This concept primarily related to the topic of life insurance. We’ve mentioned that we cannot place a value on human life. It is important to understand that though we cannot readily assess the value of a human life, we do put a price on it in different ways, some more direct than others. We will not begin to take a position in this debate, but we will illustrate a few examples for perspective.
In liability suits, a family that loses a retired grandparent will typically receive less in damages than a family that loses a high earning breadwinner. The court assesses a higher “value” on the life of this individual based on their future expected earnings.
Companies will typically perform a cost-benefit analysis on the cost of safety features, i.e. will the cost of fixing this problem be more or less expensive than the costs of not fixing it? The costs of fixing the problem are parts, labor, effect of recall on reputation, etc. Costs of not fixing the problem include expected lawsuits/damages resulting from death or injury. Some courts will use this same premise to base their decisions.
Although it may sound callous, we make similar decisions. We know that larger vehicles, i.e. SUVs, are safer and have a higher survivability than smaller, more fuel-efficient vehicles. We are willing to sacrifice the safety for the lower costs associated with these smaller vehicles. Motorcycle riders ride motorcycles because to them the associated benefits outweigh the costs.
Most every activity involves a risk of some sort. Whether we acknowledge it or not, we’re constantly utilizing the value we put on our own life to weigh the costs vs. benefits of our choices and actions.
