That's not how I interpreted his argument.
I read it as "According to the actions they take, the king values an additional day of life at 82% of what a prisoner is forced to value an additional day of life at." The rest is explanation that the prisoner is worse off because of the coercion- if they could trade quantity of life for quality of life, they would- and that the marginal value of a day in someone's life is treated very differently from the value of their life in general or other threats. The king doesn't approach alcohol as an assassin that might kill him eight years early, but that's the actual impact on his lifespan.
Hmm. That makes more sense in that it allows the relationship to be precisely calculated, but that doesn't seem to me to be the argument he actually makes. It's strongly implied throughout (especially in the passage about the two sons) that the 'value' here is one being assigned by an independent observer, not by either the king or the prisoner -- namely society.
Also, I don't think it makes sense to say that you can be forced to value anything. The prisoner would trade more life for pleasure if he could, therefore he values pleasure more highly than the cu...
Available in PDF here, the short story in question may appeal to LW readers for its approach of viewing more things than are customary in handy economic terms, and is a fine piece of fiction to boot. The moneychanger protagonist gets out of several sticky situations by making desperate efforts, deploying the concepts of markets, revealed preferences, and wealth generation as he goes.