Unconvinced this is the way it works you know

The Elyan Sage tells us:

And although government cost-benefit analysis place very low value on children’s lives because of their limited economic contribution to society

And I have a strong feeling that’s not the way it works. Life valuations are worked out not by economic contribution. Rather, by the value that people, by their actions, seems to place on said lives. Given that to near all their children are by far the most valuable things in their lives the idea that this ends up with a low valuation of a child’s life seems absurd.

As it happens I think I can work out what he’s got wrong. The correct approach is to use VOLY – value of statistical life year. This would equate to Qualy in health care and would value children more highly than oldsters. Rightly.

The problem is that the background work to show quite how to do this has only just been done. The detailed surveys to give proper estimates have not been.

So, we end up using statistical value of a life. Which is a one life, one value, number. Which undervalues kiddies and over-so oldsters, given the just the one valuation.

But it’s still not based on economic contribution, it’s based upon willingness to pay to avoid that risk. So, he’s still hopelessly wrong.

9 thoughts on “Unconvinced this is the way it works you know”

  1. Look at the money we spend (I have no particular view on whether this is optimal use of NHS funds, or not) on keeping premature babies alive, when it would surely be much cheaper to treat the very early ones as a miscarriage. After all, if the mother decided she didn’t want to keep the foetus, the NHS would cheerfully arrange to cut it up and dispose of it for her.

  2. People are valued according to their political contribution, not economic. This is why the elderly get triple-locked pensions, while non-voting children get beaten up for their lunch money. (My solution: give parents an extra vote for each child.)

  3. He should know that this doesn’t make sense on the face of it.

    We don’t value old people highly because *they’ve already made a large economic contribution*. So if we valued how much a person could contribute, then they’d be worthless now because their contribution is spent.

    While children would be the most valuable because they’re in a position to be primed to maximize their future contributions.

    ie, we wouldn’t be paying government pensions, be encouraging grandpa to go visit the euthanasia clinic, while putting all that money towards training children.

  4. By contrast, the Chinese Communist Party performed just such a cost-benefit analysis during Mao’s Famine, when the sick and elderly were denied food sufficient to survive on the grounds that they weren’t contributing.

  5. Value is a personal judgement of what you like.

    For example, if I was asked whether my great-nephews should be vaccinated or I be deemed to have a greater risk of catching covid, I’d say ‘Definitely not.’

  6. As a retired person, isn’t my spending power making some kind of contribution? I spent most of my working life putting money away for retirement. This money I am now slowly putting back into the economy.

  7. Wouldn’t an economist price this like any instrument? Newborn has high time value, but also high uncertainty. Working age person has much less time value, but also much lower uncertainty benefit/cost in most cases (since earning potential is better known). Plug real-world data into options model to calibrate. So a given adult could have a higher/lower value than a given child if we’re looking at this by any measure economic, social, or otherwise.

    On average, a child will have… doesn’t matter – no one is average.

  8. Dear Mr Worstall

    According to a wildlife programme from some time ago, when food and water are scarce, elephants will drive away the very young and the very old, favouring the older young and most importantly the fertile females. The elephantine logic being that not much has been invested in the very young and the very old have little to contribute and little to lose in terms of life on Earth.

    If the elephants had an NHS, I guess they would do things differently, or may be the same, in order to save it.

    DP

  9. Stonyground
    December 7, 2021 at 8:42 am

    As a retired person, isn’t my spending power making some kind of contribution? I spent most of my working life putting money away for retirement. This money I am now slowly putting back into the economy.

    Absolutely. Which is why we’re confiscating your savings and sending you to a labor camp. See, the thing is – you’ve already made your contribution and now are slowly bleeding that off back into society. So why not just take it all now? For the greater good, of course.

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