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Priceless: On Knowing the Price of Everything and the Value of Nothing
Frank Ackerman & Lisa Heinzerling
New York: The New Press, 2004
277 pp., $16.95, paper
ISBN: 1-56584-981-7

A recent article in the New York Times bemoaned the absence of altruism and political engagement among contemporary academic economists, citing the influence of Steven D. Levitt’s best-selling book, Freakonomics, a paean to statistical analysis and mathematical modeling. Priceless: On Knowing the Price of Everything and the Value of Nothing, published to much less acclaim, points unhesitatingly to the limitations of cost-benefit analysis, a form of “freakonomics” which has insinuated itself into American government in recent decades:

Rules limiting arsenic in drinking water, air emissions from factories and power plants, snowmobiles in national parks, new development in pristine areas, and pollution in our rivers, lakes, and streams, all have been or may be weakened or even eliminated based on the same kind of counterintuitive economics. The basic problem with narrow economic analysis of health and environmental protection is that human life, health, and nature cannot be described meaningfully in monetary terms: they are priceless.

In the course of reading, we learn that a single human life seems to be valued at approximately $6 million in contemporary analysis, which, stacked against the industry-inflated cost of regulation, makes many regulatory initiatives, as well as long-standing legislation like the Clean Air and Clean Water Acts, not “cost effective” under such analysis. Indeed, at the time of state litigation against tobacco companies in years past, a Harvard economist did a cost-benefit analysis that determined a financial savings for states as a result of the costs of aging and long-term health care saved by premature deaths from smoking. In his paper, “Cigarette Taxation and the Social Consequences of Smoking,” W. Kip Viscusi concluded, “if some of his results were ‘taken at face value,’ then ‘cigarette smoking should be subsidized rather than taxed.’” Similarly, the recently resigned president of Harvard University, Lawrence Summers, found when he was the chief economist for the World Bank that:

The measurements of the costs of health impairing pollution depend on the foregone earnings of increased morbidity and mortality. From this point of view a given amount of health impairing pollution should be done in the country with the lowest cost, which will be the country with the lowest wages. I think the economic logic behind dumping a load of toxic waste in the lowest wage country is impeccable and we should face up to that.

Clearly, such pronouncements verify the concerns of the environmental justice movement worldwide. The writers of Priceless “reject the atomistic analysis offered by contemporary economists, in which the problem is severed into its component parts, examined by experts, and reconstructed in a way that leaves most of the important parts on the cutting room floor,” proposing instead “a more holistic analysis, one that replaces the reductive approach of cost-benefit analysis with a broader and more integrative perspective” and “a sense of moral urgency to the protection of life, health, and the environment.”

Ackerman and Heinzerling, employees of the Global Development and Environment Institute at Tufts University, and the Georgetown University Law Center, respectively, offer four principles to achieve their ends:

• Use holistic, rather than atomistic, methods of evaluating costs and benefits.
• Learn from the military: moral imperatives are more powerful than cost comparisons.
• Adopt a precautionary approach to uncertain, potentially dangerous risks.
• Promote fairness—toward the poor and powerless today, and toward future generations.

Noting that, in practice, cost-benefit analysis all-too-often becomes “complete cost-incomplete benefit analysis,” the authors’ most compelling realization is that military spending, for the current occupation of Iraq, for instance, itself never undergoes cost-benefit analysis, because of the stated “moral imperative” of the “war on terrorism.” After two generations of Cold War economy, they note, “our culture is saturated with the glorification of violence and military conflict. After two generations of war on health and environmental hazards,” they ask, “what other ethos might infuse the movies, the games, and the dreams of patriotic Americans?”

The stating of moral imperatives is not left to academics in today’s world, but the authors, members of the Center for Progressive Regulation, a network of scholars supporting regulatory action to protect health, safety, and the environment, have provided counter-analysis to the National Resources Defense Council, Riverkeeper, and other organizations attempting to envision a different and safer world. They have also provided a cultural rarity, a book of economics readable by the general, and hopefully concerned, public.


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