Regulation

Cost of Living

Risk, rights, and the price of a person

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Life, people are fond of saying, is priceless. The Environmental Protection Agency (EPA) came under heavy fire earlier this year when it demurred from that pleasing bromide, not only placing a dollar value on the average human life, but giving seniors over 70 a $1.4 million discount.

Following new guidelines issued by the Office of Management and Budget, the EPA performed a cost-benefit analysis of the proposed Clear Skies Program in which it pegged the life of those older than 70 at $2.3 million, while younger Americans could boast a $3.7 million price tag. But at public hearings, opposition to the new "senior death discount"—mainly, surprisingly enough, from seniors—was so overwhelming that by early May, then-EPA administrator Christie Whitman was making like the Tour de France on rewind. "EPA will not, I repeat, not, use age-adjusted analysis in decision making," Whitman announced at a Baltimore "listening session."

The age-sensitive methodology, critics had charged, were unfair to seniors, declaring, in effect, that the elderly were worth less than the rest of us. One leaflet circulating outside the Baltimore meeting read "Seniors are Worth 3/5 of a Person," invoking the Constitution's original compromise rule for counting slaves . In an editorial for the Baltimore Sun, former EPA administrator Carol Browner accused the agency of " zeroing out the lives of seniors," while Jo Reed of the American Association of Retired Persons called it "flat-out discriminatory."

But while groups like the Alliance for Retired Americans and the AARP led the public charge against age-discounting, they were urged on by environmental organizations such as the U.S. Public Interest Research Group, the National Resources Defense Council, the and the Center for Progressive Regulation. These groups recognized that the primary harms of pollution accrue to seniors, whose respiratory and immune systems are weaker, and that any analysis that discounted those effects would therefore be far less likely to favor heavier regulation.

So dismayed is CPR by the prospect that the costs of regulation might deter the promulgation of new and ever-more-stringent environmental rules that it opposes not just age-adjusting, but the very idea of cost-benefit analysis, which it seems to regard as a sort of conservative conspiracy. Since you can't put a price on life, any attempt to weigh the pros and cons of new regulation is strictly verboten.

Charges of age-discrimination, then, proved a useful way for those eager to see greater regulation to mobilize the politically powerful senior citizens lobbies. But is there any merit to those charges? Opponents of age-adjustment would have us believe that the EPA's methodology was no different from, say, placing a lower dollar value on the lives of African Americans. But there's a key distinction: With the possible exception of Michael Jackson, black children don't grow up to be white adults. Yet every senior was once a child. The young and the old aren't distinct classes of people, but the very same people at different stages of their lives. When the EPA counts the benefit to some young person of pollution reduction, it has already simultaneously included the benefit to the older person she'll become as a result.

This is important to keep in mind, because it draws attention to the fact that age-adjustment doesn't attempt to judge whose life is worth saving, but rather to measure how much life is saved. As legal scholar Cass Sunstein has noted, no policy ever really saves lives: Barring revolutionary advances in cryogenics and nanotech, we're all going to snuff it someday. Since what's really at issue is life extension, it makes little sense not to count the very different benefits, in terms of extra years of life, that the young and old get from environmental policy.

The young stand to lose from the abandonment of age-sensitive analysis. Imagine two competing regulatory proposals in the same sphere, and assume that it would be redundant to enact both simultaneously, or at least that the marginal benefit of enacting one after the other was in place would be quite low. Now imagine that one does more to reduce environmental risks that affect children, while the other mitigates risks more likely to affect seniors. Other things being equal, assume the more cost-effective one will pass. Those who take the AARP's position would argue that a principle of equal treatment favors the latter plan, should it be shown to save a few more lives. But the demand for "equality" is disingenuous: The membership of the AARP consists of those who know they've already been lucky enough to escape the risks faced by the young. Their lobbying for age neutrality is the public policy equivalent of demanding the right to determine wild-cards after you've already drawn your hand.

The EPA claimed that it hadn't merely bowed to political pressure. Instead, it pointed to a a study by researchers for Resources for the Future, which found that older Americans (unlike their Canadian counterparts) were willing to pay as much as the young to reduce small but life-threatening risks. This, opponents of age adjustment maintained, proved that the elderly placed as high a subjective value on their remaining years as everybody else, even if there were far fewer of those years.

It's not clear whether willingness to pay (WTP in risk-analysis jargon) is the most appropriate metric to use in making environmental policy. We assume, after all, that people have an equal right not be beaten in the streets, even if some would be willing to bribe an assailant more than others to stave off an attack. The crisp, neat language of rights is less well suited to the fuzzy problem of environmental risk. How many particles of smog in the air does it take to constitute a rights violation? How high a risk of illness? And once people do get ill, how do you know which of the thousands in a given city who develop respiratory ailments would have been healthy if not for some extra amount of pollution? Nevertheless, there's no obvious reason that the moral claim of someone subjected to environmental risk should vary with willingness or ability to pay more than does that of the assault victim.

But assume that willingness to pay is important. Even so, the study doesn't show what it purports to show. Every economic decision, after all, is constrained by opportunity costs. While the authors of the study controlled for income, they weren't able to take into account the otherwise quite different situations of adults and the young. A worker in his early twenties is more likely to be thinking about saving for retirement, buying property or a car, and perhaps starting a family and sending kids to college. One's willingness to spend money on one good—say, risk reduction—is highly dependent upon the range of other goods competing for the same dollars. If we suppose that seniors face fewer of those other costs, on average, than young counterparts with comparable incomes, then we should expect the senior to be willing to pay more for risk reduction on the margin if both value it equally. (True, seniors may face higher medical costs, but those are merely another form of the same good—health risk reduction.) Results showing no difference in willingness to pay, therefore, may indicate the precise opposite of what age-adjustment's opponents claim.

None of this, of course, made much difference to the EPA's decision. The agency may have opted to assign us all the same price tag, but when it comes to tallying up political clout, one senior lobby is worth a dozen cries of "for the children."

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