The Price of Everything by Eduardo Porter

As some of the prior examples might suggest, people often make decisions about prices and values that, upon careful consideration, are inconsistent or shortsighted. We change our minds and rue our actions only minutes later. We knowingly overindulge. We prize what we have more than what we don’t.
    Students of Duke University, for instance, said they were willing to pay up to $166, on average, for a ticket to the big basketball game—when Duke was one of four teams vying for the championship. But those who had a ticket said they wouldn’t sell it for less than $2,411. Economists who trust human rationality see credit as an optimal tool to smooth consumption over our life cycle, allowing us to consume more when we earn less and pay it back later. The rest of us know credit cards can be dangerous. One study found that basketball fans in possession of a credit card would pay twice as much for tickets to a Boston Celtics game as those who had to pay in cash.
    And we are often simply inveigled by prices. In the 1960s, the California businessman Dave Gold discovered that charging $0.99 for any bottle of wine in his liquor store increased sales of all his wines, including bottles that had previously cost $0.89 and even $0.79. He left the liquor business, launched the 99 Cents Only chain of stores, and made hundreds of millions. Since then, companies of every stripe have lured us by slapping $0.99 on the price tag. Steve Jobs revolutionized the music industry by persuading us to pay $0.99 for a song. Evidently, the number convinces us we are getting value for money.
    Surveying the landscape of our idiosyncratic decision making more than fifteen years ago, Kahneman, the Nobel Prize-winning psychologist, suggested that the government should intervene to curb our tendencies toward the less than rational. We should consider, he wrote, “some paternalistic interventions, when it is plausible that the state knows more about an individual’s future tastes than the individual knows presently.” Jenny Holzer, an American artist of the 1980s who built her reputation projecting self-evident “truisms” on buildings, building them out of neon signs, and stamping them on T-shirts, addressed the very same human vulnerability on the shiny surface of a BMW race car, emblazoning it with the phrase “protect me from what I want.”

CHAPTER TWO

    The Price of Life
    ONE OF PEOPLE’S most deeply ingrained convictions is that the price of life is incalculable. An old Jewish teaching holds that if one were to put a single life on one scale and the rest of the world on the other, the scales would be equally balanced. The French novelist Antoine de Saint-Exupéry wondered why “we always act as if something had an even greater price than life” when, self-evidently, “human life is priceless.”
    I’m not quite sure how this belief came to solidify. It might have been favored by evolution as a spur to avoid predators. Yet while true in the sense that each of us would probably accept parting with all of our worldly possessions in order to avoid certain death, this narrowest of definitions fails to account for the continuous pricing and repricing of life that has taken place since life first crawled out of the primeval swamp. More than a single price, life has a menu.
    Government is impossible without a grasp of what the lives of the governed are worth. The guidelines of the United States Environmental Protection Agency, last updated in 1999, value a life at about $7.5 million in 2010 money. Britain’s Department of the Environment says each year of life in good health is worth £29,000. A World Bank study in 2007 about the cost estimated that a citizen of India was worth about $3,162 a year, which amounts to a little under $95,000 for an entire life.
    Indeed, we are all ready to accept that life has a price tag as long as it’s not our own. The ethicist and philosopher Peter Singer suggested a nifty exercise to prove the point: ask yourself