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Age-Adjusted "Life Years Saved"
Daily Policy Digest

Regulatory Issues / Economic Cost of Regulations

Wednesday, April 30, 2003
Environmentalists are upset that John Graham, director of the Office of Management and the Budget (OMB), believes federal regulations should be subject to cost-benefit analysis to ensure that economic and life-extending gains from federal regulations are balanced against their economic cost.

Additionally, some senior activists are upset that he has given less weight to the lives of elderly than to those of younger folk in some cost-benefit analyses.

Graham's valuations place economic values on human life, and have shaped several Bush administration actions. The cost-benefit analysis measurement that has attracted controversy is the "life-years saved" method. It estimates the number of years saved by a health measure and assigns a value to each year of life.

  • In two recent studies that led to the Clear Skies initiative to alter air pollution rules and a new rule on air pollution from snowmobiles, the dollar value placed on the lives of older Americans over 70 was 37 percent less than the figure used for younger adults.
  • However, Graham says, "In recent rules, a value of $172,000 has been assigned to each year of life for those under age 65 compared to $273,000 for each year of life for seniors."
  • These figures aren't necessarily contradictory, since the elderly have fewer years left potentially than young folks.
  • Moreover, it may be more costly to achieve the same life-prolonging health effect in an older person than a young one.
"The life-year promoted by OMB has been widely used in public health and medicine and is routinely used by the U.S. Food and Drug Administration to evaluate new drugs and medical therapies," Graham says.

Source: Miguel Bustillo, "Placing Lower Value on Senior Lives Stirs Anger," Los Angeles Times, April 30, 2003.

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