Tuesday, 14 April 2015

Putting a value on human life?

In Spreadsheets of Power, Richard Denniss discusses how economists value a human life. Regarding the value of a human life, Tim Harford's column How much is a (micro)life worth? provides a different and more useful perspective:
Here’s a possible solution: use microlives. A microlife is one millionth of an adult lifespan — about half an hour — and a micromort is a one-in-a-million chance of dying. 
Sir David Spiegelhalter, my favourite risk communication expert, reckons that going under general anaesthetic is 10 micromorts. Travelling 28 miles on a motorbike is four micromorts; cycling the same distance is just over one micromort. The National Health Service in the UK uses analysis that prices a microlife at around £1.70; the UK Department for Transport will spend £1.60 to prevent a micromort. In a world where life-and-death trade-offs must be made, and should be faced squarely, this is a less horrible way to think about it all. 
A human life is a special thing; a microlife, not so much. As Ronald Howard, the decision analysis expert who invented the micromort, put it back in 1984: “Although this change is cosmetic only, we should remember the size of the cosmetic industry.”
Denniss writes, with my added emphasis (perhaps inspired by Borgen?):
In 2011, Denmark’s general election saw its centre-right government tossed out of power, to be replaced by a minority centre-left coalition led by the country’s first female prime minister, Helle Thorning-Schmidt. Bjørn Lomborg’s Copenhagen Consensus Center was one of the first casualties of the change of government. When it was announced that its more than $1 million in funding would be cut, Lomborg visited the new prime minister, urging her to reconsider the government’s decision. “I’d love to show you how the Copenhagen Consensus is a good idea,” he was reported as telling her. “I think that probably might be right, Bjørn,” she reportedly responded to the sceptical environmentalist. “But I will just get so much more mileage out of criticising you.”
Bjørn Lomborg has just been appointed as an Adjunct Professor at UWA, which would explain why Lomborg was looking for someone else to fund his right-wing economic reductionism and climate change denialism. This is a worrying development, especially when the UWA Vice-Chancellor, Prof Paul Johnson, writes
Lomborg’s centre "will become the go-to place for useful economic research to inform the national and international debate".
By “go-to place, is he thinking about Gina Rinehart and the Murdoch Press? Dennis goes further:
Most economic modellers do not assume that all human lives are equal. Bjørn Lomborg, for example, one of the world’s most famous climate sceptics, uses modelling that assumes the lives of people in developing countries are worth a lot less than the lives of Australians or Americans. While the US Declaration of Independence may declare that all men are created equal, most economic models assume that all men (and women) are worth a figure based on the GDP per capita of their country. 
Late last year, Bjørn Lomborg asked to meet me, and I wondered whether talking to him would be good fun or a waste of time. It was neither: it was scary and illuminating. After 15 years as the smiling face of climate inactivists, Lomborg had raised his sights. His new mission was to ensure that governments also deliver inaction on global poverty alleviation, public health and gender inequality. 
When we met, Lomborg proceeded to explain how his team of economists at the Copenhagen Consensus Center had decided that a number of the United Nations’ Millennium Development Goals weren’t worth pursuing. His tool of choice for defending such a position? Economic modelling.
Denniss parenthetically dismissively writes that
Some economists then argue that if hundreds of the assumptions are wrong then the errors might cancel each other out. Seriously.
which is weird; it certainly is possible for models to have errors that can tend to cancel each other out. However, perhaps the point is that if this is the case, the predictive power of the model is hard to determine. Dennis ends with a powerful conclusion:
Costs and benefits can be calculated any number of ways, and the modeller’s assumptions are crucial to the end result. Lomborg had confidently assumed that the Danish taxpayer would continue to fund his work. His cost–benefit analyses had found that more effort should be put into free trade and less money spent on tackling poverty and climate change. But, as with all such efforts, garbage in, garbage out. There is a role for economists, and economic modelling, in public debate. Its role should not be to limit the menu of democratic choices. Instead it should be to help explain the trade-offs. 
Good modellers aren’t afraid of explaining their assumptions. The clients who pay best, however, don’t want the best modellers. They want people who can write a fat report to slam on the fucking table.
Update: In Abbott government gives $4m to help climate contrarian set up Australian centre it states that "Lomborg will be the co-chair of the Australia Consensus Centre Advisory Board with Prof Johnson". I wonder how much money will flow to Lomborg? In one year alone, the Copenhagen Consensus Center paid Lomborg $775,000. Under Join Us on the Australia Consensus Centre website, it says "No research will be performed at the Centre, but commissioned from leading economists and sector experts." So, what exactly is the point of UWA hosting the centre, apart from as a (negative) PR exercise. Interestingly, the Australia Consensus Centre was announced as a New economic prioritisation research centre at UWA. I note that Lomborg—with a PhD in political science—is not an economist, and Johnson's research is primarily in economic history. As an expert adviser on the economics of demographic change, perhaps Johnson should offer his services to the help with the Governments IGR, rather than making ill-considered PR appointments, such as Lomborg.

Update 2: the brown stuff is starting to hit the fan. On April 18, a Change.org petition was launched to Turn away Bjørn Lomborg's anti-climate science institute funding and on April 20 there was media coverage on RN Drive and the ABC news (UWA vice-chancellor defends think tank linked to controversial environmentalist) where Johnson stated that
The Australian Consensus Centre is designed to take a methodology of cost-benefit analysis to look at a whole range of Australian and global development challenges over the next 15 number of years to try and to work out where as a society we will get the best value for every dollar we invest.
I am a strong supporter of doing a cost-benefit analysis and also spending funds wisely and efficiently. But to give a business analogy, if a company is underperforming and the CEO tasks his managers with doing a cost-benefit analysis and improving the bottom line, the most likely managerial response is to cut staff, reduce salaries of employees, or both. Strangely, though, this belt-tightening rarely apply to the managers whose jobs are essential, as is maintaining their salary at its current level. So, it is patently obvious that those with a vested interest—personal, political, or moral—in the outcome of a cost-benefit analysis will develop models that reflect their biases, which leads to different conclusions about how money should be spent.

Disclosure: the author is an employee of UWA, and the views expressed are those of the author and not those of the University.