The Price of Life

Here is a simple way to assess your value-of-life (from an article by Howard).

Imagine you have a deadly disease, certain to kill you. The doctor tells you that there is one cure, it works perfectly, and costs you nothing. However, it is very painful, like having wisdom teeth pulled continuously for 24 hours without anesthetic.

However, the doctor says there is one other possible solution. It is experimental, but also certain to work. However, it isn’t free. “How much is it?” you ask. “I forgot,” says the doctor. “So, you write down the most you would pay, I’ll find out the cost, and if the cost is less than you are willing to pay, I’ll sign you up for the treatment. Otherwise, I’ll sign you up for the painful procedure.” What do you write down? Call that dollar amount X. For example, you might decide that you wouldn’t pay more than $50,000.

Now scratch the above paragraph; actually the treatment is free. However, it isn’t perfectly effective. It always cures the disease, but there is a small chance that it will kill you. “What is the chance?” you ask. “I forgot,” says the doctor. “So, you write down the largest risk of death you are willing to take, I’ll find out the risk, and if the risk is less than you are willing to take, I’ll sign you up for the treatment. Otherwise, I’ll sign you up for the painful procedure.” What do you write down? Call that probability Y. For example, you might decide that you aren’t willing to take more than a half-percent chance of death to avoid the pain.

Now you’ve established that Pain = $X loss of dollars, and that Pain = Y probability of death. Transitivity implies that $X loss of dollars = Y probability of death. Divide X by Y and you have your value-of-life. Above, $50K/0.5% = $10M value-of-life.

If you want, you can divide by one million and get a dollar cost for a one-in-a-million chance of death (called a micromort). For example, my micromort value is $12 for small risks (larger risks are of course different; you can’t kill me for $12M). I use this value to make health and safety decisions.

How much money is a point on Less Wrong worth to you?

That's perhaps a generalization of the question, "how much is an hour of your time worth to you", that was once brought up on Marginal Revolution. Not an easy question to answer.

I bought the book "Your Money or Your Life" on a friend's recommendation, in good part to figure out how I answer that question. It goes into some of the complications like figuring out the real "total cost of ownership" of your job - this blog gives a nice brief illustration of the kind of thinking the book encourages. I haven't really figured it out yet, but just thinking through the issues turns out to be valuable.

I've been toying with the idea of a post which illustrates on a smaller scale example the notion of applying "shut up and multiply" to some biggish life decisions, reporting on how my wife & I decided to no longer own a car after we figured out that the car was costing us around 10€ each day that we left it sitting in the garage, and that was a vast majority of the days in each year. No-one around us in similar situations seems to question that having a car is the "normal" choice.

"How much is this really worth" or "how much does this really cost" is an interesting question, one you can't always answer with full precision, but the attempt is often in itself instructive and wortwhile. An hour or two spent on back-of-the-envelope calculations, maybe even a little Excel spreadsheet, can be a great way to identify less-than-fully-rational decisions you're making just by not thinking about them.

That doesn't follow. From our recognition of the finite value of "very valuable things" like our lives and friendships, it does not follow that we consciously put a specific price on things. Rather, it's a recognition that, for any kind of rational (not-self-defeating) behavior, our actions must be as if they didn't put an infinite value (or price) on anything.

And I hate to say it, but this article is really just telling the LW crowd things it already knows, and, more importantly, already appreciates beyond merely "knowing it in the abstract".

To me, the connotation of Wilde's quote was that it's a bad thing to be aware that everything has a price, and the truly valuable things, e.g. "the smile of a baby" (the cuteness of a bunny?) cannot be priced.

That could be implied by larger context, but the quote, as it stands, only expresses the idea that prices and values are separate things. It could be that there was some meaningful conversion chart, or it could be that there wasn't. If we take that there isn't any chart for some things, it still doesn't imply that the price was infinite, it just means that talking about price doesn't make any sense. Analogy would be measuring happiness in kilograms. Lack of conversion chart doesn't imply that happiness means infinite kilograms.

The disconnect between values and prices could be described as something like "It has a high price because many people value it", not the other way around. Values are why we do things, and losing sight of those, staring only at price tags without understanding why there are prices in the first place, that's what Wilde seems to describe cynicism to be.

To me, the connotation of Wilde's quote was that it's a bad thing to be aware that everything has a price, and the truly valuable things, e.g. "the smile of a baby" (the cuteness of a bunny?) cannot be priced.

That could be implied by larger context, but the quote, as it stands, only expresses the idea that prices and values are separate things. It could be that there was some meaningful conversion chart, or it could be that there wasn't. If we take that there isn't any chart for some things, it still doesn't imply that the price was infinite, it just means that talking about price doesn't make any sense. Analogy would be measuring happiness in kilograms. Lack of conversion chart doesn't imply that happiness means infinite kilograms.

The disconnect between values and prices could be described as something like "It has a high price because many people value it", not the other way around. Values are why we do things, and losing sight of those, staring only at price tags without understanding why there are prices in the first place, that's how I interpret that quote.

Ouch, nasty one. It seems to be gone now.

A colonoscopy is a good idea when you consistently have lasting pain from defecation.

The More You Know ...