For instance, if we placed enough street lights on every road so that "it was never night in America" (to quote my prof), we would certainly reduce some traffic deaths.  But the cost of powering and putting up all those lights would be ridiculous (forget the fact that it'd be a pain in the butt to sleep). Instead of asking people directly, economists use the price we pay to avoid risk or the price we will agree to for taking on additional risks reveals the economic value we place on our own health, and thus our lives. Of course people get outraged about all kinds of things, but that's not the same as the moment when you've got to put your money where your mouth is.

Sweet, I had been holding out for a price cut!  I think I'll sit on a couple Americans and hope this year turns out to be a popular model with collectors

In all seriousness though I hope that figure is more a rule of thumb for how to treat cases that are far away from the magic number, and that anything within a few million of it or so generates enough controversy that the answer gets hashed out democratically, or at least through some kind of internal debate

lol, or we could junk the EPA and settle pollution suits through common law....

cthulhu - that's brilliant!  I guess it's a pity that Nixon didn't recognise that common law was doing such a bang up job when he proposed the EPA.  And of course individuals and small communities have all of the resources available to the government to investigate and prosecute suits right?

My eyes weren't quite working when I first read the title of this post; I saw "EPA To America: Your Life Is Worthless."  Sadly, my only thought was "well, yeah, sounds about right from them."

Its obviously true that different people value their own lives differently.  Say you have one city where everyone opts for safer expensive cars, and another where everyone chooses unsafe cheap cars.  The people in the first city obviously value their lives more.  Here is my question:  is it therefore ethical to say that a coal fired plant that emits mercury should not be built in the first city, but that its okay to build it in the second?

Suzy, your interpretation of VSL is quite misguided, sorry to say.

First, it's not the "statistical value of a life,"  It's the "value of a statistical life."  That's an absolutely crucial distinction.  Neither the EPA nor any environmental economist has tried to assign a value to a life.  Life is priceless!  What they (and we) do is to examine how people value small risks of death and then convert those numbers to what unfortunately looks like the value of a life.

You and I and everyone reading this blog make decisions about risks of death every single day.  For example, when you decide not to get an extra air bag in your new car, you're voluntarily accepting a small increased risk of death to save money.  Or when you buy more expensive peanut butter that contains no trans fats, you're spending money to lower your risk of death.  Or, when you choose a slightly riskier job for a slightly higher wage than your education and experience levels would have gotten you elsewhere, you're getting paid to endure a slightly greater chance of death.  Or when you buy a home in an neighborhood further away from a garbage incinerator, you're paying more for (among other things) a decreased risk of cancer.

These are the "consumer preferences" the EPA refers to.  They're not decisions made by the EPA but by you and me every day.

Economists take the amounts that people are willing to pay for risk and convert them into "value of a statistical life."  The formula is simple: VSL equals the amount you pay or get paid divided by the change in the risk of death.  That's where the $2-$9 million figures come from.

Remarkably, dozens of studies by dozens of respected academics (outside of the EPA!) have found that how much people are willing to pay for risk is incredibly stable.  The figures are not based on just two studies, as you imply.  Moreover, I know you think that the gap between $2 million and $8.8 million is large, but I completely disagree.  That people in different locations, in different jobs, of different ages, etc., report roughly the same figures is incredible to me.

Besides, most regulatory decisions do not depend upon whether the EPA uses $7 million or $8 million as the figure for VSL.  Sure, you cite a hypothetical example where the value of VSL matters, but it really is a hypothetical.  If such a case comes up, it will merit further scrutiny.  But, in my professional judgment, you shouldn't worry much about it.