Marginal Benefits vs. Marginal Costs

This week eleven of twelve trapped miners in Tallmansville, West Virginia were tragically killed by carbon monoxide.  The lone survivor is Randal McCloy, 27, the youngest of the miners.  He was rushed to the hospital in critical condition, and his future is doubtful at best.

While this is a headline-making news story in the United States, every day in China roughly 15 people die in mining accidents.  About 5,000 miners die every year in China’s coal mines and this is a figure that has been consistent over the past decade.  The death toll in China could be much lower if regulations and safety standards were improved.  There are also many illegal coal mines in China that are completely unregulated.  When deaths occur in these unregulated mines the bodies and debris are removed and mining immediately resumes, much as if a traffic accident had occurred.  Sometimes deaths in the unregulated mines aren’t even reported.  Nevertheless, mining is a large industry in China where over 50% of the nation’s electricity is generated by coal.

Why do people throughout the world go down into holes and mine coal, knowing that there is a distinct possibility that they will never emerge from the earth?  Every man who makes the decision to become a coal miner knows the relative risks.  He weighs that risk against the higher income gained from mining.  Those who are highly risk averse make a rational decision to accept lower incomes and not become miners.  Those who are less averse to risk become miners and enjoy higher incomes, which is an equally rational decision.

In West Virginia coal miners can make as much as $60,000 a year.  In a rural, economically depressed Appalachian community a miner can live like a king on that kind of money.  Even with no education beyond high school he can buy new vehicles, live in a nice house and give his family many of the luxuries that would be otherwise unaffordable.  Economists have a model to explain the thought process used to decide whether not to become a miner.  Those who contemplate becoming miners weigh the additional family and personal satisfaction from the higher miner income (the marginal benefits) with the probability of additional family and personal tragedy resulting from injury or death (the marginal costs).  For some, the marginal (additional) benefit exceeds the marginal (additional) cost, and they become miners.  For most, the marginal costs exceed the marginal benefits and they choose not to go down into the mines.  It is important to note that while one may decide to be a miner and another may decide not to engage in mining as an occupation, both decisions are entirely defensible and rational.

Like the tuna fisherman who risks his life on the Alaskan seas, the utility lineman who climbs live power poles, the person who chooses to use methamphetamine, or the person who chooses to risk his life savings to start a business, the coal miner makes a conscious decision to participate in a risky and potentially harmful activity.

While we grieve this week for the families who mourn in Tallmansville, and likewise remember the families of the minors will die this day in China, there is dignity in the decision made by all of these men.  Given the circumstances of their existence, they weighed their alternatives and made their choices.  Like each of us, they were subject to the consequences, should things not work out as expected.  As sad as the outcome is, such is the way the world works.  This is life as it must be.

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