The evaluation of lifesaving programs whose benefits extend into the future involves two discounting issues. The intragenerational discounting problem is how to express, in age-j dollars, reductions in an individual's conditional probability of dying at some future age k. Having discounted future lifesaving benefits to the beginning of each individual's life, one is faced with the problem of discounting these benefits to the present--the intergenerational discounting problem. We discuss both problems from the perspectives of cost-benefit and costeffectiveness analyses. These principles are then applied to lifesaving programs that involve a latency period.
In evaluating a proposed regulation or making a public investment decision, it is standard practice to compare the discounted present value of costs and benefits of the project, i.e., to apply a benefit-cost criterion. Application of this criterion, however, often meets with resistance when benefits or costs take the form of lives saved. This is especially true when lives are saved or lost in the future, thus raising the question of whether these lives, or the monetary value of the corresponding risk reductions, should be discounted.
The problem of discounting human lives arises frequently in the context of environmental policy. Perhaps the most striking example is nuclear waste disposal, which may impose risks on generations thousands of years into the future. The time pattern of risks to human life is, however, important even in the context of shorter planning horizons. Many environmental programs--for example, those concerned with asbestos--reduce exposure to carcinogens with long latency periods. This implies that, while the costs of reduced exposure may largely be borne today, the benefits do not occur until the end of the latency period. Compared with a program that reduces an individual's risk of death today, a program that reduces that same person's risk of death at the end of a 20-year latency period saves fewer expected life-years. This fact has often been ignored in valuing the benefits of environmental regulations.