« Freakonomics Radio

344. Who Decides How Much a Life Is Worth?

2018-08-09 | 🔗

After every mass shooting or terrorist attack, victims and survivors receive a huge outpouring of support — including a massive pool of compensation money. How should that money be allocated? We speak with the man who’s done that job after many tragedies, including 9/11. The hard part, it turns out, isn’t attaching a dollar figure to each victim; the hard part is acknowledging that dollars can’t heal the pain.

This is an unofficial transcript meant for reference. Accuracy is not guaranteed.
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herbal mass shooting or terrorist attack there. A man whose phone eventually will ring. My name is KEN Burke, I'm a lawyer here in Washington Dc Fibre grew up near Boston in Brockden, Massachusetts, Brockden, Highschool, gradual, University of Massachusetts. Graduate New York Universe, the rule of law, and then I was asked by the chief judge of New York state to clerk for him. This was Nineteen, seventeen as fine bergs career progressed. You got to know many of the chief judges other former clerks, one of whom was the very distinguished eminent federal district, Judge Jack, be wine Steen in Brooklyn one day in nineteen. Eighty four fibre got a call from judge wines dean by this time. Find Burg had put it
time is a federal prosecutor and as chief of staff for Senator TED Kennedy. Now he was in private practice. What did judge Wednesday morning? wine Steen had a sign to him. The agent orange litigation brought by Vietnam veterans against the chemical industry, dial Monsanto, alleging certain physical injuries and deaths attributable two inhaling or swimming in the Herb agent orange while serving in Vietnam? For those who don't recall or no agent orange, was an ex volume enter burn the shrubs
author to give american soldiers and advantage he had tried. So so the Vietcong couldn't hide an ambush american soldiers, while the Vietnam veterans came home with clear rack knee with soft tissue saw comas with other cancers and Judge Weinstein's had their case very complicated, very complex medical case and on the eve of trial he asked me, would I be willing to come to Brooklyn to mediate settlement of that case, and then design and administer a compensation programme for eligible Vietnam veterans. The judge Wednesday knew that you very much admired him was that in any way his thumb on the scale in that case, yes, he put his thumb on the scale to get it settled. I dont think he put it come on the scale as to what the amount should be or whether the odd the chemical industry had a better
ace than the young Vietnam veterans. He put his thumb on the sky only in the sense that much fine resolve this case rather than litigate the case and then appeals and five or six more years of uncertainty. Here ah the necessity of trying to bring the litigation to closure, and he also saw that legally, the veterans had a tough case. They may not win were you aware of any previous programmes or any previous settlements that were even close to its similar, to that in terms of scope and really magnitude, no unprecedented riding on a blank slate Oh, I accepted the assignment at the request, of course, of the court, and in eight weeks we settled that mass of complex litigation. Once I did that everybody started calling me,
The agent orange settlement didn't please. Everyone in fact is barely ever a subtle like this. It leaves everyone happy because underline each case is a tragedy that dollars cannot repair tragedy requiring a thankless and perhaps impossible calculus, but that's when fine bergs phone rings it might be a governor hit loophole in Colorado. After the war, a movie shootings in be a mayor Menino in Boston after the Boston Marathon bombings. It might be the path in two of the junior tech university. There was one tragedy that different from the rest on several dimensions: the nine eleven fund was fascinating, because Congress authorize unlimited funds, whatever fine bird thinks is appropriate. Five. With us. We don't know how to value these lives today.
almost radio. How do you put a monetary value on a human life? He looked at me, mister fibre. Don't ever tell people like me that you Oh, how I feel you have no idea how I feel from stature and debonnair productions, this is pre economics, radio, the path casket explores the hidden side of everything. Here's your host, Stephen Governor, It's been happening with increasing intensity, if not quite regularity. The gun massacred,
at Sandy Hook Elementary School in Connecticut at the pulse night club in Orlando, at the country, music festival near the Mandalay Bay Hotel in LAS Vegas. When the call comes Kenneth, fine Burg sets aside his regular illegal work and takes up the kings, usually working pro bono. They know every case is different. There's a different set, victims is a different motivation, is different pool of money. There's a different public sentiment, Walkest. how you get involved, how you assess the landscape and then how you begin to make it happen, show on the agenda one somebody initiate not me. I get the Paul to design it. Somebody initiates than the very next question you have to ask: how much
me: do you have to distribute that drives everything until you know whether you have got a billion dollars, five billion dollars, twenty billion almost three set three million dollars: eight million dollars, there's nothing to we and you can't decide and design a programme. until you know how much money there is that you gonna allocate to victims, then you ask based on the amount of money whose eligible the dead, the physically injured, what about those didn't suffer any physical injury, but I now saw mentally incapacitated. They can't get out of bed they eligible. Then you have to ask very important What is the methodology that will be used to calculate how much goes to each individual? Do we base it on towards system somebody gets hit by automobile or falls off a ladder that system
Does one size fits all all that all wives or equal everybody gets the same? You ve got to decide methodology will be used and then, after you eligibility and methodology decided? What proof does a victim alleged have to meant to me to corroborate the claim and then finally, do you want to give every eligible victim or the family at their arms an opportunity to be heard to come in and talk with me once I get that call. Those are the issues that does that have to be addressed in the time between the event itself. and you getting the call it saith the vaguest shooting with the Orlando shooting. What are you thinking are you waiting for the car you thinking about that event? Are you assessing in anyway? I'm not waiting for the call. I hope the call won't come
and if it does come. I hope that it will come later rather than earlier more time that goes by after a tragedy, you hope will be a dampening of the emotion of the subject. In the victim's emotional trauma. is the single biggest handicap obstacle to successful implementation of these programmes. You ve said in the past that the single- maybe most, common heartache of night, eleven survivors victims, families were is the lack of a body? Yes is: did that surprise you? It surprised me the depth, of the emotional axed. When mothers and fathers
to see me and say you know: Mister Fibre, you're, offering me four million dollars, and they have an even found my daughter's by and probably never will that that there, raises the emotional stakes of a hearing of give and take and makes it all that much more difficult to talk in the old world of dollars and sense. One of you Most unusual settlements was after the two thousand financial crisis when the government, essentially over a number of firms, and you are called into set the limits on their top executives. Compensation Congress bailed out corporate Amerika after the two thousand eight nine financial crisis in order to prevent Bank of America or GM or Chrysler or Citibank? Hiv
from going under ex money propped up the private american Business Economic System, Congress passed a law and the law said well now that we have protected these companies and bail them out from bankruptcy. We are now a creditor and until the companies pay us back with interest, we will appoint the Treasury Department to fix corporate pay, the annual compensation of private corporate officials and they thought what kind of guy could we get populist were secretary of the Treasury, called me up and said we were treasury. We don't want to be in this business setting pride corporate pay. What would Alexander Hamilton say:
so on. This is my job, the sixteen months to set individual corporate packages of compensation for the top twenty five a fish, else in the seven companies that was give the most taxpayer bail out assistance and what kind of blow back did you get from them? Tremendous global I didn't realize. I do not realise how emotional this would get corporate officials. If I go them and say you were making five million a year now gonna cut back to a million. I would it for them to say all that means I'll have to sell a third car. I will have to get rid of our are a state on long island at the beach, be able to send my kids to Exeter and hand over that's what I expected. I was wrong very emotional, because these
corporate officials, view the compensation the barometer of self worth? In that surprise, you, prize me. It was an emotional as nine eleven missed a fine work. If you can my pay by ninety dia, eighty percent. How dare you I have worked for twenty five years for this company. I have given my sweat, my blood and all that I could and now you have made me worthless in my owner. Would you think of that argument that you find validity in Vienna? I found validity in the legitimacy and good faith, emotion that they exhibited but with all due respect, It was not a rationale for me to say I feel bad for you and the afore. I won't cut your pay cuts, was passed a law I was frankly astounded at the
motion all mirror of self worth. That was reflected in what your check says every week. what about the church in your role on Sundays, at the church? What about your three children and how although being raised one about the loving family that you ve got. No, no there is, of course, big difference between a government claw back from corporate executives and distributing money to the victims, and survivors of mass mass shooting or terrorist attack in most of the law cases the funds are. Not from an institution or government, but from public donations. The one Orlando fund, for instance, was set up to help victims of the pulse nightclub, shooting in which forty nine p or killed dozens injured. The received more than thirty one million dollars in donations. Of that fine Burg, destroy
it is more than seventeen million dollars to the families of the people who were murdered. The victims who spent time in a hospital but survived doctrines, nine thousand three hundred and twenty one thousand dollars and people who work in the night club, but weren't hospitalized got a bit more than twenty six thousand dollars each when it comes to putting a price on human life, suffering. Fine burg is hardly reinventing the wheel. There actually lots of different ways to do it. That's W Kip I'm an economist Professor Advantage university miskities work has focused. a widely used metric called the value of a statistical life, via statistical life refers to how much is worth to prevent one expected death. Some people, especially if it's their own death, are trying to prevent, would put that number at infinity
everybody who thinks that life should have an infant value should instead ask themselves the question: how much did you pay for a car that's safer, but by a trivial amount and most people are not willing to pay a limited amount of money for this slightly safer car. There's another complication to statistically evaluing life and even harder problem to solve lost, people say that even placing any doubt number on life devalues life but we should be doing it at all, but routine practice governing these have to make decisions so either implicitly, were explicitly they're, gonna be valued life and we want them to use the right numbers. Ok, so what are the right numbers? How do you get there? Let's start with the it used to be so used to be. The government agencies such as the occupational Safety and Health administration, did not want to explore They say that there are placing a value on life.
Instead, they called at the cost of death of the cost of debt. Figures only a capture, the income loss to survivors. They don't capture how much you value your own life and how much you value staying alive, What you really want to know is how much people willing to pay and how much is society willing to pay to prevent the risk of one expected death and the way I've looked at? It is Examining how much workers require, in terms of compensation, to face extra risks of death on the job, and if you do how you come up with a number and current hours of about ten million dollars in a perfect world. The compensation for risky work would inevitably price in that risk, but, as Viscusi explains, the world is far from perfect. So, but I found is that whether you get paid or not depends on in part on
You are so immigrant workers, particularly mexican immigrants, who are not fluent in English, work on jobs that are fit. percent riskier than the average job, and they don't get extra pay for the risk. So these are the areas where we need more government regulation and more vigorous enforcement of irregular standards I would not place a lower value on their lives as simply because they have fewer opportunities. If you gave them these opportunities, they would have different views is because these calculations are well calculated, even rational. Perhaps problem is that rationality often dissipates once a terrible thing happens when people are hurt or killed by companies product and there's a lawsuit. I've done, studies with mock, jurors, hundreds of mock jurors, were presented them with different case sinner
is and some clear case scenarios the company's didn't place of value. life at all other scenarios. The company placed a valley; based on the lost earnings other variant was the company placed a value on life based on the events, valued statistical life, where I found is that you get perverse result, which is that the com these value lives more say they value lives. It a million dollars or seven million dollars. Instead of a few hundred thousand dollars, I want to send companies a signal that they disapprove of what the company's done, so they want to punish them, whether the exceeds whatever dollar number the company you. So if the company used number three hundred thousand dollars then, punishing them. A million dollars would send them a price signal of the value the life at sea, million dollars. You have to punish them for the penalty of ten million dollars in Georgia. Let them.
They ve, undervalued life and there's. Another complication are all lives valued equally, this is a cabin society can find work again. My He has always been the vehicle to lift up the innocent, are the victim and and that that is something that is reckon GEO. Giving different amounts to different individuals that doesn't sound. Very american is very american if Somebody gets hit by an automobile off falls off a ladder. The stockbroker and the banker get more the waiter, the busboy, the fireman. That's the american capitalist system,
and that's the role of money in trying to temper the unfortunate coming up after the break. That system gets put to the test after the nine eleven terrorist attacks. I was angry with very angry, yet at the same time, I didn't want to buy the hand hand that would feed me. Freedom through sponsored by fell on Amazon when you sell on Amazon, there's room to grow ways to move in countless Reasons to believe that your brand can do more, Amazon can help you set up your products and Your brand story give you access to. Site analytics and even help with shipping customer service
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Oh now makes sign up for your trial today at noon, and oh, oh, am dotcom. Flash for economics, for economics. Radio sponsored by rocket mortgage. Getting a mortgage doesn't happen the hassle rocket mortgage gives you the tools, information and expert help. You need understand all your home loan options and purchase with certainty, visit rocket mortgage dot com? Slash. Because when you need a mortgage fits your life rocket can call for cost infirmity. And an conditions equal housing. Lender licensed in all fifty states. An m l as consumer access not work? Number thirty, thirty can finally, is a lawyer in private practice in Washington DC, and I have the task after Sir tragedies of trying
calculate what amount of public or private compensation should be allocated to particular victims, if you ve heard of and bird before today. It's likely because one of the tragedies he worked on was in eleven terrorist attacks. He sought out that job, that's correct. Once the legislation was passed by Congress and signed by President Bush saying they would be fun. I suggest two boats under the Kennedy and Senator Chuck Hegel, good friend, of mine, from a Nebraska Republican. Ah be interested: well, that's all it took they together com Captain John Ashcroft, the attorney General President Bush and I got the job this job, was for many reasons, different from any other, the scope of the tragedy, that political economic and emotional tensions and perhaps most distinctively the course of the settlement money. The nine eleven fund was found
two, namely because Congress authorize unlimited funds, whatever fine bird thinks is appropriate. Fine with us, we don't know how to value these lives and in that programme I spent tax. Your money seven point one billion dollars. I thought that the Congress would not. Me, and instead the Congress was so very, very satisfying there. a lot of things about the nine eleven victims. Compensation fund that were unique. The airlines and other industries, for instance, didn't contribute one sent the Desolation was written essentially to protect them and industries in other industries may be insurance firms from going out of business. It basically Although the programme was voluntary and encouraged all victims who lost loved ones in the World Trade Center, the airlines, the Pentagon, to divert themselves out of the legal system and come in
special award and problem. on a sign piece of paper. I will not so view giving immunity in effect to the airlines who can't be sued for negligence and saw bullying the cockpit dual wasn't secure. security system was negligently installed If you are giving them sort of immunity from suit or what about the victims? Who paid the price Congress decided we better balance, we will make it very difficult to sue the airlines. Are the World Trade Center but at the same time, will make it very easy for victims to get compensation without showing. So that was the balance that was struck them. Meant the minute? I saw that that voluntary
chickens have to sign a paper. I will not so well. That means everybody who, who filed a claim, has to receive a different amount of money. A stockbroker are a banker, or a high price lawyer or accountant Thee survivors, expect more from the nine eleven fund in return for a promise not to sue the waited the busboy the volume and caught the soldier. The minute you take a programme with public money, in joining the litigation at the hip of the programme. Everybody's getting different amount, and that causes tremendous divisiveness. leave it with Senator Kennedy who said to you, listen, you think he'd to understand that a life is alive and that, while you do need to recompense more in some cases, can you talk about that? To balance you tried to string, of course,
Sunday to Kennedy, said flat out privately now. Can this is all taxpayers money? coming out of the: U S: Treasury make sure that ninety percent of that money doesn't go to ten percent of the victims that will be a real mistake. So what I did under the statute, I had discretion and I could Sayd was stockbrokers. Widow No, if you run the numbers purely the calculation of lost earnings, your husband over a lifetime after taxes, central would have made twenty one million dollars well, this fund was not designed com. It was never intended to give you twenty one million dollars salaam exercising my discretion under the statute and on no reduce to six million dollars, another a very, very few people, even getting six million dollars, but based on the data and
your husband was earning and what he was likely projected to earn? I'm gonna be a high end, compensated individual, We are, as the waiter or the busboy might have had, light time, earnings after taxes of eight hundred thousand dollars I'm gonna rage, you in my discretion, close you're, not to two million, but please to the median of about one point? Five million and thou way? Exactly as you point out, I mean managed exercising my valid discretion to narrow the between the rich and the poor. Did you hear complaints from from the fire Please have the highest earners some, a few sued, they went to federal court. They mean that I was violating the statute by not giving them the full economic lost wage
any lay within the corridor of the settlement having agreed to the settlement, no, they didn't so I said I'll give you a million instead of one million. I want twenty four million may said your I the statutory language they went to court the all settled the cases. Five years later there was never a trial and people ask me that did they get more or less well. Some may have got more. Some of may have got letters, but we know how to know it's a confidential, but don't forget those families, lived with this for five years we live did, and we lived the tragedy and at the end of the day, whatever they got, twenty five percent of it went to the lawyers. Do you feel it's a more complicated calculation to do the kind of the kind of calculate Economists, like kippers goosey, do they try to put it
based on, among other things, public goods, right, clean air, water and so on. Do you think that's inherently and much more all much more difficult. You know what I do in all of these programmes: is not rocket science? The tough pop the debilitating pot is the emotion the stories you here, you wouldn't believe Lady comes to see me twenty four years old, sobbing, Mr Fibre, I lost my husband. He was a fire fighter and he died at the World Trade Center and he left me without two children, six and for now, when you cut the cheque from the nine eleven fun, I'm gonna get two point: four million dollars tax free. I wanted in thirty days, MRS Jones,
Why do you need the money in thirty days? This is public money. The Treasury has to do its duty and it might be ninety days. You will get your money. I want it and thirty days why I'll tell you why Mr Fibre. I have terminal cancer. I have eight weeks to live. my husband was gonna, take care of our two children. Now They are going to be orphans. Now I've got to get this money? While I still have my faculties, I've got a set up a trust Get a guardian make sure they will be provided for I don't have much time you gotta help me Well, we re and down to the Treasury. We accelerated the programme. We gotta the Czech see weeks later. She died, ah
Did you try in the beginning to be more empathic, perhaps than you realize was a good idea. Yes, and I make me takes to see you make mistakes, and you learn your lesson. I remember one hundred and eighty three year old man came to see me after nine hundred and eleven he said I lost my son justify, were the five it never bury your son. I be the same. Does it matter much money you give me. I made the mistake of being to this very nice man. This is terrible I know how you feel he looked at me. Nice man tears, Mr Firework, don't ever tell people like me that you know I feel you have no idea how I feel you have a tough job, but
those words ring hollow their pretentious the robotic I'll. Never do that again. I was angry Angry yet, at the same time, I didn't want to bite the hand that would feed me that is Charles. Will. Whose wife Catherine died on nine eleven he is an end. they distributor Catherine worked with him on that business and just started a new job as an executive assistant in the north tower of the World Trade center. We ask our friend Anna Sale, hosts of the deaths sex in money pot guest to talk with Wolf about his expense, We can find Burg and the nine Eleven Fund Congress takes. Action Ultimately, there is one point: one man whose job it is to be the person
give you an answer on what of this fund this money from the governor? What will be or share because of your loss? No, that's not the way it worked real simply. This did not have a fixed amount of money allocated to it. He have the entire United States Treasury at his disposal. It was not based on how much of this money were you going to get they made it exactly like. You would happen for a wrongful death lawsuit. They calculated it based on lost future earnings and pain and suffering. Did that feel like if he tells me he's cat I think I feel like there could be more potential for frustration if you feel like he's under I. I understood that so my mind was I needed to prove how much Catherine was worth based on record income,
what her absence in our business? Would result in and hopefully that everything would work out and when you say had to prove are you sitting with spreadsheets and doing the numbers yourself, a lot of it. Yeah of gathering information of getting pass information and Mckenna gathering data because the whole the whole thing the issue was the non economic damages, the pain suffering. What was that worth and that that was the question yeah he exactly heat. He had picked a number that time, those twenty seven years old, based on it twenty seven year old formula, correct and with no no no adjustments or anything. He because I learned the learned lawyers like to work on press.
That precedents than like approve New growled did you feel like he knew how to communicate with people who were in deep grief? No doubt of that time, so I had to show we see, be varied diplomatic about it. I had to say things in a certain but I had already done my homework. I knew the ins and outs of the whole thing and I may you sure that I attack his policies and rules, not him? Personally, I do remember, though, because at this point you don't know who to trust
not to trust- and I remember him because I went after several times- and he says his Charles and his bastard access he's a child's I've heard this all before. But I've never heard it said so eloquently is he'd, give B. Is he trying to placate me as you try to soften easy will once what's going on here, I and as he walked out of the room afterwards, He was a walkie by me like this ISIS, you pick the wrong benchmark don't know if you use the word closure when you're thinking about your own grief, but I had a dream about last night. Closure might be for something like you go through a divorce.
environmental subtler, wash that man right out of my hair, yeah. Ok, I felt that you know that make the closure stud. That's closure now, there's no closure, this. What you do is you move on your life, but when you're somebody that you ve loved deeply loved does that of ever go away. Would no one can find bearings job. I will take this looking at it now. He had one hell of a hard job. He and I had breakfast together in o eight. He says Charles. He says my lawyer. Training taught me how to deal with other lawyers. It didn't teach me how to deal with grieving widows six weeks after they lost their husbands, ices. I guess he had to learn
people have their spouses taken their siblings taken their parents taken see. This is the less you ve through this. There were times that I just want to be with her actually never thought committing suicide, but I knew that I wanted to be dead, so I could be with her when you get to that level. It's about having something in return, it's about something who can value a person's life. What they did is think they gave. what they would have made in the future. The best estimation they could that's where it was. I still think that's a fair way to do it
now defend the nine eleven Compensation fund to my grave, I think it did exist. what the american people wanted to show the world we take care of our own. They wanted to demonstrate the sense of community with the victims, so I think it was the right thing to do, but I think the nine eleven on better studied in history class, not alone, You will never see. Now the nine eleven fund? I do not believe, nor should you, because why you're taking public money. What if there is an event that necessity, views in this event. Every day that necessitates. Theirs this word that time are you ve heard a million times its closure does, it exist now,
Now I hear that all the time I mean I I you know you hear this argument. He is a check for tomb. in dollars. It will bring you some small closure from the incident in the grief, Doll, don't do that there are hollow substitute. I can tell you fora loss.
thanks to kind of fine bird for speaking with us today. If you want to learn more about his settlement, work has written to books. What is life worth and who gets what thanks also to Charles Wolf and a sale and keep the Scuse coming up next time on four, can I'm three you? Is it really true that Scandinavia is the happiest place on earth yeah? I definitely unhappy at its about togetherness. It's about pleasure. It's about once. I regularly forget to look a car and or house. I do leave my children outside sleep and why even economists are getting on a happiness train and putting aside traditional measures like GDP God, let's gets serious about the quality of our lives and stop this nonsense. That next time and for radio
if we cannot material is produced by stature and w productions. This episode was produced by MAX Miller and Andy mice and hammer with help from other Meloth Annabel making our staff also includes Allison Craig Loud Gregg resolve skiing, Gregg, Ribbon Harry Huggins, Encyclopedia ski the music you here throughout the episode was composed by Luis scare. You can find for economics, radio, wherever you get your pot casts. Our entire archive is available on the structure, app poor freak anomalies, dot com. We also find transcripts, show notes and so on. If you subscribe to stick your premium, you'll get every episode of economics, radio, ad free, plus lots of extra bonus episode, so Did your premium dot com, slashing economics, and you can and us on Twitter and Facebook, Linkedin or via and radio at for economics, dot com thanks, as always from us. Teacher
your health first, Cooper University Healthcare. That's our aim. Our doors are open, in fact they never closed The world has changed when you visited Cooper Office things may be a little different new safe. arts in place, but our medical sports commitment to putting your health first remains unchanged. Your health is important to us. so don't delay your health care. Offices are safe because we put your health first, Cooper, University, health care.
Transcript generated on 2020-12-22.