What is the Monetary Value of Life?: The Cost-Benefit Analysis Conundrum in Coronavirus Lockdowns

In recent months as governments have responded to COVID-19 in different ways, and especially as the toll of global lockdown on the world economy and on India is slowly being felt, some questions arise. Millions have lost their jobs, millions others have been reduced to poverty, unable to meet even their basic necessities, raising the obvious question: at what point is lockdown and strict public safety measures counterproductive to minimizing human suffering? 

Simply put, how many people need to lose their jobs, their businesses, their life savings to save one life? A hundred livelihoods? A thousand? How many people need to be put out of work?

Clearly lives hang in the balance on both sides of this moral equation. If the economy is reopened recklessly, it is clear that millions of lives will be lost. People have dismissed this livelihood vs life case to be simplistic however, as it is impossible to save one’s livelihood if they are dead, but others have pointed out that dismissing this argument in this manner is also simplistic, as it is unfeasible to be in perpetual lockdown until an effective vaccine is developed which might take a minimum of 6 months or even longer (with further incalculable economic costs).

So as a general rule, how should governments and public policy makers evaluate economic costs against human lives?

The Case of the Ford Pinto

In the 1970s the automobile manufacturer Ford, developed a new line of cars called the Ford Pinto which was small, cheap, and produced for the mass market segment. Leading up to launch, however, they discovered a significant flaw in the car’s design. Crash testing and analysis by company engineers led to the discovery that the gas tank of the car was vulnerable to explosion in a rear end collision. If this flaw went unfixed, they believed there could be cases of deaths and injuries, due to serious burns and explosions.

Solutions were quickly found to repair the defects and an inexpensive fix was settled on, something in the range of $11 per car. But when the unit cost was spread out over the number of cars and light trucks which would be affected by the design change, at a cost of $11 per vehicle, the cost was calculated to be $137 million.

In order to make the decision whether or not to implement this solution, Ford did a cost-benefit analysis comparing the cost of the solution versus the benefit of saved lives. This raised the obvious question however, what price tag can you put on life to effectively compare cost and benefit? They estimated that if they were liable for every death and injury due to this flaw in their car design, they could settle lawsuits for $200,000, and $67,000 in each case respectively based on past civil actions in America. Additionally, Ford estimated according to its sales projections, there would be approximately 180 burn deaths and 180 serious burn injuries in the lifetime of these cars on the market. A quick calculation would yield that the benefit of saving lives and potential injuries was worth only around $50 million, clearly outweighed by the much more significant cost of fixing the problem in the first place, thus, Ford made the decision not to make any further tweaks to safety measures in this line of vehicles. 

Inevitably 117 lawsuits were filed against Ford, for wrongful death and product liability actions, and the automaker was willing to settle out of court for most of these cases. However when it came to light that Ford knowingly let the defect in their cars go unfixed, when an internal memo of this nature resurfaced, in the most important of these Ford Pinto cases, an American jury awarded $127.8 million in total damages to a plaintiff, punishing Ford’s recklessness and cold calculations.

Is Cost-Benefit Analysis Legitimate When Dealing with Human Life?

Clearly, in the case of the Ford Pinto, Ford exploited the legal precedent of assigning $200,000 as the value of human life based on judgments made on cases similar to itself in the past. But non-cynically, is it really possible to assign monetary amounts to life? And if it isn’t, what are the implications of that?

Unquestionably we must assign monetary costs to loss of life in order for a company to compensate a worker’s family due to work related-accidents, a government to compensate a citizen’s family due to terrorism and wrongful death, and yes for Ford to compensate a consumer due to a flaw in their product. In fact, we assign these costs all the time.

We accept that 151,000 people die in road accidents per year in India, without massively lowering speed limits and abolishing cars. We accept that over 29,000 people drown in swimming pools per year in India, without deciding that our enjoyment of pools is less important than the potential human cost to drowning deaths. We accept that more Indians die of treatable disease rather than access to healthcare. 

But we are unwilling to put a price on life as a matter of fact, because it is too precise, too degrading, ignorant of the infinite moral worth of life. So. We’re still left with the overriding question; how do you measure the cost of lockdown versus the benefit of lives saved? If lockdown is public policy, it is the responsibility of the government to justify its need and in order to do so they need to be able to weigh costs against benefits. But maybe there’s a way out of this conundrum? What if we recognised the value of life in moral terms to be infinite, but at the same time recognised people’s freedom to leave their homes, work, and keep their livelihoods? What if we recognised both the right of the vulnerable not to die, and helped them isolate themselves from viral transmission, as well as the right of the healthy to feed their families without dependence on a public dole?

As with most things, the way out of this moral conundrum is not to compare the suffering of people, but to emphasise their freedom and trust that individuals can make the best decisions for themselves. Was lockdown necessary to flatten the curve, and protect the public at large for a time? Yes. But with vaccines on the horizon only by the end of this year and perhaps even further in the future, the solution is no longer to force people to stay in their homes or to make them vulnerable to death, but to trust them to be cautious and safe without robbing them of the right to live life the way they choose. 

We must continue to have responsible government policy in order to stop community spread, but at the same time adjust to this new reality where there is no perfect solution.