Books Economics - General

How much is your life worth?

How much should we value life? This is the question put forth in an interesting book by Howard Steven Friedman called Ultimate Price. The book reviews how economists, policymakers, philosophers and others place a monetary value on life. This could be a value courts place when making awards in lawsuits due to harm or death, the value policymakers place on regulations that would be costly to businesses but improve health, or the value that health technology assessment institutions use to determine whether to cover a particular drug or medical treatment.

The book notes some oddities of the court system. For instance, courts often tie rewards for injuries to income lost. What this means is that when a rich person is injured, they are entitled to a larger payment than a poor person because there is more income lost. In the case of life lost when the Twin Towers fell (for more detail, see What is Life Worth), the average payout for the wrongful death suit was $2 million; however, the minimum award was only $250,000 whereas the maximum award was over $7 million.

How is life valued in the case of health care treatments and policy?

One approach is to measure the value of a life year or the value of a statistical life.1-4  Approaches for measuring the value of a statistical life include human capital based approaches (e.g., a multiple of current wages), stated preference surveys (e.g. contingent valuation methods) and revealed preference empirical estimates.  Examples of revealed preference methods include wage based methods (i.e., the additional wage needed to compensate individuals for taking riskier jobs) and studies measuring individual willingness to pay (or willingness to accept) for goods or services that change their mortality risk.  Studies of this type have examined the value of life due to changes in car speed limits5 or air bag regulations.6  Reviews of empirical estimates of the value of a statistical life do exist and these values vary greatly across the methodologies.7-9

Other entities–like health technology assessment bodies–are also considered for valuing health gains that impact both mortality and morbidity.  While quality-adjusted life years (QALYs) are the most commonly used metric against which threshold are set, other metrics—such as disability adjusted life years (DALYs) 10,11—are used. For many years, the most common threshold in the US for the value of a QALYs was $50,000. 12   The field settled on this threshold not due to an abundance of empirical evidence, but as an arbitrary but convenient round number, after several prominent cost-effectiveness analyses referenced this threshold.13  Like the value of a statistical life year, empirical estimates of the value of a QALY vary greatly.  For instance, a review of evidence comparing human capital, contingent valuation, revealed preference/job risk and revealed preference/non-occupational safety found that the revealed preference method valued QALYs at 20 times that of the human capital method.14  Further, societal willingness to pay for QALY gains may vary by disease severity15,16 and patient age. 17,18

How do these valuations impact decision-making? A number of reviews have been done on cost-effectiveness thresholds across HTA agencies. 19-21  In the US, the Institute for Clinical and Economic Review includes thresholds of $50,000, $100,000 and $150,000 per QALY in their 2020 value framework.22  Other studies have examined the extent to which these thresholds are binding or whether other factors are taken into consideration in HTA decision-making.23,24 

In short, the book provides a concise review of some of the scientific literature on valuing life including some of the moral issues when must consider when making these judgments. The book is certainly worth a read for those looking to learn more on this interesting topic.


  1. Hammitt JK, Robinson LA. The income elasticity of the value per statistical life: transferring estimates between high and low income populations. Journal of Benefit-Cost Analysis. 2011;2(1):1-29.
  2. Hammitt JK. Extrapolating the value per statistical life between populations: Theoretical implications. Journal of Benefit-Cost Analysis. 2017;8(2):215-225.
  3. Aldy JE, Viscusi WK. Adjusting the value of a statistical life for age and cohort effects. The Review of Economics and Statistics. 2008;90(3):573-581.
  4. Kniesner TJ, Viscusi WK, Woock C, Ziliak JP. The value of a statistical life: Evidence from panel data. Review of Economics and Statistics. 2012;94(1):74-87.
  5. Ashenfelter O, Greenstone M. Using mandated speed limits to measure the value of a statistical life. Journal of political Economy. 2004;112(S1):S226-S267.
  6. Rohlfs C, Sullivan R, Kniesner T. New estimates of the value of a statistical life using air bag regulations as a quasi-experiment. American Economic Journal: Economic Policy. 2015;7(1):331-359.
  7. Viscusi WK. The role of publication selection bias in estimates of the value of a statistical life. American Journal of Health Economics. 2015;1(1):27-52.
  8. Hultkrantz L, Svensson M. The value of a statistical life in Sweden: A review of the empirical literature. Health policy. 2012;108(2-3):302-310.
  9. Viscusi WK, Aldy JE. The value of a statistical life: a critical review of market estimates throughout the world. Journal of risk and uncertainty. 2003;27(1):5-76.
  10. Donev D, Zaletel-Kragelj L, Bjegovic V, Burazeri G. Measuring the burden of disease: disability adjusted life year (DALY). Methods and tools in public health. 2010;30:715.
  11. Devleesschauwer B, Havelaar AH, De Noordhout CM, et al. Calculating disability-adjusted life years to quantify burden of disease. International journal of public health. 2014;59(3):565-569.
  12. Neumann PJ, Cohen JT, Weinstein MC. Updating cost-effectiveness—the curious resilience of the $50,000-per-QALY threshold. N Engl J Med. 2014;371(9):796-797.
  13. Grosse SD. Assessing cost-effectiveness in healthcare: history of the $50,000 per QALY threshold. Expert review of pharmacoeconomics & outcomes research. 2008;8(2):165-178.
  14. Hirth RA, Chernew ME, Miller E, Fendrick AM, Weissert WG. Willingness to pay for a quality-adjusted life year: in search of a standard. Medical decision making. 2000;20(3):332-342.
  15. Shiroiwa T, Igarashi A, Fukuda T, Ikeda S. WTP for a QALY and health states: More money for severer health states? Cost Effectiveness and Resource Allocation. 2013;11(1):22.
  16. Seabury SA, Goldman DP, Maclean JR, Penrod JR, Lakdawalla DN. Patients value metastatic cancer therapy more highly than is typically shown through traditional estimates. Health Affairs. 2012;31(4):691-699.
  17. Skedgel C. The prioritization preferences of pan-Canadian Oncology Drug Review members and the Canadian public: a stated-preferences comparison. Current Oncology. 2016;23(5):322.
  18. Johannesson M, Johansson P-O. Is the valuation of a QALY gained independent of age? Some empirical evidence. Journal of health economics. 1997;16(5):589-599.
  19. Schwarzer R, Rochau U, Saverno K, et al. Systematic overview of cost–effectiveness thresholds in ten countries across four continents. Journal of comparative effectiveness research. 2015;4(5):485-504.
  20. Santos AS, Guerra-Junior AA, Godman B, Morton A, Ruas CM. Cost-effectiveness thresholds: methods for setting and examples from around the world. Expert review of pharmacoeconomics & outcomes research. 2018;18(3):277-288.
  21. Nanavaty M, Kaura S, Mwamburi M, et al. The use of incremental cost-effectiveness ratio thresholds in health technology assessment decisions. J Clin Pathways. 2015;1(1):29-36.
  22. Institute for Clinical and Economic Review. 2020 Value Assessment Framework: Proposed Changes. 2019.
  23. Kolasa K, Wasiak R. Health technology assessment in Poland and Scotland: comparison of process and decisions. International journal of technology assessment in health care. 2012;28(1):70-76.
  24. Trenaman L, Pearson SD, Hoch JS. How Are Incremental Cost-Effectiveness, Contextual Considerations, and Other Benefits Viewed in Health Technology Assessment Recommendations in the United States? Value in Health. 2020.

Book: Friedman HS. Ultimate Price: The Value We Place on Life. University of California Press; 2020.

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