Should public policy save lives or more years of life?

Published on 21 February 2024
Finances publiques François Leveque
François Levêque, Professor at CERNA – Mines Paris – PSL, and Emile Quinet, École des Ponts ParisTech (ENPC), analyse the management of public spending to reduce mortality.

Should public spending to reduce mortality take age into account? For example, in the wake of an intense heat wave or violent epidemic, should the deaths of children, adults or the elderly be avoided in the first instance? In other words, for a given budget, should the aim be to save as many lives as possible, without distinguishing between people of different ages, or to save as many years of life as possible by giving priority to people who have a longer life expectancy because they are younger?
This question is hotly debated among economists. It takes the form of a choice between using the value of a uniform human life or the value of a year of human life, two concepts that can be set against public spending to assess its relevance and compare it. We recommend counting according to the years of life gained – and therefore according to age – when the hazards primarily affect the elderly. As in the case of heatwaves or Covid-19. In France, 86% of deaths during the 2003 heatwave and 83% of deaths during the SARS-CoV-2 epidemic affected people aged 70 and over.

What is the “statistical value of a life”?

Before arguing for this choice, we need to return to some basic concepts and principles of economic calculation. Applied economics needs figures in order to better allocate public spending to save human lives. To decide what action to take against road accidents or smoking, we need to compare their costs with the benefits in terms of human lives saved. And since the cost is expressed in euros, the benefits must also be expressed in euros.

This leads to the accepted concept of the “statistical value of a life”. Mind you, this is not the price of a life: since the end of slavery, there has been no market, and therefore no price, for human lives. Nor is it about the value of life, and even less about the value of life. It is a statistical value for two reasons. Firstly, it reflects the reduction in an individual risk of death resulting from a public policy. As such, it should not be confused with the value of human lives. Secondly, it concerns an unidentified individual.

Let us imagine a society of 100,000 individuals who are considering financing a public safety project. Let’s assume that each person is prepared to pay an average of 100 euros to reduce the probability of death from 3/100,000 to 1/100,000, i.e. 2 fewer deaths for the society as a whole. This gives a “statistical value of a life” of 5 million euros (100,000×100/2). Or, in a much better but longer formulation, “the cost of avoiding an additional anonymous death” of 5 million euros.

This statistical approach is a tool to help public decision-makers reduce the risk of death, and to do so as intelligently as possible. The State cannot devote its budget exclusively to saving human lives. It is important to consider whether it is worth spending a little more to prevent cardiovascular disease than to treat it, to combat alcohol and heroin, or to reduce road and air accidents. The challenge is to save as many lives as possible with a given budget.

Of course, death cannot be avoided forever. Intuitively, the value of an individual delaying death depends on the time saved – one year is better than one week – and on age – one year more at 40 is better than one year more at 80. Hence the second concept, the “statistical value of a year of life”, to designate the loss of a year of life.

An average of three million euros for an extra life saved

One of the methods widely used to estimate these values is to ask individuals themselves what they are prepared to pay for a reduction in risk. The amounts declared are then aggregated and averages calculated.

The most comprehensive survey of studies on the value of a human life saved is that produced by the Organisation for Economic Co-operation and Development (OECD) in 2012. It covers some 1,000 academic studies on the subject; it classifies them according to the type of risk taken into account (transport, health, environment), the type of survey (questionnaire administered face-to-face, by telephone, by email exchanges, etc.), the method (contingent analysis of the data, etc.) and the type of study (risk assessment, etc.). ), and by method (contingent analysis, in which respondents are asked how much money they are prepared to pay to reduce their risk of death by X over the next year; or conjoint analysis, in which respondents are asked to choose between two situations proposed to them, which differ in terms of risk and the amount of money they would have to pay). This survey resulted in a statistical average value of a life of 3,000,000 euros for the OECD as a whole.

Alongside these numerous estimates of the statistical value of a life, those relating to the year of life are rarer. One example is a study of over a thousand people surveyed in 2010 in several European countries, which came up with a figure of €40,000 for the value of a year of life. The question concerned their willingness to pay for a gain in life expectancy of 3 months or 6 months according to a more or less ambitious pollution reduction scenario.

Behind this type of result lie protocols that are as precise as they are complex (in particular to explain the difficult concepts of risk and probability) and sets of questions that are rigorously tested and carefully formulated. You also need to be aware that the values obtained in the responses are dispersed among the individuals subjected to the same survey.

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Higher for wealthier individuals, for example. The same applies to the average values obtained from one survey to another, depending on the protocols chosen and the questions asked. They are higher for a health programme than for a road development project. To take account of theoretical advances and the proliferation of applied studies, the values officially recommended or adopted by government departments change over time.

In France, for example, the statistical value of a life has gone from the first reference in 1970 to the most recent in 2013, from just under 300,000 euros today to just over three million today. One of the authors of this article led the discussions and work that led to the choice of this figure in 2013, as well as the figure of 160,000 euros for the statistical value of the year of life. The report that justifies these values states that it is useful to use the lost year of life to complete analyses and calculations when “the question of age arises”. However, it does not recommend using this value alone in such cases. It is now time to decide whether or not this is the case.

Fair innings

Why are we proposing to opt for a value that takes age into account?

First, let’s look at the consequences of such a choice. As older people have fewer years to live, the change from accounting in terms of the value of a life lost to accounting in terms of years of life lost means that proportionately fewer mortality risk reduction projects are selected in their favour. For example, when choosing between a project that avoids deaths from heat waves and one that avoids deaths from road accidents and therefore benefits a population that is more balanced in age, the former will be more economically advantageous, all other things being equal.

The choice of one value or another is therefore a matter of intergenerational justice, either favouring the older generations or favouring the younger generations.

Favouring the latter and not the reverse is based on the idea that everyone has a similar length of life equal to the life expectancy of their age group. Anyone who died earlier would suffer an injustice that the community should prevent. This principle is defended by an English health economist, Alan Harold Williams. He drew his inspiration from the thoughts of a compatriot philosopher. In reference to England’s national sport, it is known as the Fair innings argument, the latter term referring to an innings in the game of cricket for the batsman’s team.

It posits that avoiding the deaths of people who have passed or are approaching old age is not acceptable if it can only be achieved by costing the lives of those who are far from it. Such a situation arises when society has set itself a constrained budget for spending on health and civil security. More broadly, the Fair innings argument ties in with the idea of legitimately reducing inequalities in life expectancy between individuals.

It should be noted that this principle is not without pictorial references. For example, in the popular expression “bonus years” to describe those years beyond life expectancy. Or even in the Bible, which specifies that “The days of our years are 70 years” and suggests that those who live longer have nothing to be proud of because they have nothing to do with it.

Inverted U curve

So what value should we choose for the cost of a year less of life avoided?

The first way is to determine it from the “statistical value of a life” by dividing it up. For a 40-year-old with a life expectancy of 78 years, the value of a slice of a year of life is equal to the “statistical value of a life” divided by 38 (i.e. 78 – 40). But to take account over time of the trade-off between consuming today or tomorrow, it is necessary to update the number of years of life in the denominator. This is the approach taken in the report cited above, which arrives at the figure of 160,000 euros using a discount rate of 3%.

This approach is very convenient because there is a much larger body of work that directly determines the statistical value of “a life” rather than “a year of life”. One of its main weaknesses is that the result is very sensitive to the discount rate, even though it has not been observed. It is the result of a choice made by experts, and this choice is therefore somewhat arbitrary.

A second method is still based on the “statistical value of a life” but considers that it is not independent of age. A large number of surveys and models suggest that this is indeed the case. They show that the value of a life as a function of age assumes the approximate shape of an inverted U. It increases rapidly in the early years of life. It increases rapidly in the early years, stabilises in adulthood and declines more or less rapidly in old age. However, the precise shape of the inverted U and therefore the value of a year of life according to age, which is no longer constant in contrast to the first method, differs greatly from one study to another.

A third method consists of asking individuals how their statements about the value of additional years of life vary with their age. However, there are very few studies in France or elsewhere that use this method.

Pending the development of this type of direct survey or other advances in research, we suggest using one of the other two methods. However, we recommend that the presentation of results for evaluating a given public expenditure should be accompanied by a sensitivity study to the discount rate and inverted U curves chosen.

Let us conclude with two observations that tie in with current debates and thinking on the end of life. Firstly, the weighting of lives saved by the number of years of life gained must naturally take into account the quality of life during those years gained. This is another well-developed area of economic research that extends those mentioned here. It is particularly well developed in the health sector. Secondly, our proposal needs to be discussed and debated beyond the experts in the field and the administration. This is not a technocratic choice. Citizens must be involved and deliberate.

François Lévêque, Professor of Economics, Mines Paris and Emile Quinet, Emeritus Professor, Ecole des Ponts-ParisTech and Associate Member of the Paris School of Economics, Ecole des Ponts ParisTech (ENPC)

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