Home Budget & Tax News The Pandemic or the Lockdown: Which Has Been Worse?

The Pandemic or the Lockdown: Which Has Been Worse?

The COVID-19 pandemic has killed over 200,000 Americans, while lockdowns and policies to stem the virus’ spread have caused enormous economic and societal harm. Any comparison must use a common metric, and economics uses dollars, even for human lives. No one can avoid placing a dollar value on saving lives; always choosing safety just places an infinite dollar value on life. Our only option is whether to evaluate tradeoffs.

Economists use the value of a statistical life (VSL) for policies regulating risk. The method uses the many choices people make in markets involving risks, like taking risky jobs. The VSL ensures that government decisions resemble our personal decisions.

Statistical lives are when the identity of the persons whose lives may be saved is unknown. Or as Nobel prize-winning economist Thomas Schelling wrote, when “The life you save may be your own.” An estimated 90 million Americans are in COVID-19 high-risk categories, so the pandemic involves statistical risk.

A standard value for a statistical life, based on dozens of economic studies, is $10 million. People never make trades involving millions of dollars because the risks examined are small.

We can use years of life when the people at risk are younger or older than average. This approach uses expected years of life remaining at different ages. For example, life expectation is 69.2 years at age 10 and 9.2 years at 80, so the death of a child, which many people find particularly tragic, contributes more years of life lost. A standard value for a year of life is $300,000.

The COVID Tracker website reports 201,000 deaths through October 4 for a value of $2 trillion using the VSL. If instead we use statistical years of life (over 75 percent of deaths are among persons over age 65), the deaths have cost 2.7 million years of life, valued at $800 billion. We may wish to reduce this further due to COVID-19 co-morbidities. Many persons dying from COVID are already in poor health; for instance, an 80-year-old COVID-19 victim might only have three years of life remaining, not the average of nine years.

COVID-19 has resulted in over 400,000 hospitalizations. Estimates of the cost of hospitalizations range from $14,000 to $72,000. The higher figure yields a hospitalization cost of $30 billion. Illnesses not involving hospitalization have modest medical costs. For these plus the millions quarantining due to contact with COVID patients, the major cost is missed work time.

Now, let’s consider the policy measures. Government policies have led to the sharpest contraction on record. Unemployment reached almost 15 percent in April and is still more than double February’s rate and we have lost $650 billion in GDP.

The economic impact exceeds lost GDP because of consumer surplus, or the value people receive from consumption beyond the amount paid. Sports, entertainment, and recreation, all badly disrupted by the lockdown, generate high ratios of consumer surplus to expenditure. Lost consumer surplus almost certainly exceeds $200 billion.

For most children, the 2019-20 school year ended in March and many schools offered little online instruction. Working parents had to accommodate children not in school, increasing this impact. Expenditures for the lost quarter of the year provide one way to value the school disruption. Public schools enroll 50 million children and spend over $12,000 per student nationally, for a $150 billion loss from education.

Americans’ mental health has suffered enormously in 2020. Anxiety, depression and calls to suicide help lines are up sharply. News reports attribute numerous suicides and overdoses to COVID stress. The virus and the pandemic together, I think, have produced the mental health costs.

The costs of the pandemic and lockdown almost surely each exceed $1 trillion. What does this imply for a potential second lockdown? Our initial policy response was almost surely excessive; masks and social distancing have allowed businesses to reopen without overwhelming hospitals. We can contain the virus without the enormous costs to date.


Originally posted on Yellow Hammer. Republished with permission.

Daniel Sutter
Dr. Daniel Sutter has been the Charles G. Koch Professor of Economics with the Manuel H. Johnson Center for Political Economy in Troy University’s Sorrell College of Business since 2011. He's also a contributor to Heartland's blog, the Freedom Pub.



Please enter your comment!
Please enter your name here

- Advertisment -

Most Popular

Polls Show Perceptions of COVID-19 Wildly Off

Two separate polls show U.S. adults are grossly misinformed about COVID risks.

Officials Take Credit When Pandemic Ebbs, Blame the People For Surges – Commentary

The lesson here — that Michigan residents shouldn’t be blamed or shamed for contracting a highly contagious illness — seems a difficult one to learn for some in government and the media.

Economically Destructive Cap and Trade for HFCs Is Here (Part One)

The Democratically controlled congress and the Biden administration slipped a phase out of the popular refrigerant HFC, used in air conditioning and refrigeration systems, as well as in other items, into the recent COVID-19 relief bill.

Sanders, Democrats Pressure Biden on ‘Free’ College Tuition

By Casey Harper (The Center Square) – New legislation from Democrats in the U.S. Senate would provide free public education to millions of Americans, but...
- Advertisement -

Recent Comments

Many Climate Crisis Claims Are Based on Manipulated Science on How to End Biden’s Fake Climate Apocalypse
Scottar Brooke on Free Speech? Forget It.
Randy M Verret on The Gaslight Election
S. T. Karnick on The Gaslight Election
Randy M Verret on The Gaslight Election
S. T. Karnick on The Gaslight Election
Randy M Verret on The Gaslight Election
S. T. Karnick on The Gaslight Election
Randy Verret on The Gaslight Election
Randy Verret on The Gaslight Election
Breonna Taylor Settlement: What it means for No-knock Warrants – Gun News on U.S. Senator Attacked by Mob
Breonna Taylor Settlement: What it means for No-knock Warrants ~ N6AQ.com on U.S. Senator Attacked by Mob