Thursday, May 1, 2014

Value of Life


General Motors is in hot water because of faulty ignition switches they installed in some of their cars. This switch had a problem that caused cars to lose electrical system while being driven. As a result the driver of the car would not have power steering or power brakes operating and that could lead to a collision. Worse, such electric malfunction would also make the airbags stop working, increasing the likelihood of death in such collisions.

A key issue is that GM knew about this problem for a long time and did nothing about it. Meanwhile at least 13 people have died because of this fault. Worse, the solution would have cost as little as two dollars a car. This has infuriated people at large, because it indicates what a low value GM places on lives of people.

GM may argue that we have accepted many other similar actions that they, and other carmakers, take, without any protest. For example, we know that a collision avoidance system, if made available on all vehicles, not just the expensive ones, may save lots of lives. Similarly, side airbags can do the same---save lives in case of a collision. Should the fact that GM does not have these systems installed in all their cars indicate that they put money above lives? If we have already allowed GM to get away with that, why do we make a fuss about the faulty ignition switch?

This is an interesting point. However, there are grounds to say that this is comparing apples and oranges. The faulty ignition switch causes accidents, the other example cited either prevent an accident or reduce its impact. That is not the same.

GM may then argue that we are upset because the cost of fix is so small. What if the fix required GM to spend two hundred dollars per car not two? Would we be less upset?

This is when things get interesting. Most likely we will say yes---we will be less upset if the cost of fix was not so insignificant. However, in doing so, are we putting a dollar value to human life?

So, for example, if the number of cars with the ignition switch problem is 100,000, at $2 a fix, the cost per year will be $200,000 and that would have saved, let’s say, two lives. Since GM decided not to fix the problem, they are placing the value of a human life to be less than $100 thousand. This is clearly upsetting to all of us. However, if the cost is hundred times more, the value of life goes up to $10 million, and we will be less upset if they did not fix the problem. If we extrapolate this reasoning, there may be some dollar figure at which we would find GM’s behavior acceptable.

So, despite rhetoric, we all agree that the value of human life is not infinite and there is a dollar value that we are comfortable with.

It reminds me of a conversation, George Bernard Shaw (I think) had with a woman:

GBS, “Will you sleep with me, if I give you $10 million?”
Woman, “Yes.”
“What if I give you $20?”
“What do you take me for---a whore?”
“Madam, we have established that fact, we are just haggling over the price.”

I know that in a serious subject like the value of a human life, such levity might not be appropriate, but you get my point. Of course, once we do accept that the human life has a dollar value, the question shifts to how much.

In the future if such a dollar value is placed, the process of making all kinds of decisions will get simplified.

For example, the medical establishment may decide that a life may not be worth saving if it costs more than certain amount. Thus, the guideline can be that the life of a 100-year-old person is not be worth extending by 100 days if it costs more than one million dollars.

Actually, such decisions are already being made, but with much trepidation and without any publicity. A recent NY Times article reported that “some of the most influential medical groups in the nation are recommending that doctors weight the costs, not just the effectiveness of the treatment, as they make decisions about patient care”. “Protecting patients from financial ruin if fundamental to the precept of ‘do no harm,’” the article mentions in describing the policy of cardiology societies.

Given the rising cost of medical care, I believe such policy is necessary.


However, if we do so, what right will we have to hold GM accountable for any tradeoff they make related to cost of fix vs. number of likely fatalities?

3 comments:

  1. In legal liability terms, the value of a life is present value of future earnings foregone. So if you're liable for damages resulting from the death of an investment banker, it will cost you a lot more than killing a plumber.

    An interesting corollary here is that if you injure someone, your liability is likely the present value of current and future cost of care. A wise lawyer once told me that if you kill a child, it will likely cost you nothing since the parents are, in financial terms, better off avoiding the cost of bringing up the child. But if you injure the child such that, say, he is in a permanent coma, you will be liable for the cost of caring for him for the rest of his life. He smiled and said, if you have a choice, kill rather than maim the child.

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  2. Decisions about the relative values of a human life are regularly and routinely made by Indian doctors, and they are also accepted in India as rather obvious. For example, if a patient shows up unconscious due to an accident in the middle of the night in a hospital emergency room, the doctor and medical staff on duty will decide if that person is capable of paying his bill and therefore worth going to work upon. This is callous, but for the small for-profit hospital it is only economics. Interestingly, the Indian government has similar notions of the value of life – if a passenger dies in an airplane crash (say Air India which is a government owned airline), the payout per passenger killed is many times higher than if a train accident happens and passengers are killed in a train accident. The Mangalore crash payout for the Air India flight victims was 75 lakhs versus say 1 lakh for a train crash victim). I think only the Western world, and particularly America carries this notion that everything should be done to ensure the survival of every single human life, and hence the cost of saving a human life can, and is expected to be staggering in America.

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