Economic approach to punishment

I read a story the other day but cannot currently find it. It was an interview with the man who dispersed the 9/11 fund. He talked about how he determined a value for each life and how that determined the awards he gave out. This got me thinking about other applications for a quantification of human life and it came to me --an economic theory of punishment.

There is a long list of literature on the subject of the cash value of human lives. This figures are used in personal injury and wrongful death suits, to list a few applications.

There are various computational methods used to determine these values. One that I am aware of is using real estate figures. For example, a researcher can find housing that is similar except for the amount of pollution in the area. By looking to environmental figures as to the loss of life expectancy due to exposure to the pollution and tying that to the difference in the market value of the homes, she can come up with a value that the market places on life. This is a simplified version of just one method. Many others focus on lost income, etc.

Once a value has been placed on a life, a limb, or an emotional hurt it has been brought out of the fog of qualitative analysis and into the realm of quantitative. Instead of "insufferable pain" there is $200K of damage. I think that this quantification could be used to great affect in determining the proper punishment for a crime.

This would have the biggest affect on crimes that primarily cause economic loss, e.g. theft and assorted white collar crimes. If we are to put any credence at all into the values that economists and others attach to life, limb, and emotions then the value of those damages should be reflected in the punishment. In the converse situation, the value of damages from primarily economic crimes should reflect the punishment.

The two most obvious places this would have an effect would be "victimless" crimes, e.g. drug use (although assertive prosecutors would find societal costs) and white collar crimes, e.g. Enron where the monetary damage was high, but the punishment low. A "victimless" crime that causes no economic loss can demand no punishment, while an Enron that causes massive economic loss demands the harshest of penalties.

For comparison, assume an average life is valued at two-million dollars (If I remember correctly, this is not an unreasonable value). Under an economic theory of punishment (I know, sort of a misuse of the adjective "economic") someone who causes two-million dollars in damages is as morally culpable as a murderer, and should be punished as such. Not very Utilitarian, but that's not the point.

There are, of course, problems with this approach, both ideologically and practically.

The immediate ideological objection is that if everything is quantified, then a person should be able to buy her way out of her punishment in a similar manner to how the rich avoided the draft in the U.S. Civil War. One way to confront this issue is to use a sliding scale similar to that used to value lives and limbs by basing the damages on lost income. I believe Sweden applies jsut such a sliding scale in traffic fines. (google "Nokia and Sweden and "Traffic fines"") and see what you get!)

The practical problem is that accurate valuation would not be possible. The answer to that objection is that these valuations are used now, and that there are enough aggregate figures that reasonably standardized values should be derivable.

With the constant battle for objectivity and equality in sentencing laws, tying punishment to a quantifiable damage (as found by the trier of fact in a court of law) is one possible solution.