Congress and the Belief That Human Life Is Priceless

Uwe E. Reinhardt is an economics professor at Princeton. He has some financial interests in the health care field.

The stern grilling administered recently by members of Congress to Mary Barra, the chief executive of General Motors took me back to March 2009, when I had the privilege of testifying at a hearing before the House Energy and Commerce Subcommittee on Health.

At that hearing, Representative Phil Gingrey, M.D. and Republican of Georgia, took me behind the woodshed over a remark I had made in a post on this blog. I had called the idea that human life is priceless both romantic and silly.

Representative Gingrey asked me:

Dr. Reinhardt, do you believe that we, as individuals, in America should have the ability to value our own lives, or is this something we should ask the government to do for us, i.e., ration that care when you get to be 90 years old and you need a hip replacement, do you just let them fall and break the hip and die of pneumonia? Or do they get the opportunity, if they value that, to get that hip replaced?

I responded that the issue is not the monetary value we put on our own lives with our own money, but rather that those who preside over private and public health insurance funds, Congress included, at some point have to ask themselves at what price they can afford to buy additional life years for people insured with those collectively financed funds, which are, after all, finite.

Mr. Gingrey’s riposte was that I spoke “like a German philosopher of yesterday.” I deemed that a cheap shot.

Indeed, as a professor of economics I would like to assign Representative Gingrey and his like-minded colleagues on the Hill to watch an instructive video clip of an exchange on the value of human life between the late Nobel Laureate Milton Friedman and a college student.

In that exchange the student objected to a decision by Ford Motor, based on a formal benefit-cost analysis, not to spend $11 a car on changing a design that had placed the gas tank in the subcompact Pinto, built during the 1970s, in a way that increased the likelihood of gas-tank explosions. (For details on that case, see this paper).

Mr. Friedman contended that the student’s complaint merely was over the low value - $200,000 per life lost - that the company had placed on avoiding fatalities and serious burn injuries from the safety hazard - not over the principle that the value of human life has a finite upper limit.

The student actually seemed to agree to that principle, but he recoiled at the idea - alas, not very articulately- that some unknown person within Ford could blithely assume on behalf of all Pinto buyers that the value of avoiding a horrible death or injury from a burning Pinto was as low as the company had assumed in its formal risk analysis.

The student’s intuition seems to have been that most of these owners would have been willing to pay the extra $11 for the fix to the gas-tank problem, an intuition many readers may share. The practical challenge is how one would retrieve such information from current and prospective owners of a car. For that reason, benefit-cost analysts use an assumed value of life, as best they can infer it from the relevant research literature. From what I know of that literature, $200,000 per life actually is low.

The Pinto case has a strong resemblance to the current uproar over General Motors’ handling of a faulty ignition key in certain models built in the past decade.

In harshly querying Ms. Marra, Senator Barbara Boxer, Democrat of California, referred to the now famous memorandum “Value Analysis of Auto Fuel Fed Fire Related Fatalities” written by Edward Ivey, then a G.M. engineer, in 1973, in which he set forth an explicit benefit-cost analysis on a safety issue in certain G.M. cars in that era.

In that memorandum the value of a fatality (i.e., a human life lost) as a result of a fuel-fed fire hazard in the cars was put at $200,000, although Mr. Ivey hastens to caution readers, “It is really impossible to put a value on human life.” The Ivey memo subsequently featured in a law suit, settled in 1999, that ultimately cost G.M. $1.2 billion.

In their public appearances, on the campaign trail or at hearings, members of Congress may find it useful to pretend that they deem human life priceless. It can explain, for example, why Congress refuses to allow considerations of costs - what is called “cost-effectiveness analysis” â€" to be pursued by the federally funded Patient Centered Outcomes Research Institute that was authorized by Congress in 2010.

But as a legislative body, Congress routinely, albeit implicitly, puts finite prices on human lives in the trade-offs members make during budget votes. They may forbid cost-effectiveness analysis for coverage decisions under Medicare, but they implicitly price out human life as finite at the margins of their budget allocations - for example, in budget cuts on health programs for the poor.

Congress also implicitly puts prices on human life when it foists upon the Pentagon expensive weapons systems of dubious effectiveness that please cash-carrying lobbyists, retired generals now fronting for military contractors and constituents in districts where the weapons systems are manufactured.

In giving in to those entreaties, however, Congress may leave the Pentagon to send America’s forces into battle without adequate body armor or properly armored vehicles and even without sufficient troops to guard ammunition dumps left behind by the defeated enemy - literally as free weapons supermarkets for insurgents. All of this happened in Iraq.

I recall sitting at dinner with a group officers of the United States Marine Corps in 2004, about to return with their platoons to Iraq, there to protect truck convoys. The young officers were wondering how they might affix sandbags to the doors of their platoons’ Humvees to stop shrapnel from roadside improvised explosive devices tearing through the flimsy doors of those vehicles.

As the father of one of those officers, I was not well pleased during those Congressional hearings in 2009 to be condescendingly lectured by a member of Congress on the value of human life and to have my view on that matter, which is shared by literally every American economist, written off as that of a “German philosopher of yesterday” â€" most probably meant as an allusion to Nazi ideology.

Mr. Gingrey and his colleagues on the Hill would be well advised to take a look at that above-cited exchange between that student and Mr. Friedman. Upon serious reflection, they might agree with Mr. Friedman.

In a future post, I shall describe how economists try to infer the value Americans implicitly put on human life in their daily decisions and what values have been found in empirical research.