Ronin of the Spirit

Because reality is beautiful.

Worst Reporting Ever (III)

Now, many of you are aware of my great loathing of the Associated Press.  An acquaintance sent me this gem:

An American life worth less today

WASHINGTON – It’s not just the American dollar that’s losing value. A government agency has decided that an American life isn’t worth what it used to be. The “value of a statistical life” is $6.9 million in today’s dollars, the Environmental Protection Agency reckoned in May — a drop of nearly $1 million from just five years ago.

The first thing I want to bring to your attention is the immediate bias.  “…has decided that an American life isn’t worth what it used to be…” Don’t judge by nationality.  Pollution poured into an American waterway that pours into Canada or Mexico will effect those nations.  Further one presumes that the EPA is tasked with protecting the lives of legal and illegal immigrants as well.  By opening the article this way the AP has already began with with a suspect lack of professionalism.

The Associated Press discovered the change after a review of cost-benefit analyses over more than a dozen years. (Way to be on the ball guys!) Though it may seem like a harmless bureaucratic recalculation, the devaluation has real consequences. When drawing up regulations, government agencies put a value on human life and then weigh the costs versus the lifesaving benefits of a proposed rule. The less a life is worth to the government, the less the need for a regulation, such as tighter restrictions on pollution. Consider, for example, a hypothetical regulation that costs $18 billion to enforce but will prevent 2,500 deaths. At $7.8 million per person (the old figure), the lifesaving benefits outweigh the costs. But at $6.9 million per person, the rule costs more than the lives it saves, so it may not be adopted.

Some environmentalists accuse the Bush administration of changing the value to avoid tougher rules — a charge the EPA denies. Conveniently, for the AP, neither the accusers, nor the defenders are named.  It makes it very hard to check sources.

“It appears that they’re cooking the books in regards to the value of life,” said S. William Becker, executive director of the National Association of Clean Air Agencies, which represents state and local air pollution regulators. “Those decisions are literally a matter of life and death.” Dan Esty, a senior EPA policy official in the administration of the first President Bush and now director of the Yale Center for Environmental Law and Policy, said: “It’s hard to imagine that it has other than a political motivation.”

Agency officials say they were just following what the science told them. (Man, I wonder which officials.  Its really hard to check sources if the AP won’t name them.)

The EPA figure is not based on people’s earning capacity, or their potential contributions to society, or how much they are loved and needed by their friends and family — some of the factors used in insurance claims and wrongful-death lawsuits. Instead, economists calculate the value based on what people are willing to pay to avoid certain risks, and on how much extra employers pay their workers to take on additional risks. Most of the data is drawn from payroll statistics; some comes from opinion surveys. According to the EPA, people shouldn’t think of the number as a price tag on a life.

“…potential contributions to society, or how much they are loved and needed by their friends and family…” Wow.  I wasn’t aware that an algorithm existed to determine that.  OH WAIT, it doesn’t.  Calling potential income “potential contributions” sorts of muddies the issue a bit, since potential income is mathematically predictable number, whereas “contributions” has no objective value.  “…loved and needed by their friends and family…” There is no algorithm for that.  The money awarded in a wrongful death case is not to pay the loved ones for their lose, it is to PUNISH the wrong doer for their negligence.  The only purpose of this paragraph is to demonize the EPA for doing the job it has been tasked with.

The EPA made the changes in two steps. First, in 2004, the agency cut the estimated value of a life by 8 percent. Then, in a rule governing train and boat air pollution this May, the agency took away the normal adjustment for one year’s inflation. Between the two changes, the value of a life fell 11 percent, based on today’s dollar.

Refer back to second sentence in this piece: “..A government agency has decided that an American life isn’t worth what it used to be…”  How surprising!  The EPA decides economic policy for the Federal Reserve. You see, by saying decided the second sentence says that the EPA acted purposefully with foreknowledge to reduce the value. Yet 3% of the reduction was inflation adjustment, which they have NO control over.  3% out of 11%.  Well, 3 is 27% of 11.  The EPA had no control what so ever over more than a quarter of the reduction.

EPA officials say the adjustment was not significant and was based on better economic studies. The reduction reflects consumer preferences, said Al McGartland, director of EPA’s office of policy, economics and innovation. “It’s our best estimate of what consumers are willing to pay to reduce similar risks to their own lives,” McGartland said. But EPA’s cut “doesn’t make sense,” said Vanderbilt University economist Kip Viscusi. EPA partly based its reduction on his work. “As people become more affluent, the value of statistical lives go up as well. It has to.” Viscusi also said no study has shown that Americans are less willing to pay to reduce risks.

Here, when quoting some one who knows what they are talking about, the AP actually does OK.

At the same time that EPA was trimming the value of life, the Department of Transportation twice raised its life value figure. But its number is still lower than the EPA’s. EPA traditionally has put the highest value on life of any government agency and still does, despite efforts by administrations to bring uniformity to that figure among all departments.

What does this paragraph mean? a – b – c is greater than x + y + z.  So what?  This paragraph is just a chance to say, “trimming the value of life”  When and by whom were these so called efforts undertaken?

Not all of EPA uses the reduced value. The agency’s water division never adopted the change and in 2006 used $8.7 million in current dollars.From 1996 to 2003, EPA kept the value of a statistical life generally around $7.8 million to $7.96 million in current dollars, according to reports analyzed by The AP. In 2004, for a major air pollution rule, the agency lowered the value to $7.15 million in current dollars.

Now, that is interesting.

Just how the EPA came up with that figure is complicated and involves two dueling analyses. (I love dueling analysts!)

Viscusi wrote one of those big studies, coming up with a value of $8.8 million in current dollars. The other study put the number between $2 million and $3.3 million. The co-author of that study, Laura Taylor of North Carolina State University, said her figure was lower because it emphasized differences in pay for various risky jobs, not just risky industries as a whole.

EPA took portions of each study and essentially split the difference — a decision two of the agency’s advisory boards faulted or questioned.”This sort of number-crunching is basically numerology,” said Granger Morgan, chairman of EPA’s Science Advisory Board and an engineering and public policy professor at Carnegie Mellon University. “This is not a scientific issue.”Other, similar calculations by the Bush administration have proved politically explosive. In 2002, the EPA decided the value of elderly people was 38 percent less than that of people under 70. After the move became public, the agency reversed itself.

Again, the AP does OK quoting others.

So the breakdown is this.

(1.) The EPA is trusted to regulate environmental risk.  Life is full of risk.  Death is risk free.  So, the EPA has the very unenviable job of compromising risk for the greatest benefit and least cost for all players. (2.) To prevent fraud, waste, and abuse, the EPA has to have some kind of metric to make these decisions.  The logical metric is to assign a value to human life. (3.) The EPA used a bullshit process to arrive at their current value.  Somehow, the AP manages to make it seem like this the EPA’s fault rather than leaders who can put the squeeze on the EPA top brass.  From the article, the EPA’s own Science Advisor said this was an awful idea.  What did we learn?

(1.) The AP does crappy reporting again.

(2.) The EPA as a bureaucratic rather than elected group.  As such its policies are subject to a greater and lesser forms of control from overhead, in defiance of its own advisors advice.

Possible solutions (Not comprehensive):  Change American Congress to proportional appointment.  Have EPA heads be elected in free nationwide elections.  To the existing checks and balances in the American system add a fourth leg of Welfare, the head of which is elected the same as congressmen and presidents.  The EPA would then fall with the other alphabet soup of federal agencies under an elected head who competes with the other 3 branches of government for resources and approval.   Make the state governours function as the primarmy stock holders of the US, and let them appoint a CEO for the EPA to serve as the head in business fashion.

July 15, 2008 - Posted by | Ecology, Government, Politics, skepticism, Uncategorized | , , , ,

1 Comment »

  1. Thanks for the posting and the analysis. While I may quibble with some of your comments, I can say that I was very disappointed with the article. (I am the economist from EPA that was quoted in the article). Other economists (Viscussi) were taken out of context as well. I told the author several times in our interview that EPA does not decide what the value is, but rather we relied on the leading economic studies published in the economics literature. I don’t think that characterization stuck, and the critics quoted really would have no idea how we do this. Dan Esty was quoted, and he has no clue what we did. He should have said, I am not familiar with this.

    Comment by Al McGartland | July 17, 2008 | Reply

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