Dollars and Death

Administrative regulations and tort law both impose controls on activities that cause mortality risks, but they do so in puzzlingly different ways. Under a relatively new and still-controversial procedure, administrative regulations rely on a fixed value of a statistical life representing the hedonic loss from death. Under much older law, tort law in most states excludes hedonic loss from the calculation of damages, and instead focuses on loss of income, which regulatory policy ignores. Regulatory policy also disregards losses to dependents; tort law usually allows dependents to recover for loss of support. Regulatory policy generally treats the loss of the life of a child as equivalent to the loss of the life of an adult; tort law usually treats the loss of the life of a child as less valuable. Regulatory policy implicitly values foreigners as equal to Americans; tort law does not. We argue that both areas of law make serious mistakes in valuing life and that each should learn from the other. Regulatory policy properly focuses on hedonic loss from death, and tort law should adopt this approach. But regulatory policy should imitate tort law’s individualized approach to valuing the loss from death, including its inclusion of losses to dependents. If these changes were made, tort awards would be more uniform and predictable, and regulations would be less uniform and more stringent. In addition, average tort damages for wrongful death would be at least twice as high as they are today. With respect to dollar judgments for mortality risks, a pervasive issue is how to combine accuracy with administrability and predictability; both bodies of law could do far better on this score. How should the legal system assign dollar values to human lives? Consider a highly publicized example. On September 22, 2001, Congress enacted legislation to compensate the survivors of the attacks of eleven days earlier. Under the final regulations, survivors were permitted to claim amounts for both economic and non-economic losses. The economic losses were to be measured by calculating each victim’s expected lost wages from 5, 2004 * Kirkland and Ellis Professor of Law, University of Chicago Law School. ** Karl N. Llewellyn Distinguished Service Professor of Jurisprudence, University of Chicago, Law School and Department of Political Science. Thanks to Matthew Adler, Ward Farnsworth, Robert Hahn, Saul Levmore, Richard Posner, Adrian Vermeule, and W. Kip Viscusi for comments, and to Nikkie Eitmann, Josh Kluewer, Wayne Hsiung, Gavin Martinson, and Andres Sawicki for research assistance. Posner thanks the Russell Baker Scholars Fund for financial support. 1 Air Transportation Safety and System Stabilization Act, § 405(c)1-2, 49 U.S.C § 40401 (2001). 2 See http://www.usdoj.gov/victimcompensation/. For discussion, see Symposium, 53 DePaul L Rev 205 (2003). September 11, 2001 through the anticipated date of retirement, subject to several timate of household consumption or victim. Noneconomic losses were set at $250,000 per victim plus 100,000 per surviving spouse and ild. In all, 2,878 families, about 97 percent of those eligible, received compensation rom the fund, with amo a high of $7.1 million; e average award totaled about $2.1 million per family. Hence there was significant varia presu comm awar varia simu of ru are s bring ust generally accom 7 and to ndertake that analysis, agencies must turn human lives into monetary equivalents. For ple, the Environm a set of fact-specific awards adjustments, including a reduction by an es expenditure by the $ for each surviving ch f unts ranging from a low of $250,000 to th bility among awards. But the variability came amidst a serious effort to produce mptive floors and caps, with a “baseline” for single decedents of $300,000 and a itment to allow awards exceeding $3,000,000 only in unusual circumstances. These ds have been attacked on multiple grounds, including excessive and insufficient bility. The September 11 awards reflect a strong influence from tort law, which they ltaneously modify. But in American law, tort doctrines provide only one of two sets les for monetizing death. The other comes from administrative regulations, and there triking contrasts between the two bodies of law. One of our main goals here is to the two in contact with one another. Countless regulations now attempt to reduce statistical risks. Cost-benefit analysis pany these regulations, at least if their costs are high, m u exam ental Protection Agency values each life at a uniform number, most recently $6 million. Through tort law, courts provide 3 28 C.F.R. § 104.44 (2004). 4 See David W. Chen, After Weighing Value of Lives, 9/11 Fund Completes Its Task, The New York Times, June 16, 2004, at A1. 5 66 Fed Reg 66,274-75. 6 See Alina Tugend, Lives in the Balance, The National Journal Government Executive, September 2003, at 50; David W. Chen, Man Behind Sept. 11 Fund Describes Effort as a Success, With Reservations, The ee 68 Fed. Reg. 41434, 41488 (July 11, 2003); in its ggested a ). New York Times, January 1, 2004, at B3. 7 See Stephen Breyer et al., Administrative Law and Regulatory Policy 120-35 (5 ed. 2002). 8 A general overview can be found in Office of Management and Budget, Regulatory Analysis, Circular A4 (September 17, 2003), available at http://www.whitehouse.gov/omb/inforeg/regpol.html#rr 9 See 66 Fed. Reg. at 7012. In its July 2003 regulation governing food labeling of trans fatty acids, the Food and Drug Administration used a VSL of $6.5 million, s March 13, 2003 proposed rule on dietary ingredients and dietary supplements, the same agency su VSL of $5 million, see 68 Fed. Reg. 12158, 12229 (using this value to calculate the “value of a statistical life day”