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What Price For a Life?
Subject Opportunity Cost
Topic Scarcity, Choice and Opportunity Cost
Key Words Government, Awards, Income, Earning Potential, Wages, Damages, Benefits
News Story

Kenneth Feinberg, the lawyer appointed to oversee the government fund for victims of the September 11 attacks, has said that he is leaning towards giving relatively equal awards to families. This has annoyed some lawyers representing families of victims.

The law setting up the fund states that each award must be partly based on the victim's income and earning potential. That could lead to large variations in awards between bond traders who earned millions, and janitors who earned low wages. However, the portion designed to compensate for pain and suffering and loss of companionship could be used to equalize the distribution of payments. The amount of each award is not capped.

Families are not able to seek a payment unless they agree not to sue anyone for damages. It is also unclear which family members will be able to claim benefits, and whether same-sex partners could benefit. Another issue is whether payments by the Red Cross will count against the payment from the government fund.

(Updated January 15, 2002)

Questions
1. What is the opportunity cost of a person dying in the World Trade Center? Distinguish the monetary and non-monetary costs.
2. According to the law establishing the government's fund, how would the awards be related to these costs?
3. How might the "income and earning potential" of a victim be calculated?
4. From an economic point of view, would it be fair
a) to equalize awards?
b) to give awards to same-sex partners?
Explain why or why not.
Source Associated Press, "Awards should be equal, head says," St. Petersburg Times, December 8, 2001.

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