| Fall 2001;
Volume 2, Number 2|
Feature: Violence and Healthcare
The Costs and Benefits of Reducing Gun ViolencePhilip J. Cook PhD and Jens Ludwig PhD
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Each year, approximately 30,000 people in the United States die as a result of gunfire and about 80,000 people are wounded. While nearly everyone agrees that these figures are too high, what exactly should be done about the problem? One informal slogan held by some advocates is that any intervention targeted against gun violence is worthwhile so long as one life is saved.
But as a guide for improving the lives of Americans, this slogan is not helpful. Would those who adhere to it endorse a program that prevented a single firearm injury, but had an operating cost equal to the entire federal governments annual budget? This program would meet the informal test of saving a life, but would deprive tens of millions of disadvantaged and elderly families of governmental assistance with housing, food, health care, and education upon which they desperately depend. Anyone who would be unwilling to support this program implicitly accepts the idea that benefits and costs are relevant for judging gun policies, and that some gun-oriented interventions are not worthwhile even if they would save lives. Thus, estimates for the costs of gun violence and the benefits of reducing it are crucial for identifying worthwhile interventions.
For some, calculating the costs of gun violence may conjure up a dry accounting exercise of totaling up medical expenditures and earnings lost due to injury. But in our view, an exercise of this sort misses the point (Max and Rice, 1993). The public concern with gun violence has little to do with the resulting burden on our healthcare system or the reduction in the size of the labor force due to death and disability.
Rather, especially for children and their families, the effects of gun violence have everything to do with concerns about safety. Avoiding and preventing gun violence is a costly enterprise in both the public and private spheres, but most people would be willing to pay more to reduce that threat. Thus, the cost of gun violence is the flipside of the value of safety, and that is the perspective that we develop futher in the remainder of this essay.
Valuing SafetyThe idea of conducting benefit-cost analysis in the area of crime and injury avoidance strikes many people as being disturbing since life should be priceless. Economists would agree up to a point, noting that human lives are priceless in the sense that they are not regularly bought and sold in the marketplace. It is usually true that no feasible sum of money can fully compensate the family and friends of the victims of fatal gunshot injuries. Nevertheless, courts do regularly place a price on life in setting damages for personal injury suits; legislatures and regulatory agencies are routinely required to decide how much an increment in safety is worth.
When Congress established a national speed limit of 55 miles per hour in 1974, the highway fatality rate dropped dramatically (Clotfelter and Hahn, 1978). But much of the public, including the commercial trucking interests, eventually demanded a return to higher speed limits despite the likely increase in fatalities, and Congress complied. Individual consumers are also forced to make decisions in the face of what might be thought of as a quality-quantity tradeoff for our lives. Should we spend extra to obtain a car with anti-lock brakes, or save the money for our childs college fund? Should we pay an extra $10,000 to buy a house that is farther away from the local nuclear plant?
To be clear, policy makers and private citizens are making judgments about the value of ex ante reductions in the risk of injury, before the identity of those who will be injured is known. While most people would give up much of their net worth to save themselves or a loved one from certain death, their willingness to pay for small reductions in the risk of death is more limited. The value of a statistical life is the summation of what people will pay for small reductions in the probability of death, with values defined similarly for statistical injuries and other health hazards. If each person in a community of 100,000 is willing to pay $50 to reduce the number of deaths in that community by one per year, then the value of a statistical life to those residents equals $5 million.
The amount people will pay to reduce the risk of a gunshot injury will presumably depend on how it affects them, their families, and their communities. Sometimes the monetary value of greater safety comes directly from a spreadsheet. For example, the sharp decline in the rate of violent crime during the 1990s have brought widespread gains in property values to many homeowners in urban neighborhoods. But most of what is at stake are intangible commodities not traded in the marketplace, i.e. freedom from the threat of gun violence and relief from the need to take steps to reduce that threat.
The willingness-to-pay (WTP) approach leads to quite a different picture of the dollar cost of gun violence from the standard public health approach. This cost of illness (COI) approach defines the costs of gun violence as the medical expenses incurred by victims plus lost productivity. This method ignores most of what is captured in WTP: the subjective value of safety, concern about others welfare, and the costs of prevention and avoidance.
In our book, Gun Violence: The Real Costs, (Cook and Ludwig, 2000), we show that medical expenses and lost productivity actually make up very little of the societal burden of gun violence. For example, the costs of medical treatment to victims for all gunshot injuries in 1997 was on the order of $1.9 billion. But this figure overstates the net effects of gun violence on total medical expenditures in the U.S., since gunshot victims would have required medical services at some point over their lifetime if they had not been shot. If one subtracts the estimated lifetime medical costs that victims would have incurred had they not been shot from the costs that they actually incurred as a result of their wounds, the net costs of gun violence to the medical system are on the order of $400 million to $1.2 billion. While this is not a trivial sum, these net medical expenditures represent only a small share of the overall costs of gun violence. The lesson is that the cost-of-illness approach understates the benefits to society from reducing gunshot injuries.
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