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Life - hard to know what price
is right
By Bill Torpy
Article re-printed from The Atlanta
Journal-Constitution 03/05/2004
How much are we worth? That delicate and esoteric
question permeates the tort reform debate in the Legislature.
Broken down to basic chemical elements, a human body
is worth maybe $5. But isolated into fluids, DNA and
tissues, our bodies could theoretically fetch $45
million in the medical and scientific fields, according
to an analysis by Wired Magazine. The 1,000 grams
of bone marrow — if harvested and sold at the
maximum price of $23,000 per gram — could be
worth $23 million alone.
Doctors and insurance companies argue that juries
are tagging them with unreasonable verdicts and want
to cap "noneconomic" damages — for
a victim's pain and suffering — at $250,000.
The problem is, life has no "replacement cost,"
no book value.
For example, should a person's earning power be the
overwhelming criterion in determining his worth? Some
argue a "smell the roses" variable must
be in the equation. Lawyers call it "love, care,
comfort and society." It tries to measure a person's
role in the family and community, their social footprint.
"Is a person who makes lots of money and who
is unhappy worth as much as someone who doesn't make
that money but enjoys life?" asked Atlanta personal-injury
lawyer Tommy Malone.
After an eight-hour shift at work, a person has 16
hours each day to pursue and enjoy life — time
that should not be discounted, says Malone. "How
much is a sunrise worth?" he asked.
The median award to a plaintiff who wins a wrongful
death case is about $900,000, according to Jury Verdicts
Research, a Horsham, Pa., firm that has analyzed 200,000
personal-injury jury verdicts. But a life's value
has a wide range, as shown by the Victims Compensation
Fund, the U.S.-funded commission to compensate Sept.
11 victims and stave off lawsuits. The fund's compensation
grid starts at $250,000 and maxes out at about $7
million; the average payout has been about $1.8 million.
The fund's Web site describes actual cases: The survivors
of a 36-year-old project manager with one dependent
and a $221,000 salary received $3.5 million after
$940,000 in other benefits and insurance were deducted.
And survivors of a married business official, 38,
with a $65,000 salary received $985,000, after $588,000
in "collateral offsets."
In wrongful death cases, juries consider the value
of the life that was lost; in personal-injury cases,
they also consider the quality of the life that remains.
A Fulton County jury last week hit Ford Motor Co.
with a $47 million verdict for a girl paralyzed in
an accident involving a Lincoln luxury sedan.
The jury awarded the 9-year-old $33 million for her
pain, expenses and permanently altered life, plus
$14 million to punish Ford for its "conscious
indifference to the consequences" of not addressing
safety concerns with the 2000 Lincoln LS.
Such verdicts are often an emotional response rather
than a realistic one, argues Tom Gose, president of
MAG Mutual, which insures most of Georgia's doctors.
He says jurors' sense of sympathy can tack zeroes
onto a verdict.
"That emotion, while normal, has gotten to the
point of unaffordable," Gose said. "No one
is worth $47 million, because the system can't afford
it. It's all about balance."
He and others say huge malpractice verdicts are chasing
doctors out of business, which ultimately hurts more
people. And damage awards tend to be larger when a
plaintiff survives some terrible injury or ordeal.
"Juries award more for the living than the dead,"
said Robert Johnson, a forensic economist who has
testified in numerous personal-injury cases for both
defendants and plaintiffs. The manner of injury or
death also counts, he said. "A burn victim gets
more than an amputee. The idea is that [the amputation]
only occurred once."
People killed by Uncle Sam are also valued differently:
When a warplane accidentally bombed a wedding party
in Afghanistan, families of the 48 dead were paid
$200 each, according to an ABC News report. In 1998,
a Marine jet clipped a gondola's cable in the Italian
Alps, sending 20 skiers to their deaths. Their families
each received $2 million. And families of the 290
victims of the Iranian airliner shot down in 1988
by a U.S. warship got $300,000 for wage-earning victims
and $150,000 for non-wage-earners.
Conversely, the family of a GI killed in Iraq collects
$250,000, tops, from the Service Group Life Insurance
policy.
And while servicemen max out at $250,000, the government
has set up a payment grid for workers hurt on the
job. Georgia Worker's Comp tables list an arm or leg
maxing out at $95,625, an eye at $63,750 and a ring
finger $12,750.
Looking at the future
So far, we have discussed "Retrospective"
payments, which means: You're dead, how can we compensate
your survivors for your loss?
There are also "Prospective" estimates of
a life, a calculus used by government and business
to measure the cost of a life that may be lost in
the future. Federal agencies apply this cost-benefit
analysis to such decisions as how much pollution an
industry can release or how many lives will be saved
by a road improvement.
Currently, the Department of Transportation values
lives at about $3 million when making road improvements,
says Kip Viscusi, a Harvard economist who pioneered
such calculations for the federal government. The
Washington Post tabbed him "the Reagan administration's
expert on the value of life."
Viscusi's calculations value a life at about $7 million.
The formula, which is controversial and arcane —
and in use by the government — is based on "wage-risk"
surveys. Those formulas try to measure the amount
of extra pay a theoretical average worker would demand
to perform a more dangerous job — one with an
annual chance of death of 1 in 10,000. For that calculation,
$700 a year — a figure gleaned from surveys
and studies — is multiplied by 10,000 to come
up with the $7 million total.
In 1996, Viscusi analyzed various federal regulations.
In his results, he included a chart estimating the
Environmental Protection Agency regulations on benzene
emissions cost nearly $3 million in 1984 dollars for
each life saved. Occupational Safety and Health Administration
grain dust rules cost $5.3 million for each life saved.
The Superfund program cost $3.2 billion per life saved,
making it one of government's least cost-effective
efforts.
Not set in stone
Frank Ackerman, an economics professor
at Tufts University, takes exception with such analysis.
The numbers on both sides of the cost-benefit equation
are subjective and can be manipulated, he says; for
instance, who knows exactly who died or was sickened
by a plant releasing chemicals? (DOT projections,
by contrast, are somewhat more concrete — bodies
per mile of road can be measured.)
In his book, "Priceless: On Knowing the
Price of Everything and the Value of Nothing,"
co-authored by Georgetown University law professor
Lisa Heinzerling, Ackerman says, "In real life,
almost no one has ever thought this way about taking
a job. ($700 added pay times a 1-in-10,000 risk of
death) But in economic theory, ordinary people are
endlessly and effortlessly engaged in complex decisions."
The book says the EPA under the Bush administration
reduced the value of a theoretical life in some analyses
— from $6.1 million to $3.7 million —
to make it easier on industry because it will take
smaller antipollution investments to save the same
number of statistical lives.
Companies used to perform such analysis but have pulled
back because they anger juries.
The classic case is the Ford Pinto, the 1970s subcompact
that tended to explode when struck in the rear by
another vehicle. Ford calculated that adding an $11
part to each vehicle could save 180 lives and numerous
injuries, assuming 2,100 accidents would occur. The
cost of fixing 12.5 million vehicles would have been
$137 million. The projected cost of deaths and injuries
- using the government figure at the time of $200,000
for a death and $67,000 for an injury - was $49.5
million.
The arithmetic suggested Ford would save about $87
million by not adding the $11 part; it would be cheaper
simply to pay off the victims. In the end, however,
Ford paid out $1.2 billion to victims.
"It looks like a crass tradeoff; we don't want
companies to think about these things," said
Viscusi. "But companies shouldn't be penalized
for doing these things."
Such calculations are vital in determining the best
use of society's limited resources and wealth, he
said.
The cost of saving a statistical life becomes counter-productive
when it hits the $20 million to $50 million range,
he says. "That's 50 million you're taking out
of consumers' pockets they could use for health care,"
says Viscusi.
Johnson, the economist, says those figures fall into
some sort of bizarro universe.
"Nobody in any of these studies says, 'Three
million for my life? I'll take it!', " he said.
"It's somebody else's life."
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