Daniel J. Hemel (New York University School of Law) and Jonathan S. Masur (University of Chicago – Law School) have posted Valuing Future Lives, 44 Yale Journal on Regulation (forthcoming 2027), on SSRN. Here is the abstract:
Federal regulation often involves a tradeoff between monetary costs in the present and life-saving benefits in the future. A central question in regulatory cost-benefit analysis is how to assign a present dollar value to future lives so that future lives and present dollars can be compared. For regulations that are projected to prevent deaths years or decades down the road, agencies make two key analytical moves. First, they adjust the value of a statistical life upward to reflect the fact that society’s willingness to pay to save lives will rise as people become wealthier in the future. Second, they discount future benefits downward to reflect the fact that the wealthier people of the future will derive less utility from each dollar precisely because they are wealthier. In theory, these upward and downward adjustments could offset exactly, such that lives saved in the future carry the same weight in agency cost-benefit analyses as lives saved today. In practice, agencies adjust the value of a statistical life upward at a much slower rate than they discount future benefits. The consequence is that agencies assign much less weight to lives in the future than to lives in the present. For example, the Environmental Protection Agency considers a life saved fifty years from now to be worth 69% to 95% less than a life saved today. Other agencies likewise apply large haircuts to future lives. The result is a dramatic antiregulatory bias, particularly with respect to regulations that will have large effects years in the future, such as measures to curb climate change. This Article critically analyzes federal agencies’ practice of devaluing future lives. Through step-by-step reconstructions of methodologies employed by four agencies—the Department of Transportation, the Environmental Protection Agency, the Department of Health and Human Services, and the Occupational Safety and Health Administration—the Article shows how current regulatory practice substantially discounts the prevention of premature deaths over the medium and long term. It then demonstrates—through case studies of recent air pollution and motor safety rulemakings—how the devaluation of future lives stacks the deck against regulatory action. It concludes by calling for agencies to adopt a presumption that lives in the future have the same value as lives saved today, and it explores the implications of this proposal for the broader enterprise of cost-benefit analysis.
Highly recommended.