REIF: The Cost of Life
How much is your life worth? An insurance company may insure your life for $ millions, but how much do you think your life is worth?
We all think our lives are priceless, and – of course – they are, but when building hazardous plant (e.g., a petro-chemical plant), constructing nuclear vessels, or extending a transportation system such as highways and railways, we need to put a price on life. Will the new system increase the risk of death on the surrounding population? Can I put safety measures in place to reduce this risk?
This is safety decision-making, and can be used to test safety measures designed to reduce the risk of death, allowing us to question if it is worthwhile, whether on economic grounds, or some other: it gives us criteria to test if a proposed safety measure is too expensive to be worth implementing.
Why? Well, we need to calculate the increased risk on people, by creating new, hazardous, plant/equipment/systems, and balance this against the benefits of the new risks. The new project may end up saving lives, but alternatively it may pose a risk to human life. We need to perform a ‘cost benefit analysis’ (CBA): how do the costs of the project compare with the benefits? A problem with this CBA is that – for projects that endanger life - it requires we put a cost on life….
This e-learn explains how we need to put a cost on life, to input into cost benefit analyses when we are assessing projects that create risks.
Duration: 30 minutes