TCS Daily


How Much My Life Worth? How About Yours?

By Tim Worstall - December 6, 2004 12:00 AM

Now that "Hillary '08" is up and running perhaps it is safe to return to the more basic discussions about politicians, regulation, costs and benefits. As we know there are always good sounding reasons for the laws and strictures that are imposed upon us and alas, all too often, too little attention is paid to the costs of them. Today's example is from the UK so you will need to know that £1 is currently about $1.85.

The basics of the story are simple, in that new regulations have been breeding for a decade or so on fire standards in Houses of Multiple Occupation (HMOs), such buildings being anything from a house that has been cut up into a few units to a skyscraper full of apartments. At first sight this seems to be an obvious set of beneficial legislation for, after all, who wants to burn to death when the downstairs neighbour has a fat fire? The devil is, as ever, in the details.

The regulations require a zoned fire alarm system and emergency lighting, something which I know from recent personal experience costs £1,000 per apartment. Again one might say that this is reasonable. A side effect of the new system is that all those little things that have become legally necessary over the years must now be done, not just winked at as before (self sealing fire doors on all kitchens for example). Again from recent personal experience I know that this costs some £10,000 per apartment. If you prefer, this is not the cost of the new regulations, but the cumulative costs of conforming to all of the fire regs over the past few decades.

Looking at my home city of Bath (actually "Bath and North East Somerset" but referred to as "Bath" throughout) there are, according to the nice man at the local council, 3,000 of these HMOs with an average of five apartments each. According to the Avon Fire Brigade the risk of death in a domestic fire was 0.29 per 100,000 inhabitants a year so Bath with a population of 169,000 would expect, on average, half a death a year from fires in the home. (Yes, I know that fires cause injuries and economic damage as well but it is not unusual to use cost per life saved per year as a measure of an action's effectiveness.)

So armed with these facts we can look at how useful these regulations will be. At the low end we have £1,000 per each of 15,000 apartments, giving us a cost of £15 million that has to be found by the burghers of Bath. If we assume that fires only happen in HMOs and that we will have stopped all deaths by fire (both completely absurd assumptions) we thus reach a cost of £30 million per life saved. At this point I have to admit that I'm not completely sold on the effectiveness of these regulations. Yes, I'm aware that no one wants to burn to death but are there not other ways of saving lives that are rather cheaper? Vaccinations of children perhaps, things that we ought to be doing before we do these expensive things?

If we look at the other end of the numbers we get into the realms of absurdity. £10,000 per apartment as the cumulative cost of fire regs gives us £150 million that must be or has been found by those same burghers. Some one third of the population live in HMOs, yet let us accept that they might be more risky than individual dwellings, so half of our death rate comes from HMOs. Further, we are only going to save half of those lives lost to fire by these regulations as there will always be the drunk who goes to bed with a cigarette and the like. Doing the math we appear now to be saying that we should pay £1,200 million for each life saved under these regulations. This is of the order of the cost of getting a couple of new drugs approved and are we really certain that saving one life in Bath is of the same level of economic importance as, say, a malaria vaccine? Well, mine of course, yours as well, but his?

Armed with the above facts we can now decide how we want to write our story. We could, if we were so minded, talk about how the Government now requires all apartment owners to store US radioactive waste in their homes (absurd, yes, yet true. All fire/smoke alarms are made with americum oxide extracted from used fuel rods by the DOE.).

We could, if we were politicians, tell all and sundry about how these vital regulations will save lives and bask in the praise heaped upon those who do something for the kiddies. We could also, if we were reactionary curmudgeons like myself, point out that politicians are killing thousands by insisting on absurd levels of protection and spending on minor threats. For despite what some say about such things as global warming and the Copenhagen Consensus:

"It is economic nonsense to suggest that there is just one pot of money from which all these things must be funded. "

There is indeed just one pot of money, that one containing all of it. What we spend in one place on one problem cannot be spent in another place on another.

As it happens I don't think that the good people of Bath would in fact research and launch a life saving drug or two if they didn't have to spend their money in this manner. I do think that at least some of the money would have gone to charities, to "adopt a Third World Child", perhaps on more vegetables and fresh fruit for as we know the lack of these is the greatest cause of cancer after smoking, well, almost anything it was spent on would save more lives than these regulations. Even if only one person gave £ 100 from that initial £15 million figure to an NGO handing out Oral Rehydration Therapy more lives would be saved. We'll never know who is that lucky person who has his life saved in this grossly expensive manner, just as we'll never know the names of those killed by the absurd misuse of economic resources, in fact just about the only thing we can be sure of is that the number of those saved will be smaller than the number of those killed by our not spending the money on cheaper methods of saving lives.

A useful lesson for the period immediately after an election. Politicians and regulators are not always your friends even if the right guy did win.

The author is an entrepreneur and a TCS contributor. Find more of his writing here.


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