vitalsignsblog

The US EPA places a dollar value of $7.9 million on human life.

The EPA estimates that a human life is worth 7.9 million dollars.

They use this figure when calculating the cost of implementing a new regulation.  Supposedly, if we’re worth $7.9 million each, the regulation should cost less to implement than the cost of losing the lives at risk absent implementation.

Figures on the cost of business compliance with Federal regulations range from $1.2 trillion annually to $2.2 trillion annually.  Using the Small Business Administration’s non-partisan figure of $1.75 trillion annually for business compliance costs, we can say that we spend $5,700 per year on compliance for every resident of the US.

But that’s not the only compliance figure.  There are many others, but for the sake of simplicity, we’ll look at the 6.6 billion hours spent per year filling out tax forms.  At the median wage of $16.27 per hour for opportunity cost, this means Americans forgo $10.7 trillion in opportunity cost just doing their taxes.

States also have compliance costs.  Using data from the Small Business Administration, it’s reasonable to estimate these costs at $3.7 trillion  per year.

Let’s add this up: $10.7 + $2.2 + $3.7 = $16.7 trillion (rounding causes imprecision).

Note that this figure includes a substantial amount of what economists call “dead weight loss” – the value that should be in the economy, but isn’t because of some complicating factor.  In this case, that factor is regulation.

Now, for the fun math.  The civilian labor force is (generously) 155 million people in the US.  Dividing compliance costs by the labor force gives us $107,742 in lost value per person per year because of compliance costs.

Now, divide the figure the EPA uses by the lifespan of the average American.  The result: $108,000 per year – or approximately equal to the cost of compliance with regulations.

The figures used above are accurate figures, though their real impact on the economy would likely be somewhere well short of 107,000 additional dollars per person per year.  Nevertheless, the math is clear.

If the US government wants to dramatically increase wealth (by as much as 100%) in the US, they should lessen the ridiculous burden of regulation.