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Great article. The thing that is fascinating/scary about this is how it's seizing markets in every country. It's like the entire global economy pushed the pause button for the next 2-3 months. I personally think every bank account in the US should get $10,000 airdropped into the account, and perhaps more in the future. Right now deflation is the enemy.

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It is just the catalyst, not the cause I think. There was kindling all over the forest, and now the fire is lit.

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Mar 16, 2020Liked by Lex Sokolin

Loved the article. The value of a statistical life is a useful Concept, but in my mind it has the same limitations of measurement like natural landscapes have. Valuation models have to rely on datasets where a clear market value can be assigned. Total value of life (let's assume stochastic) is ultimately value against the earning potential of that life. Just like for the Environment, total economic valuation covers all the earnings streams available to, say, a Woodland or parkland… without more directly visible correlations with other economic phenomena, it is difficult to assign any weights to other measures - say, destruction of parkland somewhere causes a minor crash in a stock market nearby because all those employed there tried to go into more liquid assets immediately.

In a way, Coronavirus is a great example of cascading effects - its dark, macabre productivity is not only in the People it kills, it is also that it has set many other balls rolling.

I particualrly like your choice of some proxies, including court Awards on wrongful deaths. But economic valuation of life is tricky.

I do agree with your general Message though. Great article!

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Thanks for the good words! The broader literature broadly does go into various methods of estimating, including DCF of earnings, impact on family, and such. Interestingly, the human judgment call (i.e., the probabilistic assessment) is often the highest number because it relies on human intuition and us overvaluing ourselves.

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