A new statistical study has suggested that the value of lives saved by shutdowns in the coronavirus pandemic could outweigh the damage to ...
A new statistical study has suggested that the value of lives saved by shutdowns in the coronavirus pandemic could outweigh the damage to the U.S. economy by $5.2 trillion.
The study, which has not yet been peer reviewed, is slated for publication in the Journal of Benefit-Cost Analysis, and uses projections to weigh the costs and benefits of lockdowns.
It comes as the debate over the shutdowns reaches a new fervor, with jobless claims over the five weeks since the outbreak began reaching 26 million, and states such as Georgia moving to reopen quickly in a bid to revive the economy.
The authors rely on a number of key assumptions, many of which remain unproven.
The study assumes 2.2 million Americans would have been killed in the pandemic without lockdown measures, and that each life lost has a statistical value of $10 million, for a total cost in deaths of $21.8 trillion under the uncontrolled scenario.
The casket of Chicago Police Sgt. Clifford Martin Sr. is loaded into a waiting hearse outside Calahan Funeral Home, Tuesday. Martin, 56, died after testing positive for coronavirus
A chart from the new study shows the authors projections for the number of coronavirus cases under both an uncontrolled scenario and a scenario with lockdowns
This chart shows the study's estimates about the impact on GDP in scenarios with no outbreak, a controlled outbreak with lockdowns, and an uncontrolled outbreak
At the core of the new study is a grim figure called the value of a statistical life -- the dollar amount used to represent the cost incurred by the average person's death.
The authors assign a statistical cost of $10 million to every American killed by coronavirus.
Deaths due to coronavirus are overwhelmingly skewed among older populations, with data from the Centers for Disease Control and Prevention showing that 79 percent of fatalities in the pandemic are among those over the age of 65.This is roughly in line with federal guidelines used by the Department of Transportation to value measures to reduce auto fatalities -- but those numbers are based in part on median income, and are an average across the entire population.
The authors then assume that U.S. gross domestic product will decline by 6.2 percent in 2020 due to the pandemic and subsequent shutdowns, using projections from Goldman Sachs economists.
The study assumes that GDP will subsequently grow 5.5 percent, 3.5 percent, and 2.0 percent in the following three years and 1.75 percent per year thereafter.
This table lays out the authors' conclusions about the costs and benefits of lockdowns
They estimate that the benefit in lives saved by lockdowns outweighs the economic cost by $5.16 trillion, under their assumptions.
'Based on this comparison, we find that social distancing policies likely do not constitute an overreaction to COVID-19,' the authors write.
However, the authors admit that the calculus would change if some of their key variables altered.
If the immediate decline in GDP with social distancing is 8.5 percent or more, or the case mortality rate of coronavirus turns out to be less than 0.81 percent, the economic cost of the lockdowns would be higher than the value of lives saved, they write.
As well, the study concedes that if the statistical value of lives lost in the epidemic were pegged below $5.85 million per death, the economic cost of shutdowns would outweigh the lives saved.
'At the time of this study, there is still uncertainty about the ultimate spread, severity, and duration of COVID-19 in the U.S., and about the severity and duration of the economic impacts from the pandemic, both if the virus were to be left uncontrolled and if social distancing measures are maintained,' the authors write.
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