WASHINGTON -- What is the value of a human life? That is the question vexing John Graham, the White House's regulations czar.

The answer is crucial to cost-benefit analyses used to determine whether new rules and laws are justified. If a proposed health-and-safety measure would reduce the risk of premature death for a certain number of people, analysts want to put a value on that to see if the rule is worth the expense of implementing it.

When Mr. Graham became the Office of Management and Budget's regulatory-affairs chief, he found different agencies used widely varying values. The Environmental Protection Agency priced a life at $6 million. The Department of Transportation figured $3 million was plenty, even though it relied on many of the same studies the EPA uses. The Food and Drug Administration uses a third formula -- a sliding scale based on how many more years a new regulation might allow each person to live.

"This is one of the things that's been very perplexing -- to see this variation between federal agencies without a clear and obvious rationale behind them," Mr. Graham says.

The values have huge ramifications, because the higher the value assigned to a person, the easier it is to justify costly life-saving rules. So environmentalists and interest groups that support aggressive business regulations favor higher life-value estimates, while business groups and like-minded activists tend to favor lower estimates.

Mr. Graham pushed agencies to come to an agreement. He made clear that he favors a nuanced approach that, in effect, discounts the value of older people's lives, given that they have less time to live. Though he is a skeptic of regulations working for a pro-business administration, Mr. Graham insists his goal is to make sure cost-benefit analyses are based on sound science.

Critics don't see it that way. More than 20 environmental, health and religious groups -- including some key administration allies on other issues -- attacked Mr. Graham's approach.

"To me it's almost an immoral exercise to place a dollar value on any human life," says Charles Short, secretary of social issues for the Catholic Archdiocese of Washington. But to slight the value of the elderly, he argues, is even worse. "Some of the greatest contributions to humanity were in many cases made in the dusk of someone's life."

"I think there is an arbitrariness here that's not really based on anything particularly sophisticated," adds David Certner, director of federal affairs for the AARP, formerly the American Association of Retired Persons, which represents 35 million people. He argues that the government also could make life-expectancy distinctions based on ethnic groups and gender, but wouldn't dare.

This political tempest began as an academic dispute among economists some 25 years ago.

"Now we're at the point where people are applying value to the length of life," says W. Kip Viscusi, a law and economics professor at Harvard Law School. "It's clearly not a winner when it comes to making yourself look good at public meetings, but it's the right thing to do from a public-safety standpoint."

Mr. Viscusi argues that using a flat value discriminates against young people. A study he conducted puts a $7 million value on a human life. But applying that figure to both the 21-year-old saved by an auto-safety rule and the 70-year-old whose life has been slightly prolonged by clean-air rules "creates a severe inequity," he says.

U.S. PIRG is using this image to protest a proposed formula which would value the lives of people over 70 years old by 37% less than those of people who are younger.

Mr. Viscusi and a British economist, Michael Jones-Lee, have conducted surveys that they contend show that older people tend to discount the value of their own lives. For example, Mr. Viscusi found that older workers will accept less of a pay premium to do risky jobs. And Mr. Jones-Lee did a study in England during the 1980s showing older people tended to be less willing to pay for government regulations that make slight improvements in their health and safety.

Using such studies, the two economists developed a measure called "willingness to pay" that has attracted a following among cost-benefit analysis experts, including Mr. Graham.

Before joining the OMB, Mr. Graham was a respected economist who founded a center for risk analysis at Harvard University's School of Public Health, and he fondly recalls stirring up class discussions of such matters. To tackle the issue in his current post, he invited analysts from the FDA and the EPA to try to work out similar cost-benefit guidelines. "This proved to be very difficult stuff because these agencies are very far apart," he says. Nevertheless, Mr. Graham issued guidelines in February urging all federal agencies to use the willingness-to-pay approach as an alternative to their usual methods.

The political backlash was fierce. The EPA grudgingly used the formula in analyzing President Bush's proposed Clear Skies Act, which is aimed at reducing power-plant pollution and mainly would benefit older people with breathing disorders. The formula discounted the lives of those over 70 by 37%.

A reference to the calculation was buried in 1,300 pages of footnotes backing the agency's analysis of the bill, and when environmental groups noticed it, they pounced. At public meetings the EPA hosted to explain the proposed law, seniors prepped by the left-leaning Public Interest Research Group peppered administration officials with hostile questions. In Tampa, Fla., some appeared wearing price tags saying "Seniors On Sale, 37% off" -- the "senior death discount," they called it.

CATCH-22   The question of how to quantify the value of a human life vexes regulators when considering new rules. Seniors groups oppose prorating life's value by age, but flatrate methods seem to slight younger people.   Current formulas assign a flat rate for each life:     Person A Person B Age 70 40 Remaining Life Expectancy 10 years 40 years Life Value $4 million $4 million Annual Value Of Remaining Years $400,000 $100,000   'Is it efficient, or fair, to value person B's life years at one-fourth the value of person A's life years?' --OMB Regulatory Chief John Graham   Source: White House Office of Management and Budget

Christine Todd Whitman, who recently announced she will soon leave her post as EPA chief, tried to explain that the formula had "never been a guiding principle" of her agency. But elderly protesters kept showing up at EPA events. In Pittsburgh, one shuffled up to the microphone at a hearing and said, "I like breathing clean air today as much as I did when I was a young woman," according to the Pittsburgh Post-Gazette.

In the midst of this maelstrom, an economist from a research group here called Resources for the Future discovered that surveys taken in the U.S. didn't back up Mr. Jones-Lee's England-based research. Alan Krupnick found older Americans were about as willing to pay the same amount as younger people for improved safety and health regulations. "This is a huge issue," says Mr. Krupnick, some of whose work suggests older Americans might be willing to pay even more than young people for added years of life.

After the Krupnick study emerged, Mr. Graham suggested that agencies suspend using the willingness-to-pay analysis. "It will take some additional research to sort this out and find out who's right," he says. All federal agencies stopped using the disputed method in April. This month, Ms. Whitman tried to put the issue to rest once and for all at a meeting with seniors in Baltimore, declaring that use of the formula "has been stopped."

But Mr. Graham says his "strong conviction" is to continue to weigh each person's life expectancy in cost-benefit analyses of legislation and regulations. "It's very important for people to understand that the benefit the government provides is in the duration of life," he says.

Write to John J. Fialka at john.fialka@wsj.com¹

Updated May 30, 2003