Dollars and Death

Dollars and Death EricA. Posnert & Cass R. Sunsteintt 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 those killed in the attacks of eleven days earlier.' Under the final regulations, survivors were permitted to claim amounts for both economic and noneconomic losses. The economic losses were to be measured by calculating each victim's expected lost wages from September 11, 2001, through the anticipated date of re- tirement, subject to several adjustments, including a reduction by an estimate of household consumption or expenditure by the victim. Noneconomic losses were set at $250,000 per victim plus $100,000 per surviving spouse and for each surviving child.3 In all, 2,878 families, about 97 percent of those eligible, received compensation from the fund, with amounts ranging from a low of $250,000 to a high of $7.1 million; the average award totaled about $2.1 million per family.4 Hence there was significant variability across awards. But the variability came amidst a serious effort to produce presumptive floors and caps, with a "baseline" for single decedents of $300,000 and a commitment to allow awards exceeding $3 million only t Kirkland and Ellis Professor of Law, The University of Chicago. Thanks to the Russell Baker Scholars Fund for financial support. tt Karl N. Llewellyn Distinguished Service Professor of Jurisprudence, Law School and Department of Political Science, The University of Chicago. Thanks to the Herbert Fried Fund for financial assistance. The authors thank Matthew Adler, Ward Farnsworth, Robert Hahn, Saul Levmore, Richard Posner, Adrian Vermeule, and W. Kip Viscusi for comments, and Nikkie Eitmann, Josh Kluewer, Wayne Hsiung, Gavin Martinson, and Andres Sawicki for research assistance. 1 Air Transportation Safety and System Stabilization Act, § 405(c)(l)-(2), Pub L No 10742,115 Stat 230 (2001), codified at 49 USC § 40101 (2000 & Supp 2003). 2 U.S. Department of Justice, September 1lth Victim Compensation Fund of 2001, 67 Fed Reg 11233 (2003), codified at 28 CFR Part 104 (2004) ("September llth Fund"). See generally Symposium, After Disaster: The September 11th Compensation Fund and the Future of Civil Justice, 53 DePaul L Rev 205 (2003). 3 September 11th Fund, 28 CFR § 104.44. 4 See David W Chen, After Weighing Value of Lives, 9/11 Fund Completes Its Task, NY Times Al (June 16,2004). The University of Chicago Law Review [72:537 attacked on multiin unusual circumstances These awards have been variability.6 insufficient and excessive including ple grounds, The September 11th awards reflect a strong influence from tort law, which they simultaneously modify. But in American law, tort doctrines provide only one of two sets of rules for monetizing death. The other comes from administrative regulations, and there are striking contrasts between the two bodies of law. One of our main goals in this Article is to bring the two in contact with each other. Countless regulations now attempt to reduce statistical risks of death. Cost-benefit analysis must generally accompany these regulations,' at least if their costs are high, and to undertake that analysis, agencies must turn human lives into monetary equivalents For example, the Environmental Protection Agency (EPA) values each life at a 9 uniform number, most recently $6 million. Through tort law, courts See September 11th Fund, 28 CFR §§ 104.41-43. See, for example, Alina Tugend, Lives in the Balance, Gov Exec 50, 56 (Sept 2003) (noting the dissatisfaction of many victims' families with the awards received, citing payouts amounting to less than publicly stated after offsets, and inadequate awards for top income earners); David W. Chen, Man Behind Sept. 11 Fund Describes Effort as a Success; with Reservations, NY Times B3 (Jan 1, 2004) (noting that families of decedents had decried an earlier version of the regulations as stingy, while the head of the Fund complained that some awards were too large). See Stephen G. Breyer, et al, Administrative Law and Regulatory Policy: Problems Text, 7 and Cases 125-27 (Aspen 5th ed 2002) (describing President Clinton's Executive Order 12866, which requires agencies to analyze both quantitative and qualitative costs and benefits of any new regulations that might be pursued). 8 For an overview of regulatory cost-benefit analysis, see Office of Management and Budget (OMB), Circular A-4, Regulatory Analysis (Sept 17, 2003), online at http://www.whitehouse.gov/ omb/circulars/a0O4/a-4.pdf (visited Feb 10, 2005) ("OMB Circular"). 9 See Environmental Protection Agency, National Primary Drinking Water Regulations; Arsenic and Clarifications to Compliance and New Source Contaminants Monitoring, 66 Fed Reg 6976, 7012 (2001) (final rule). In its July 2003 regulation governing food labeling of trans fatty acids, the Food and Drug Administration used a value of statistical life (VSL) of $6.5 million, see U.S. Department of Health and Human Services, Food Labeling: Trans Fatty Acids in Nutrition Labeling, Nutrient Content Claims, and Health Claims, 68 Fed Reg 41434,41489 (2003) (proposed rule); in its March 13, 2003, proposed rule on dietary ingredients and dietary supplements, the same agency suggested a VSL of $5 million, see U.S. Department of Health and Human Services, Current Good Manufacturing Practice in Manufacturing, Packing, or Holding Dietary Ingredients and Dietary Supplements, 68 Fed Reg 12158,12229 (2003) (proposed rule). Some individuation has been suggested by the interest in statistical life-years, a measure that naturally produces a higher degree of particularity. See OMB Circular at 30 (cited in note 8). More specifically, the OMB guidelines say: Another way that has been used to express reductions in fatality risks is to use the life expectancy method, the "value of statistical life-years (VSLY) extended." If a regulation protects individuals whose average remaining life expectancy is 40 years, a risk reduction of one fatality is expressed as "40 life-years extended." Those who favor this alternative approach emphasize that the value of a statistical life is not a single number relevant for all situations. In particular, when there are significant differences between the effect on life expectancy for the population affected by a particular health risk and the populations studied in the labor market studies, they prefer to adopt a VSLY approach to reflect those differ5 6 2005] Dollarsand Death provide a set of fact-specific awards that attempt both to compensate for and to deter wrongful death. The resulting awards are highly variable. For example, courts have recently given successful plaintiffs as little as a few thousand dollars and as much as tens of millions of dollars." Notwithstanding their overlapping goals, administrative regulations and tort law diverge from each other in dramatic and puzzling ways. The (...truncated)