A Stitch in Haste

A four-year old boy died after riding an attraction at Disney's Epcot Center:

The $100 million ride, one of Disney World's most popular, was closed after the death but was reopened Tuesday after company engineers concluded that it was operating normally.
...
During an eight-month period in 2003-04, six people over age 55 were taken to hospitals for treatment of chest pain and nausea after riding "Mission: Space," though none of them was found to have any serious problem.

Putting aside any demonstrable fault that may be discovered later (e.g., operator error, failure to warn), one wonders how long it will take before there are calls to shut down the ride permanently. The chant will likely go something like this: "A mere amusement ride is not worth one human life!"

But of course, both lawyers and economists know that we put dollar values on human life all the time -- in wrongful death actions, workers compensation claims and even divorce settlements. People might even be said to place dollar values on their own lives when they take out life insurance policies on themselves.

Disney will find out about valuing human life soon enough when the parents of this child sue on whatever grounds they choose (and even if Disney isn't liable -- a quite tenable position -- they will almost certainly settle anyway). I actually want to address a different question:

Should the ride have been built in the first place?

Again, the chant will probably go, "A ride that is so risky that it might actually kill is too risky at the outset -- the cost is simply too great." But costs are only one side of the equation -- what about the benefits?

Opponents: "What benefits? It's just a stupid amusement park ride!"

Proponents: "Obviously there are benefits, or no one would ride it. There most be some utility being generated if people actually enjoy riding it."

Opponents: "How can you can compare a few minutes of mindless thrills to a human life?"

Proponents: "But it's not a few minutes -- it's a few minutes multiplied by the total number of rides taken. That could add up to hundreds of thousands, even millions of rides taken. That's quite a bit of utility. And yes, it might, all else equal, arguably exceed the value of one human life."

Opponents: "So we should just let kids die on rides?"

Proponents: "No, of course not. And again, if there was a clear fault on the part of Epcot, then Disney should pay damages to the family. But strictly as a matter of macroeconomics, it is inefficient and irrational to look only at risks -- even lethal risks -- and dismiss as 'irrelevant' or 'fleeting' the benefits provided by the product."

Opponents: "Heartless bastard."

Don't think it happens? Remember Slip 'N' Slides? Forced off the market (although they seem to be back with new safety features -- see also here). The New Jersey Supreme Court once essentially declared all above-ground pools to be unjustifiably unsafe in the wake of diving accidents (the rule was overturned by the state legislature). And don't get me started on pharmaceuticals.

Just because this is the kind of analysis no one wants to perform doesn't mean it isn't valid. One cannot disregard or trivialize the benefits to countless unharmed (and unnoticed) consumers and focus only on the aberrant costs to an unlucky handful.

That's the Politics, and the Economics, of the Warm Fuzzy Feeling, and it doesn't work.