In the 1970s, the Ford Motor Company introduced a new subcompact car called the Pinto. In response to several fatal accidents involving the Pinto, Ford prepared a seven-page company memorandum entitled “Fatalities Associated with Crash-Induced Fuel Leakage and Fires.”
In the memo, Ford estimated the cost of fuel system modifications to reduce fire risks in rollover events to be $11 per car across 12.5 million cars and light trucks (all manufacturers), for a total of $137 million. The design changes were estimated to save 180 burn deaths and 180 serious injuries per year, a benefit to society of $49.5 million. In coming up with the benefits, the value of human life was estimated to be approximately $200,000 per individual, a value arrived at by the National Highway Traffic Safety Administration.
As a result of this analysis, Ford felt justified in not making the modifications, since the costs exceeded the benefits.
Fast forward to COVID-19, and the same sort of cost-benefit discussions are taking place.
Earlier this week a Congressman stated, when asked about the U.S. response to the COVD-19 pandemic: “it is always the American government’s position to say, in the choice between the loss of our way of life as Americans and the loss of life, of American lives, we have to always choose the latter.”
He then went on to add: “There is no zero harm choice here. We are going to have look Americans in the eye and say ‘we are making the best decisions for the most Americans possible’ and the answer to that to get Americans back to work, to get Americans back to their businesses.”
This Congressman was essentially doing a cost-benefit analysis; comparing the cost to the American economy of being shut down with the benefit of saving lives.
The Congressman is not alone in thinking like this, and many people have started to debate the trade-offs between starting the economy too soon and risking lives versus keeping the economy shut down and saving lives.
There’s no doubt it’s a difficult question, and Science magazine had an informative article on the issue.
The modeling efforts of a group of economists at Northwestern University showed that even a yearlong lockdown makes economic sense, to allow time for a vaccine to be developed. The pause would shrink the economy by approximately 22%—a cost of $4.2 trillion. By comparison, the model shows that without containment measures, the economy would contract by about 7% over that year—but as many as 500,000 additional lives would be lost, which translates into a loss of roughly $6.1 trillion.
The price of human life in this study is the price that the U.S. Environmental Protection Agency used to gauge the costs and benefits of environmental regulations: $9.5 million per life.
Another economist at the University of California, Los Angeles, agrees that the economics point strongly toward strict measures.
However, the researchers do note that these models are only as good as the data they are using, and at this point, much of the data needed is still unknown.
So what should be done?
As these studies point out, it is not as simple as saying, “Save lives at all costs. Nothing is more important.”
But what if, and I know this is an extreme example, it cost $5 trillion to save one life.
Would that be worth it? I think many, if not most, people would probably say it’s not worth it; that $5 trillion could be better spent helping millions of people in terms of educating, feeding, and housing them.
But what if it only cost $5 to save a life? Most people would argue in favor of spending the $5 to save a life.
As I noted, it’s not an easy question to answer.
My only advice would be to make sure that the decision-makers are taking the advice of people skilled at doing such analyses, and that they have no bias one way or the other in terms of the outcome.