These measures can and are used for the many different types of valuation of otherwise immeasurable items, from the costs of pollution and noise to the negative effects of living next to a crack house or a casino or the benefits of being close to a community park or walking trail.
Of course this bothers a few folks who argue that some things have infinite value and should not be measured in mere dollars. But quite frankly, it is hard to not be dismissive of these folks. We live in a world where we cannot have all the things we wish, and so we must weigh our options. Ultimately things not measured will be treated as if they have no value, so some measure will be better than none at all.
Most policymakers are comfortable with these types of measures, but in my view the most difficult part of this type of work lies in assessing the value of human life. This is a necessary thing to do for insurance purposes, for compensating victims or for considering how much to reduce flood risk. Of course we all place some value on our own lives. Measuring that is the challenge to economists.
Michael J. Hicks, Ph.D., is director of the Center for Business and Economic Research and professor of economics at Ball State University. Contact him at email@example.com.