The Value of Life in the Social Cost of Carbon: A Critique and a Proposal

Abstract

Abstract In its 2023 revision of the social cost of carbon, the U.S. Environmental Protection Agency values people’s lives on the basis of their willingness to pay for them, without applying any distributional weights. It justifies this proposal on grounds of the Kaldor–Hicks criterion, which avoids interpersonal comparisons of wellbeing. But this criterion was discredited 70 years ago. Interpersonal comparisons of wellbeing cannot truly be avoided, and they should be used to determine distributional weights. One way of doing so is to identify as a numeraire a good that brings equal wellbeing to each person. A healthy life year is a reasonable, though only approximate, candidate for such a good. This article presents the point of view of a philosopher, regarding the practice of economists from outside the discipline.