Another celebrity trial

This week Roger Clemens, probably the best major league pitcher in the 1980s and 1990s, goes on trial for perjury.  Clemens testified before Congress that he had not used performance enhancing drugs while a player.  Federal prosecutors decided that his denials were not persuasive and will present evidence that they think indicates Clemens was lying. 

Nice column today by Allen Barra on the Daily Beast that captures my sentiments on the matter exactly -- why are the feds wasting are precious tax dollars on this?  The cost is $120 million so far.  Imagine how much we would have to spend if we were to prosecute everyone who ever lied to Congress!  One also might wonder why Congress has the time and resources to conduct hearings on the behavior of a retired player.  Not sure how any of this passes a cost-benefit test. 

How much is a life worth?

According to the EPA, $9.1 million.  The Food and Drug Administration says $7.9 million, which is a big jump over the $5 million estimate they used in 2008 (the economy tanks, but the value of life goes up?).  The US Department of Transportation has been using $6 million. 

Some readers may object that life is priceless or, more precisely, too precious to assign a monetary value.  However, economic analysis of regulations requires some metric for the benefits side of the equation.  Regulatory costs are straightforward, but the benefits largely consist of improved health and longevity.  Without a dollar value for life, we could focus only on cost and thus end up running the risk that we would not adopt policies with high costs ane even higher benefits.  NYT reports that businesses are becoming concerned that agencies are planning to raise their estimates (which seem to have become frozen in the later years of Bush 43), which would allow more proposed regulations to past a cost-benefit test. 

Fellow Harvard graduate student W. Kip Viscusi is the world's leading expert in the economic value of life.  Viscusi examined the trade-off between safety risk and compensation in the labor market.  The basic idea is that if jobs with a 1 in 1000 risk of death (e.g., fishermen) paid $1000 more per year than jobs with a zero risk, a logical person would be willing to pay $1,000,000 to avoid a certain death.  For what it is worth, Viscusi currently pegs the value of a life at $8.7 million. 

How much is your fandom worth?

Yesterday's WSJ contains a front page article summarizing economic research that attempts to put a price upon an emotion, in this case how much is it worth to be a fan of the Minnesota Vikings. Some fans put their money where there feelings by buying tickets and merchandise. But many fans simply follow a team, so how much is it worth to them?

The research reported here revolves around a survey done at the time the owner was threatening to move the Vikings to another city (would they still call them Vikings in San Antonio?). Citizens were asked how much they would be willing to pay to subsidize a new stadium to keep the Vikes in M-town and the average answer came to $530 per household. In a cost-benefit analysis, this information would be used along with tangible economic benefits (such as extra sales of tickets, hotel rooms and viking helmets) to determine if the city should subsidize a new stadium.

This same type of research is used to determine the value of such items as maintaining a pristine wilderness that most people will never visit but value nonetheless. The obvious criticism: it is one thing to say you would voluntarily spend $500 in a survey and quite another to actually part with the $500. The researchers might get a better answer if they posed the question this way: mayoral candidate X proposes raising your taxes $500 to pay for a new stadium -- does this make you more or less likely to vote for this candidate?