24.02.23 Review

Grave Loyalty: the payouts offered by the Russian government for those killed in Ukraine are worth only slightly more than the price Russians place on their own lives

Putin was able to initiate the war with such ease a year ago as a result of the low value placed on human life in Russia. According to economists Antonio Avila-Uribev (LSE) and Dzhamilya Nigmatulina (HEC Lausanne), who have analysed the price that Russians were willing to pay for air tickets during the days immediately following the announcement of mobilisation in September 2022, a Russian life is worth approximately 10 million rubles. Insurance companies frequently perform subjective ‘value of life’ calculations, and a 2019 Sberbank study found that the monetary value placed by Russians on their lives ranged from 2.4 to 13.3 million rubles, depending on their income. Recent ‘death payouts’ have reportedly been at the upper end of this range, allowing the families of the deceased both to grieve privately and to feel as though the government has fulfilled its obligations. As such, they are less likely to criticise the government's actions. Although it appears that the authorities have determined the ‘price of loyalty’ relatively accurately, in reality, the government has not fulfilled a significant part of its obligations.

How much do Russians value their lives? Economists Antonio Avila-Uribev (LSE) and Dzhamilya Nigmatulina (HEC Lausanne) have concluded that Russian men of military age believe their lives to be worth around 10 million rubles. This valuation comes from a study published by the Center for Economic Policy Research (CEPR). The researchers arrived at this sum by analysing the surge in airfare prices during the initial stages of the war and following the announcement of mobilisation, which prompted many young men to flee Russia in fear of their lives.

In the initial days following the Russian full-scale invasion of Ukraine, there was a staggering surge in the prices of air tickets of 140%, and following the later announcement of mobilisation, the prices rose by 110%. In February 2022, as Western countries were closing their airspace to Russia, there was a shock to both demand and supply of air tickets. Later, during mobilisation, only a supply shock occurred, and this will be our focus here. Despite the average cost of a plane ticket standing at 200,000 rubles at that time, people were willing to overpay in order to leave Russia as quickly as possible. 

The authors of the study divided the surplus value of the tickets by the risk probability of men aged 20-34 being mobilised and sent to their deaths. Economists Oleg Itskhoki and Maxim Mironov estimated the probability of this occurring at 2%. Accordingly, the value young men attributed to their own lives while fleeing mobilisation stood at approximately 10 million rubles, which translates to $370,000 in terms of purchasing power parity.

From his analysis of the Russian government’s response to the COVID pandemic in 2020, economist Sergei Guriev concluded that a life in Russia is worth significantly less than those in developed countries (in the US, for example, a person’s life is estimated to be worth $14.5 million). In his study, Guriev highlighted that the loss of life brought about by attempts to avoid a ‘hard lockdown’ had negated any benefits of saving government funds, which could have been spent on supporting the economy. However, the economy found itself to be in better shape back then. During the pandemic, the majority of deaths occurred among the elderly, while the main casualties Russia has accrued in the war  have been men of working age. This will be extremely damaging for Russia, Antonio Avila-Uribev and Dzhamilya Nigmatulina conclude. 

Making economic calculations of the value of human life is a common practice in various fields, including insurance, where estimating the potential costs of a fatality is crucial. In recent years, families of air crash victims in Russia have received compensation up to the value of 5 million rubles, while a 2019 survey by Sberbank's insurance department found that Russians themselves value their lives at 5.8 million rubles. Respondents feel less anxious about their own mortality if relatives are to receive this sum in the event of their fatality. However, it is important to note that the actual sum  varies significantly based on the respondent’s income, with a range of 2.4 to 13.3 million rubles. After mobilisation was announced, it was largely people with a medium-to-average income who fled the country by plane. It is for this reason that the sum obtained by the researchers falls within the upper range and confirms the accuracy of these estimates.

It appears that, in all likelihood, the government used Sberbank’s study when determining the amount of compensation to be paid for those killed in Ukraine. There has, however, been some confusion regarding the final value of the payouts, and on March 3, 2022, Putin announced that, in addition to the 7.4 million rubles required by law, the relatives of the deceased would also be paid a lump sum of 5 million rubles. This puts the final amount at 12.4 million. However, this only applied to those who had signed contracts with the army. Various figures for the value of these payouts have subsequently emerged, and these were divided into federal and regional payments, with the latter varying greatly from region to region. Despite this, the range of 5–12.4 million rubles is consistent with the upper range of Sberbank’s estimates regarding the amount sufficient to reconcile the families of the dead with their losses. In these cases, death will still be experienced as a tragedy, but the relatives of the deceased will feel as though the government has fulfilled all its obligations to them. As such, these citizens will remain loyal to the authorities. It also bears noting that the government places a higher value on the lives of military personnel (and the loyalty of their relatives) than those of civilians; the families of the victims of the Su-34 crash in Yeysk were promised only 1 million rubles in compensation each.

By the end of the first year of the war, estimates gathered by Re: Russia indicate that the losses sustained by the Russian army at the front range from 30,000 to 90,000. If we take the average number of fatalities and multiply this number by the ‘cost of living’ figure calculated by the CEPA study (10 million rubles), we reach a figure of a mere 900 billion rubles, which is approximately 0.6% of Russia’s GDP. In reality, however, the obligations of the state are much lower, as most of the dead have been declared missing rather than deceased, and federal and regional budgets determine the limits on ‘coffin’ payments. According to data compiled by ‘Novaya Gazeta. Europe’, at the beginning of July 2022, 113 billion rubles had been allocated for payments to the dead and wounded, of which 89 billion had already been paid. Even if we are to assume that this sum has tripled or quadrupled since then, Russian citizen’s ‘grave loyalty’ ends up costing the Russian government very little.