How Much Is Your Life Worth?

May 27, 2015 | 9:19 am
David Wright
Former Contributor

I recently bought a new bicycle to replace the one I bought in college, which I was still riding despite its deteriorating condition. I also decided to buy a new bike lock. Since the value of my new bike was considerably higher than that of my old one, it was clearly worthwhile for me to spend the money to upgrade my security system.

This sort of cost-benefit analysis is one way we all make decisions. For example, the more money a bank is designed to store safely—and therefore the greater the potential loss if it fails to do so—the more it’s worth for the bank to invest in security systems to prevent such a loss.

Nuclear power safety

The same principle that holds for bikes and banks is used by the Nuclear Regulatory Commission (NRC), which oversees the U.S. nuclear power industry. If the NRC wants to determine if it makes sense to require nuclear plants to add new safety and security systems, an important part of that determination is looking at the cost of adding those systems and comparing that to the cost of an accident that would be prevented by those systems.

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(Source: naturalflow)

So the question is: How does the NRC calculate the cost of a nuclear accident?

It calculates the effects of a nuclear accident and assigns a monetary value to the lives the accident could claim. This is a standard procedure. The Department of Transportation does the same thing—assigning monetary values to people injured or killed in traffic accidents—to determine what safety features it should require auto manufacturers to add to cars and trucks to prevent those accidents.

But for this to calculation to make sense, it’s important to get the costs of an accident right. In particular, if the calculated costs are too low, then on paper it won’t look like it makes sense to require nuclear plants to install safety systems that in reality do make sense.

Low-balling the value of a human life

And this is where the NRC fails in a dramatic way. In its calculations of the costs of a nuclear accident, the NRC assigns a value of $3 million to the loss of a human life. By comparison, the Department of Transportation uses a value of $9.1 million, which is in line with the value used by other federal agencies.

By low-balling the costs of accidents, the NRC is failing to require nuclear safety features that are worthwhile—and that the NRC’s calculation would show are worthwhile if it used a more standard value.

The NRC staff has recommended that the NRC increase the value it assigns to a human life from $3 million to $9 million, and tie that number to inflation, as other agencies do.

The NRC commissioners are now deciding whether to accept that recommendation, and are expected to come out with a public proposal soon. The nuclear industry is expected to oppose this change since adding safety features will cost money.

Stay tuned. In the meantime, this issue is described in more detail on the Huffington Post.