Saturday, 26 December 2015

The price of human life

A debate is currently taking place in New Zealand about whether the drug Keytruda should be funded by the national drug agency Pharmac. It is reported that Keytruda is apparently a successful treatment in about one third of all cases of melanoma.  I have been unable to find the origin of this figure but few seem to doubt that the drug has significant efficacy and some other countries have made it available at a highly subsidised cost to patients. Pharmac itself decided recently that it was too costly to fund here but this decision may possibly be reversed by the NZ government.

Of course there is much more to the funding question than economics. The issue is partly statistical and it may well be that the "one third" figure is not particularly robust. There are also more human issues such as compassion and equity. However it is undeniable that economics has to play the dominant part in the debate and this leads to the question I want to ruminate about: what is the price of a human life?

Let me be clear. I am not asking a universal question. My question is directed to particular societies and I am sure the answer will not always be the same. Perhaps that is already an indicator that world-wide we are very far from being able to treat all human beings as equal but I am going to have to put that into the "too hard" box for the present. So let us admit that citizens of New Zealand are treated much better than, say, citizens of Syria or Mexico.

Within New Zealand (or pick your own country) the political parties would surely say that they stood for equal treatment of all their citizens. And therefore if a price is put on a human life this price should be the same for all citizens. If you don't agree then read no further and don't stand for political office! Well, perhaps that was a little unfair: after all you could argue that in a particular domain the common price of a life should be one amount but the price in another domain should be another amount. The trouble with that position is that one can partition domains into subdomains as much as one pleases, pricing every subdomain differently - and the consequences for the supposed equality of the citizenry soon vanishes in a puff of smoke. So bear with me and let's look at the ramifications of setting a fixed price for everyones life across every domain of the country.

If there was such a price many national funding decisions would become easier. Take road safety measures as a first example. Should we increase police monitoring of busy highways in Wellington? Well, how many lives would it save? And that tells us how much we should spend. Or should we install fencing at some of the trickier stretches of the Great Walks? Again: how many lives would it save gives us the answer. Such calculations would enable us to say which of many competing priorities in different domains should be funded and to what level.

So why don't we have an agreed price for a human life? I think part of the answer is that we can't help confusing "price" with "value". OK - let's admit that we can't put a numerical value on a human life; I'm happy to concede any descriptive word about its value (even "infinite) but still wish to distinguish between price and value. Having made that concession we can move forward and think about the price of a life purely in economic terms. A bigger reason for our hesitation to fix a price is that the way in which we would do it is very murky. Yet surely we could at least begin so long as we recognise an important caveat.

We want to have a price that we shall use for determining policy in general. So our price is an average price (averaged over all residents of the country). It is not to be used as a summary of how much a particular individual is worth. But an average should surely be easier to come by (do I show naivete!?): it will a ratio in which the denominator is the population size and the numerator is .....  Well, what? The Gross Domestic Product would be one possible numerator. Here perhaps is where the debate will be had and I would be interested in what readers thought would be most appropriate.

To sum up: having an agreed national average price of a human life would enable us to make economic decisions on how much to spend on certain social goals, and it would enable us to prioritise social goals.  It would also torpedo arguments of the type "Country X does this, therefore so should we". To do this we have to recognise that the price would only be used for societal decisions not individual decisions and we have to be very clear of the difference between "price" and "value"; I am certainly not proposing that we estimate the worth of people - communities or individuals - by a dollar amount.