Tuesday, August 19, 2014

Statistical life vs. identifiable life

Do We Really Value Identified Lives More Highly Than Statistical Lives?

The recent Ebola evacuated case exemplifies the concept created by Shelling a long time ago, the difference of how a society allocates resources according to 2 different rules:
In 1968, in a paper about valuing ways to reduce the risk of death, Thomas Schelling1 distinguished between “identified lives” and “statistical lives.” Identified lives are the miners trapped in a mine or the child with a terminal disease—specific people who need help now. Statistical lives are those people, unidentifiable before the fact and often after as well, who will be saved by a new safety regulation, public health program, or environmental standard. Schelling observed that people seem to be willing to pay more to save an identified life: “Let a six-year-old girl with brown hair need thousands of dollars for an operation that will prolong her life until Christmas, and the post office will be swamped with nickels and dimes to save her. But let it be reported that without a sales tax the hospital facilities of Massachusetts will deteriorate and cause a barely perceptible increase in preventable deaths—not many will drop a tear or reach for their checkbooks.
Really such a case goes beyond Shelling insight because of uncertainty and unavailability of effective treatment. Bioethics field has argued over what they called "rule of rescue", a different perspective of the same issue. In this respect, NICE statement helps to understand both views:
When there are limited resources for healthcare, applying the ‘rule of rescue’ may mean that other people will not be able to have the care or treatment they need. NICE recognises that when it is making its decisions it should consider the needs of present and future patients of the NHS who are anonymous and who do not necessarily have people to argue their case on their behalf. NICE considers that the principles provided in this document are appropriate to resolve the tension between the needs of an individual patient and the needs of present and future users of the NHS. The Institute has not therefore adopted an additional ‘rule of rescue.
The article by Louise B. Rusell reflects precisely the theoretical and practical controversy and ends with this paragraph:
Adjustments and controversies aside, the evidence provided by VSL estimates suggests that people’s willingness to pay for statistical lives may be consistent with their willingness to pay for identified lives. The apparent existence of 2 different decision rules may have been no more than an artifact of the economic method for valuing statistical lives in use at the time the distinction was proposed. Now that economists’ methods more fully reflect “the interests, preferences and attitudes to risk of those who are likely to be affected by the decisions,” their estimates of the value of a statistical life support the idea that there just may be a single rule: Identified and unidentified lives may be equally valuable. This is good news for decision makers who use cost-benefit and cost-effectiveness analysis to inform decisions.
The theoretical suggestion sounds good, nowadays the political decision making reality goes in the opposite way, at least close.

PS. A must read post on GCS blog about the same topic.

PS. Ebolanomics, the economics of ebola at the New Yorker. Nothing new, prizes instead of patents to promote R&D, a good idea with difficult implementation.

PS. How much would you pay for a quality adjusted life year?

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