What's the value of a life?

Economists ask such questions because society cannot otherwise make good decisions about actions that extend life, as opposed, say, to improving the quality of life. To put it another, what sounds like a repugnant notion - that the value of person can be expressed in economic terms - is necessary to making choices, including moral and ethical ones.

The task of measuring the value of a life isn't easy, however. The Undercover Economist has a nice explanation. It's tricky to measure but some clever economists have found ways to do so. The Undercover Economist writes:

Being a soldier is risky; so is being a drug-dealer or prostitute. The difficulty, evidently, is to disentangle the health risk and the financial reward from all the other motivations to choose a particular way of life. That isn’t easy but economists try.

World Bank economist Paul Gertler and his colleagues reckoned that Mexican prostitutes valued their lives at about $50,000 per year, based on willingness to take money not to use condoms. At five times their annual earnings, that’s a similar figure to workers accepting risky jobs in rich countries.

See also this work by Kevin Murphy and Bob Topel that he cites.