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Life - hard to know what price is right

By Bill Torpy

Article re-printed from The Atlanta Journal-Constitution 03/05/2004


How much are we worth? That delicate and esoteric question permeates the tort reform debate in the Legislature. Broken down to basic chemical elements, a human body is worth maybe $5. But isolated into fluids, DNA and tissues, our bodies could theoretically fetch $45 million in the medical and scientific fields, according to an analysis by Wired Magazine. The 1,000 grams of bone marrow — if harvested and sold at the maximum price of $23,000 per gram — could be worth $23 million alone.

Doctors and insurance companies argue that juries are tagging them with unreasonable verdicts and want to cap "noneconomic" damages — for a victim's pain and suffering — at $250,000.

The problem is, life has no "replacement cost," no book value.

For example, should a person's earning power be the overwhelming criterion in determining his worth? Some argue a "smell the roses" variable must be in the equation. Lawyers call it "love, care, comfort and society." It tries to measure a person's role in the family and community, their social footprint.

"Is a person who makes lots of money and who is unhappy worth as much as someone who doesn't make that money but enjoys life?" asked Atlanta personal-injury lawyer Tommy Malone.

After an eight-hour shift at work, a person has 16 hours each day to pursue and enjoy life — time that should not be discounted, says Malone. "How much is a sunrise worth?" he asked.

The median award to a plaintiff who wins a wrongful death case is about $900,000, according to Jury Verdicts Research, a Horsham, Pa., firm that has analyzed 200,000 personal-injury jury verdicts. But a life's value has a wide range, as shown by the Victims Compensation Fund, the U.S.-funded commission to compensate Sept. 11 victims and stave off lawsuits. The fund's compensation grid starts at $250,000 and maxes out at about $7 million; the average payout has been about $1.8 million.

The fund's Web site describes actual cases: The survivors of a 36-year-old project manager with one dependent and a $221,000 salary received $3.5 million after $940,000 in other benefits and insurance were deducted. And survivors of a married business official, 38, with a $65,000 salary received $985,000, after $588,000 in "collateral offsets."

In wrongful death cases, juries consider the value of the life that was lost; in personal-injury cases, they also consider the quality of the life that remains. A Fulton County jury last week hit Ford Motor Co. with a $47 million verdict for a girl paralyzed in an accident involving a Lincoln luxury sedan.

The jury awarded the 9-year-old $33 million for her pain, expenses and permanently altered life, plus $14 million to punish Ford for its "conscious indifference to the consequences" of not addressing safety concerns with the 2000 Lincoln LS.

Such verdicts are often an emotional response rather than a realistic one, argues Tom Gose, president of MAG Mutual, which insures most of Georgia's doctors. He says jurors' sense of sympathy can tack zeroes onto a verdict.

"That emotion, while normal, has gotten to the point of unaffordable," Gose said. "No one is worth $47 million, because the system can't afford it. It's all about balance."

He and others say huge malpractice verdicts are chasing doctors out of business, which ultimately hurts more people. And damage awards tend to be larger when a plaintiff survives some terrible injury or ordeal.

"Juries award more for the living than the dead," said Robert Johnson, a forensic economist who has testified in numerous personal-injury cases for both defendants and plaintiffs. The manner of injury or death also counts, he said. "A burn victim gets more than an amputee. The idea is that [the amputation] only occurred once."

People killed by Uncle Sam are also valued differently: When a warplane accidentally bombed a wedding party in Afghanistan, families of the 48 dead were paid $200 each, according to an ABC News report. In 1998, a Marine jet clipped a gondola's cable in the Italian Alps, sending 20 skiers to their deaths. Their families each received $2 million. And families of the 290 victims of the Iranian airliner shot down in 1988 by a U.S. warship got $300,000 for wage-earning victims and $150,000 for non-wage-earners.

Conversely, the family of a GI killed in Iraq collects $250,000, tops, from the Service Group Life Insurance policy.

And while servicemen max out at $250,000, the government has set up a payment grid for workers hurt on the job. Georgia Worker's Comp tables list an arm or leg maxing out at $95,625, an eye at $63,750 and a ring finger $12,750.

Looking at the future

So far, we have discussed "Retrospective" payments, which means: You're dead, how can we compensate your survivors for your loss?

There are also "Prospective" estimates of a life, a calculus used by government and business to measure the cost of a life that may be lost in the future. Federal agencies apply this cost-benefit analysis to such decisions as how much pollution an industry can release or how many lives will be saved by a road improvement.

Currently, the Department of Transportation values lives at about $3 million when making road improvements, says Kip Viscusi, a Harvard economist who pioneered such calculations for the federal government. The Washington Post tabbed him "the Reagan administration's expert on the value of life."

Viscusi's calculations value a life at about $7 million. The formula, which is controversial and arcane — and in use by the government — is based on "wage-risk" surveys. Those formulas try to measure the amount of extra pay a theoretical average worker would demand to perform a more dangerous job — one with an annual chance of death of 1 in 10,000. For that calculation, $700 a year — a figure gleaned from surveys and studies — is multiplied by 10,000 to come up with the $7 million total.

In 1996, Viscusi analyzed various federal regulations. In his results, he included a chart estimating the Environmental Protection Agency regulations on benzene emissions cost nearly $3 million in 1984 dollars for each life saved. Occupational Safety and Health Administration grain dust rules cost $5.3 million for each life saved. The Superfund program cost $3.2 billion per life saved, making it one of government's least cost-effective efforts.

Not set in stone

Frank Ackerman, an economics professor at Tufts University, takes exception with such analysis. The numbers on both sides of the cost-benefit equation are subjective and can be manipulated, he says; for instance, who knows exactly who died or was sickened by a plant releasing chemicals? (DOT projections, by contrast, are somewhat more concrete — bodies per mile of road can be measured.)

In his book, "Priceless: On Knowing the Price of Everything and the Value of Nothing," co-authored by Georgetown University law professor Lisa Heinzerling, Ackerman says, "In real life, almost no one has ever thought this way about taking a job. ($700 added pay times a 1-in-10,000 risk of death) But in economic theory, ordinary people are endlessly and effortlessly engaged in complex decisions."

The book says the EPA under the Bush administration reduced the value of a theoretical life in some analyses — from $6.1 million to $3.7 million — to make it easier on industry because it will take smaller antipollution investments to save the same number of statistical lives.

Companies used to perform such analysis but have pulled back because they anger juries.

The classic case is the Ford Pinto, the 1970s subcompact that tended to explode when struck in the rear by another vehicle. Ford calculated that adding an $11 part to each vehicle could save 180 lives and numerous injuries, assuming 2,100 accidents would occur. The cost of fixing 12.5 million vehicles would have been $137 million. The projected cost of deaths and injuries - using the government figure at the time of $200,000 for a death and $67,000 for an injury - was $49.5 million.

The arithmetic suggested Ford would save about $87 million by not adding the $11 part; it would be cheaper simply to pay off the victims. In the end, however, Ford paid out $1.2 billion to victims.

"It looks like a crass tradeoff; we don't want companies to think about these things," said Viscusi. "But companies shouldn't be penalized for doing these things."

Such calculations are vital in determining the best use of society's limited resources and wealth, he said.

The cost of saving a statistical life becomes counter-productive when it hits the $20 million to $50 million range, he says. "That's 50 million you're taking out of consumers' pockets they could use for health care," says Viscusi.

Johnson, the economist, says those figures fall into some sort of bizarro universe.

"Nobody in any of these studies says, 'Three million for my life? I'll take it!', " he said. "It's somebody else's life."


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