ADEREMI MEDUPIN
An interesting entry point into the economics of death discourse is through addressing the economic costs of illness as attempted by Dorothy P. Rice, Thomas A. Hodgson, and Andrea N. Kopstein,… where they argued that: The economic costs of illness continue to play an important role in decision-making regarding the allocation of resources in the health sector. They represent the monetary burden on society of illness and premature death. Economic costs represent forgone alternatives and are measured in terms of direct and indirect costs.
A caveat by way of calming professional nerves and a confession
Let me quickly enter a caveat concerning the second part of the title of this piece concerning the ‘the death of economics’ in order to prevent being arraigned before the court of professional economists at home and elsewhere on the charge of murder plot. Details of my defense scenario will emerge later but suffice meanwhile to announce that I am not the original issuance of the verdict of professional death. It was Paul Ormerod as the head of the Economic Assessment Unit at The Economist and the Director of Economics at the Henley Centre for Forecasting in England and who had taught economics at the universities of London and Manchester, and was a founder of the consulting firm Volterra that authored the book, The death of Economics in 1994, published by Faber and Faber Limited, London. An early reviewer of the 230-page book referred to it as “this fabulous little book” while another reviewer described it as “a nice overview of the insanely irrelevant models used to justify free-market policies up to the present day”. Much later, a commentator advanced the position that: “Paul Ormerod achieved notoriety, even opprobrium among orthodox economists, with the publication in 1994 of his best-selling book The Death of Economics”. In the interim, however, permit me to take up the more personal and sobering issue of the death of fellow human beings.
Given my recent loss of two long-standing friends and mutual club members -Dauda Adebimpe Ibrahim-aka Shetty-from Offa in Kwara State, Nigeria, and Abdulkarim Abdulaziz from Ogbomoso, Oyo State, Nigeria- in rapid succession, I should be pardoned for raising the subject of death. However, well ahead of the twin losses, I had been very curious about the phenomenon of death, to the extent that I have a yet to be published manuscript devoted solely to the subject. The opening of the manuscript’s Preface runs as follows:
I have a long list of relations, friends and assorted colleagues of varying connections who could be considered as having died either relatively young or whose death came, somewhat as a surprise when it happened. At a profoundly personal level, how can we not be excited about how one feels, if one knows, at the approach of our death?
In the concluding section of the manuscript, I noted that, While working on the initial draft of this brief text, I ran into a newspaper publication dated July 21, 2022 headlined: “Death is Coming soon-Mike Tyson” under which the famed boxer is quoted as saying that he felt his death inching closer, adding: “We are all gonna die one day, of course. When I look in the mirror, I see those little spots on my face, I say, ‘Wow. That means my expiration date is coming close, really soon. . . . Money doesn’t mean sh*t to me. I always say that to people. They think money will make them happy, they have never had that much money before, because when you do nobody can truly love you . . . “ (accessed at: www.dailytrust.com). From the boxer’s submissions, clear messages on living and dying come across zeroing down to the sobering Biblical refrain about all worldly possessions being nothing but vanity.
As shared by an analyst, it would not be an exaggeration to say that the topic, “Death”, is one of the most avoided conversations. This point is buttressed by the following quote by an anonymous writer, who reported that: “Life asked Death, ‘Why do people love me but hate you?’ Death responded, ‘because you are a beautiful lie, and I am a painful truth'”. This is apt, as many dread to talk about death despite its inevitability, be it in open or private discussions, and if they must, they tend to seek the convenient route, or uttering the ever-evasive dismissal “GOD FORBID!” Death, however, is an inevitable reality with real-life consequences – sometimes in ripples – on many lives, especially the loved ones the demised left behind. The key point in the foregoing is the inevitability yet incomprehensibility of death, while serving as a broad introduction to our theme which addresses two distinct areas in the application of death scenario.
Human loss through death
As already implied, the instigation for this piece in the first place is the loss of two mutual friends. This initial instigation understandably led to how my professional discipline is connected, treated under ‘Economics of Death’, where attention is not the philosophical issues surrounding the subject but its material fallouts, From a philosophical perspective, a challenging question is: what truly happens when a person dies?. There are two possible answers to this question. A simple one and a rather difficult one is that when a person dies, the bereaved lose that life eternally; that is a simple truth. The second not-so-simple answer is that death does not only take away lives, but it also sometimes negatively impacts the demised family. This latter answer links up partially with the economics of death.
The kernel of the economics of death is highlighted in a number of studies. For example, according to research conducted by Paul Gertler titled “The Presence and Presents of Parents: Do Parents Matter for More than their Money?” buttresses this reality when revealed that at least 15% of bereaved children drop out of school compared to 7% of non-bereaved children. Also, according to Forbes, most businesses do not survive after the owner’s death. Averagely, there is a 20% probability of an enterprise failing within four years after its owner’s demise.
Typically, the death of a loved one is a harrowing experience but having to deal with the hardship of survival while grieving is like being caught in a classic case of double jeopardy. At a more aggregated level of analysis, we can see how the way a country’s economic system impacts on the lives of citizens. As illustrated in the article, “The Economics of Life and Death” published in Scientific American of May 1993 by the Economics Nobel Laureate, Amartya Sen, as example, “one country can have a much higher gross national product per capita than another; at the same time, it can have much lower life expectancy than its less wealthy counterpart because its citizens have poor access to health care and basic education.”
An interesting entry point into the economics of death discourse is through addressing the economic costs of illness as attempted by Dorothy P. Rice, Thomas A. Hodgson, and Andrea N. Kopstein, in their 1985 article, “The economic costs of illness: A replication and update”, published in the journal, Health Care Financing Review, volume 7, where they argued that:
The economic costs of illness continue to play an important role in decision-making regarding the allocation of resources in the health sector. They represent the monetary burden on society of illness and premature death. Economic costs represent forgone alternatives and are measured in terms of direct and indirect costs. Direct costs are the value of resources that could be allocated to other uses in the absence of disease, and indirect costs are the value of lost output because of cessation or reduction of productivity caused by morbidity and mortality. Morbidity costs are wages lost by people who are unable to work because of illness and disability and an imputed value for those persons too sick to perform their usual housekeeping services. Mortality costs are the present value of future earnings lost by people who die prematurely.
When I asked Google if human life is quantifiable, the provocative result I got ran thus: In Western countries and other liberal democracies, estimates for the value of a statistical life typically range from US$1 million—US$10 million; for example, the United States FEMA estimated the value of a statistical life at US$7.5 million in 2020.
In the USA during the Covid-19 debacle, there was a radio programme, Planet Money (accessible at: https://www.npr.org/transcripts/835571843)on which the value of human life was debated, comprising two hosts and a guest- from which, with editorial touch, the following extracts are made:
KENNY MALONE, HOST: OK, then how much exactly is a life worth in dollars? It is a sticky question, and it happens to be very familiar to economists.
BETSEY STEVENSON: When people say, how could you put a value on life, I say, how could you not? How could you pretend people are valueless?
MALONE: The sticky question at the core here is: How do economists put a dollar value on a single human life?
GONZALEZ: We can tell you they've got one. They say a life is worth about $10 million. But to explain how they got that number, that's a whole episode.
GONZALEZ: So the government has to run this math, and to do that, they need to say a lost life is worth some amount of money. And up until the '80s, here's how they did that. They asked, what is the cost of death? Just an average person's death, both the medical costs associated with that death and - and this is the important part - their lost earnings.
MALONE: Yeah. This is a version of how courts sometimes handle wrongful death lawsuits. When somebody dies early, there are all of these years of life when that person would have been working and earning money but isn't. And so the court will sometimes give a family all of that lost future income.
GONZALEZ: This calculation was called the cost of death. And in 1982, the average cost of death came out to around $300,000. So that would be, like, $800,000 today.
MALONE: But $300,000, that was the number back in 1982 that the government would use to evaluate a new regulation, to figure out if the lives saved were worth the regulation cost.
MALONE: Think about what you are implying by using this number - that a person is only worth what they make at work? Like, that is clearly going to be a low number, too low of a number. You know, it makes no sense in that, you know, if you look at people who don't have income coming in, are their lives worth nothing?
GONZALEZ: Economists have been working on this. And it's tricky because, like, what are you going to do, just ask people, how much is your life worth? They're just going to say, my life is priceless. It's worth an infinite amount of money.
MALONE: This is one of the flaws with this method of putting a value on life. It doesn't factor in grief, or how, or when somebody dies.
In the same neoclassical framework, to Insuranceopedia, the economic value of an individual life is the amount calculated from one’s yearly income, the income one gets leading to retirement, and other variables (savings, assets, etc.) to determine the financial loss a family will suffer in the case of a family member’s death. This calculation will help determine the amount of insurance that a person qualifies to receive. On the platform of Open Archive, under an entry titled, “How Much is a Human Life Worth? A Systematic Review”, published on May 25, 2021, we are informed how “monetary valuation of a human life – the value of a statistical life (VSL) – is used in a broad range of policy areas resulting in a wide range of VSL estimates”. For elaboration and obvious rationalization of insurance, Insuranceopedia explains:
The death of an income provider in the family economically affects the entire household. To protect them from economic devastation, a member, specifically the breadwinner, gets an insurance policy that is determined from the amount of money that is lost if he or she dies. This is arrived at by computing the annual income, the projected generated income until retirement, and other factors such as savings and assets. While this is one method of knowing how much insurance a person should get, there is also another method which, perhaps, is more versatile because it also absorbs the financial effects of death. This method is called the needs analysis approach. To put it simply, this method calculates the expenses a family needs in the future. This includes, but is not limited to, education, legal fees, child care, other possible household obligations, and loss of income due to an employed family member’s death.
But, realistically speaking, is it not murderous to put a price tag on human life as neoclassical economists are wont to do in their typical cost-benefit analysis of projects scenario? It is in the spirit of this basic question that mainstream economics is dismissed as dead on the charge of irrelevance to true human essence that is, not being human-centred. For reason of logic, it makes sense to take a brief look at the trade in human parts as a way of peeping into the value of human life as a wholesome unit.
A note on trade in human organs
Organ trade constitutes the sale and purchase of organs for financial or material gain. According to Frederike Ambagtsheer and Roos Bugter in their article, “The organization of the human organ trade: a comparative crime script analysis”, published in Crime, Law and Social Change (2023), the growing scarcity of human organs has led to an illegal organ market that is proliferating globally. Although reliable figures of the trade’s scope are lacking, the World Health Organization (WHO) has estimated that approx. 5000 illegal transplants are performed annually. In 2014 the Council of Europe established a new convention against ‘Trafficking in Human Organs’ which calls for a broad prohibition of virtually all commercial dealings in organs. Accordingly, sales that occur with the consent of donors are considered to be ‘trafficking’ regardless of the circumstances involved. This may help to explain how a former Nigerian Senator served jail in Britain. As noted by Peter Andrews in his post on “The Value of a Human Life”, due to the unparalleled value of human organs, in addition to the potential for exploitation of impoverished individuals, institutions like the World Health Organisation (WHO) insist that organ donations should remain altruistic. Incidentally, studies show that all organ trade cases that have been exposed to date, reveal that legal institutions including blood banks, hospitals, clinics and their staff were directly or indirectly involved in facilitating illegal transplants.
All the aforesaid in this section is background to our primary interest: acquiring an objective perspective on the estimated value of life in the inhumane market economy, that is, putting aside the moral questions of why and how come that the market economy is pricing even our body parts and health in the first place. Of course, there may be conceptual arguments around whether the sum of the parts can be equal to the whole. Dr. Bertalan Mesko, PhD-in The Medical Futurist of June 9, 2022, has provided an insight, noting that: “The world is a giant supermarket where you find price tags on literally everything. A rare butterfly can cost up to a grand on eBay, an acre on the surface of the Moon is available from $24.90 – although we strongly discourage you from actually buying it, and your organs are also for sale. If you could harvest every organ and chemical in your body, you could make a $45 million. But in reality, Medical Transcription estimates, the average price of a human dead body is more likely to fetch around $550,000 (with a few key body parts driving up the price)”. Here we are-dear reader; how much is your life worth? Trust me, I don’t mean to be rude. The medic then entered the insightful observation that: “So, it seems that your body parts are already labelled with a price tag. Scary, isn’t it? But in terms of the pricing practice, there’s not much difference when it comes to our overall health and life either. The distinction lies in that organs with price tags are not so visible to us as the price of therapies, drugs, or prosthetic body parts”. So, we are still left with the question: when a person dies, what do we consider his life to be worth in monetary terms? But how about the death of economics?
Back to Paul Ormerod’s The Death of Economics
A befitting way to approach the justification or otherwise of the verdict, The Death of Economics by Paul Ormero is to bring out its essential argument as done by the publisher with the following critical remarks, that:
Ormerod’s aim was to provide a critique of conventional economics which was accessible to general readers. He described orthodox economics with its assumptions of a rational behaviour in a mechanical, linear world of equilibrium as in many ways an empty box. Its understanding of the world is similar to that of the physical sciences in the Middle Ages. A few insights have been obtained which will stand the test of time, but they are very few indeed, and the whole basis of conventional economics is deeply flawed. No wonder the prescriptions offered by conventional economists regarding big questions like inflation and unemployment are, according to Ormerod, at best misleading and at worst dangerously wrong. A secondary objective of the book was to suggest how economics could be developed to give a better understanding of how the world actually operates.
When David Heathfield undertook a review of the book on the pages of The Economic Journal, Vol 105 in July 1995, he concluded on the note that : “This is a book written by an experienced applied economist and addressed to the general public with the intention of ‘blowing the whistle’ on the economics profession.”
The verdict that economics is dead has been carried to finality by Fergal Shortall, titling his review piece boldly as: “Economics: An Obituary”. This reviewer opened his effort with the following humbling remark: “It is difficult to come to this book with an open mind. Its title suggests a breadth of ambition worthy only of someone with a middle initial, a professorship at Harvard and a Nobel prize, and yet Paul Ormerod is not a household name, even in utility-maximizing households. Furthermore it is a slim airport paperback addressed to the general public not a weighty two-volume magnum opus. In short, it seems at first glance to lack the gravitas necessary to tackle such a topic. However, let us reserve judgment for the moment.” He then drew attention to ‘the present state of economics’, and how Ormerod begins by painting a dark picture of the world in general, and of economics in particular. Recessions, mass unemployment, currency instability and volatile economic cycles have all gone forecasted by economists. The failure of practitioners to predict events of major importance leads him to wonder whether the subject can be of any use at all. Ormerod gives a potted history of the major economic theorists of the past, Smith, Ricardo, Marx and Keynes, emphasizing the scope of their talents and noting their determination to root the subject in the real world. Against this, he juxtaposes the position of modern economists, whom he says have lost touch with reality and in fact 'positively extol esoteric irrelevance.' The profession has become more concerned with the elegance of their theories than their practical implications.
In this vein, of all places, we find displayed on the IMF Blog the acceptance of a “growing disenchantment with the economics profession and calls for the discipline to change to better reflect individual and societal values”, under the topic: Beyond Efficiency: A More-human Economics, authored by Gita Bhatt as shared on March 4, 2024. Similarly, Harvard’s Dani Rodrik has contended that existing policy models are inadequate to address such challenges as climate change, inclusion, and economic development. As an analyst puts it, the orthodoxy of economics, trapped in an idealised, mechanistic view of the world, is powerless to assist in the face of the world economy in crisis, characterized by stagflation: the combination of inflation and unemployment. This is without prejudice to the fact that, academically, the discipline seems to have developed enormously, the mathematical sophistication especially having increased in terms both of theoretical work and of the approved methodologies of applied economics. However, in reality, as Ormerod captured it in the Preface to his controversial but illuminating and challenging text in focus, even to the intelligent member of the public, economics is often intimidating. Its practitioners pronounce with great confidence in the media, and have erected around the discipline a barrier of jargon and mathematics which makes the subject difficult to penetrate for the non-initiated. But as John Maynard Keynes himself observed, “The difficulty lies not so much in developing new ideas as in escaping from old ones.” This is a way to avoid the death of economics, as presently constituted and oriented. I come in peace, please.
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