Human life is priceless. Is it true? On the one hand, attempts to determine the value of human life in dollars or rubles are immoral. On the other hand, the absence of such estimates leads to even greater moral problems.

How much should be paid to relatives of those killed in terrorist attacks or military actions? How much is it worth spending to reduce mortality in road accidents or fires? The idea that human life is priceless often turns into free life: relatives of the dead receive almost nothing, projects that could reduce mortality are considered too expensive. The state and society prefer to spend money on other important goals. But what is ultimately more important than our own lives?

How much is life worth?

How do you estimate the value of a human life? Vulgar economic analysis assumes that the value of a life is equal to the amount of "human capital" - how much added value a given person produces over their lifetime. Given that Russians produce $2,500 per capita per year, and the average length of working life is about 40 years, one can conclude that the value of the life of the average Russian is only about $100,000. It also follows directly from this theory that the life of one billionaire is worth as much as the lives of all the inhabitants of a small city combined.

However, the above approach is not only offensive to our moral values, but also superficial from the point of view of economic science. A person is not only what he produces. Maximizing his utility, each of us believes that we do not live to work, but work to live. Professional activity is only a small component of life, therefore the value of life should be much higher than "human capital".

$9 million for an American.

Another, theoretically and empirically more grounded methodology has been developed to assess how much we value our own lives. Over the past 20-30 years, economists in different countries have conducted dozens of studies attempting to assess the so-called "value of statistical life." This methodology is based on an analysis of real economic decisions, in which economic agents weigh the value of their lives. For example, how much more expensive safer cars are or how much higher the pay for working in a more dangerous place is evidence of how exactly participants in market transactions value their lives.

To determine the value of a statistical life, very good microeconomic data are needed, so it is not surprising that the overwhelming majority of studies relate to the United States. The results of studies of the American labor market give a relatively small spread of the cost of living - from $4 million to $9 million (in 2000 prices). Similar estimates are obtained when analyzing decisions on buying cars, installing fire safety equipment, buying real estate depending on the environmental situation. The reliability of these estimates is so high that the American government uses the methodology of assessing statistical life when making decisions on investments in the field of life safety, ecology, and health care.

Our price.

It is not yet possible to conduct similar studies for Russia. However, one can try to estimate the life of a Russian by extrapolating American data. Analysis shows that with an increase in income by X times, the value of life increases only by the square root of X. Thus, the value of a Russian's life is approximately 3.5 (the square root of the ratio of GDP per capita in Russia and America) times lower than the value of an American's life, i.e., it ranges from $1 million to $2.5 million. Consequently, the demands of the relatives of those killed in the Dubrovka theater center cannot be considered excessive, but the amount of insurance payments to relatives of servicemen participating in military operations is an order of magnitude lower than the fair amount.

Perhaps "Russia is not America" and the extrapolation of American data is not entirely valid, perhaps it is worth comparing the estimates obtained with studies on less developed countries? For obvious reasons, calculating the value of a statistical life for developing countries is very difficult. Reliable estimates have been obtained only for India: the lowest estimate of the cost of living of an Indian is $1 million. Since India is 4 times behind Russia in GDP per capita, the life of a Russian should be worth 2 (square root of 4) times more. Thus, extrapolation of Indian data gives an estimate of the life of a Russian at $2 million and above.

Why is Russia not America?

Every year, more than 30,000 people die in road accidents in Russia, while in Sweden - less than 600 people. At the same time, the number of cars in Sweden is only 3 times lower than in Russia. Reducing road accident mortality is not that expensive. For example, even in the UK, which has a very good road safety record (3,400 fatalities per year with more cars than in Russia), local government spending on speed bumps and safe pedestrian crossings allows for a reduction in the death rate, spending only about $150,000 for each life saved. In Russia, where even the most basic measures to improve road safety have not yet been taken, these costs are probably significantly lower.

The main thing, however, is not that the state values our lives extremely low, but that we ourselves do not value our lives. This is evidenced by the basic habits of Russian drivers: unwillingness to fasten their seat belts, driving while intoxicated, driving into the oncoming lane. The low value of one's own life is also reflected in disdain for others: the average Russian driver does not consider it his duty to give way to pedestrians and ambulances.

The list of evidence that we do not value our lives and the lives of our fellow citizens can be continued indefinitely: smoking, excessive alcohol consumption, disregard for fire safety rules. The low value of life by the average Russian is also evidenced by the size of bribes in free health care and in the market for exemption from military service.

Quality mark.

The value of human life is essentially the main indicator of socio-economic development, much more accurate than GDP per capita. Every day, Russians make decisions that highlight how cheap they perceive their lives. As in any other market, the throwaway price of a Russian citizen’s life means that its quality is unsatisfactory. To use the terminology of government programs and presidential addresses, one can say that Russia is still uncompetitive as a place for its citizens to live. It will remain so until we stop perceiving ourselves as second-class citizens.

The author is the Vice-Rector of the Russian School of Economics

MYTHS OF ECONOMY: How much is a person worth?