Robert Cooter, Community Versus Market Values of Life, 57 Wm. & Mary L. Rev. 713 (2016)
Individuals and communities make choices affecting the risk of accidental death. Individuals balance risk and cost in market choices, for example, by purchasing costly safety products or taking a dangerous job for higher pay. Communities balance risk and cost through social norms of precaution, which prescribe how much risk people may impose on others and on themselves. For example, social norms dictate that bicyclists should wear helmets and automobile passengers should wear seat belts. In both cases, the balance between the fatality risk and the cost of reducing it reveals an implicit value of a statistical life, or 'VSL''-an individual "market VSL" in the former case, and a "community VSL"in the latter instance. This Article explores the theoretical differences between community and market VSLs, provides average dollar values for both, and endorses the use of community VSLs in tort (as a measure of damages) and in the regulatory context (as an input to cost-benefit analyses).
Our analysis of existing empirical studies reveals an average community VSL of roughly $2-3 million-significantly smaller in value than market VSLs, which average roughly $7 million. After presenting and explaining these figures, we argue that courts and regulators should base the legal value of a life on the community value. The principal reasons for adopting community VSLs are validity and consistency. Community VSLs are a valid measure of the implicit value of life because they are derived from social norms, which embody the collective preferences and ideals of communities as refined over time. At a minimum, they are more reliable and meaningful measures of the value of life than the current legal alternatives: in tort, the unaided intuition of jurors and, in the regulatory context, individual labor-market decisions made with limited information. Community VSLs would also increase internal consistency in tort, by linking the calculation of damages to the same community-centric standards already used to determine reasonable precaution. If adopted in the regulatory context and in tort law, community VSLs would place both mechanisms of risk regulation on the same, valid foundation.