The Spectator has published a SAGE paper outlining a ‘reasonable worst case’ scenario leading to an additional 85,000 Covid deaths in the UK, even with some partial mitigation. It’s hard to know what to make of this figure without a better understanding of what would happen if the government did nothing. (The paper assumed that ‘policy measures are put in place to reduce non-household contacts to half of their normal … levels’, which sounds pretty draconian to me.) But on the basis of what we do know, it is also hard to justify tightening restrictions any further, especially if this means another full national lockdown.
There have already been several independent attempts at a comprehensive cost-benefit analysis of prolonged Covid lockdowns. I think it fair to say there is an emerging consensus that the welfare costs – not just the economic damage but also other social harms – significantly outweigh the benefits in terms of lives saved.
A good early example was a paper, ‘When to release the lockdown: A wellbeing framework for analysing costs and benefits’ (April 2020), by a team led by Professor Richard Layard at the LSE.
This study took account of wide range of potential costs of lockdown, including the impacts on unemployment, mental health and education, and compared them to the potential benefits, including factors such as reductions in pollution and road accidents, as well as the prevention of premature deaths from Covid itself.
Using some illustrative numbers, the authors suggested that the net effect of the first lockdown on wellbeing was initially positive, but that the balance changed over time. Writing in late April, they concluded that the lockdown should be lifted early in June.
Another example is Living with Covid-19: balancing costs against benefits in the face of the virus (July 2020), by Professor David Miles and others, published by the National Institute of Economic and Social Research (NIESR). This more comprehensive and (in my view) more rigorous study came to stronger conclusions than the LSE paper.
The NIESR study analysed Covid using the same policy tools (particularly ‘QALYs’) that are used to assess the decisions about how best to respond to other health problems. On this basis, and taking account of a wide range of different scenarios and assumptions, the authors concluded that the lockdown has consistently generated costs that are greater (‘often dramatically greater’) than possible benefits.
This is my personal view too, as discussed further in my own first attempt ‘Coronavirus and the economic value of human life’ (June 2020), published by the IEA. This paper explained how the Covid-19 crisis has provided many grim examples of some familiar problems in health economics and cost-benefit analysis, and of the ‘tragic choices’ that sometimes need to be made.
In particular, policymakers frequently have to put a monetary value on a human life when deciding how to use limited resources in the fairest way. This value is often based on the number of years that a person might have left to live and the quality of that life (the concept behind ‘QALYs’). It is therefore perfectly reasonable to take account of the fact that the mortality rates for those with Covid-19 are far higher for elderly people, and for those with pre-existing health problems.
Indeed, here are two thought experiments for those who still object to putting a monetary value on a human life.
First, suppose it would cost £1 billion to prevent just one premature death. Would this be worth it? (If your answer is ‘no’, you’ve just put a monetary value on a human life.)
Second, suppose you have to allocate the last seat in a lifeboat as the Titanic sinks. Do you give it to a healthy child or a sickly old man? (If your answer is the child, you’ve probably used the same reasoning as that behind QALYs to decide which life is worth more.)
It is also important to be aware of the ‘identifiable victim’ problem. This may lead policymakers to focus too much on those people who might be at risk of dying of Covid-19, and not enough on less visible costs, including any harms done to others as a result of the government’s own actions.
However, there may be a risk too of over-estimating the economic and fiscal costs of the lockdown itself. This is the problem of identifying the ‘counterfactual’, or what would have happened anyway even if the authorities had not responded in the way that they have.
This makes any cost-benefit analysis of policy interventions extremely challenging, not least given the difficulty of comparing apples (deaths from Covid-19), oranges (other less visible impacts on health and wellbeing) and pears (economic and fiscal costs).
Nonetheless, the longer the lockdown remains in place, the greater the margin by which the costs are likely to outweigh the benefits, given the growing evidence of harms that the lockdown is doing to others, including patients who are not getting treated for other conditions, and younger people who are missing out on education and job opportunities.
In addition, the longer the economy is kept shuttered, the greater the risk that the damage will be long-lasting, making it that much harder to pay for better public services and infrastructure in the future. The first lockdown shrank the economy by a quarter in just two months, cost hundreds of thousands of jobs, and added hundreds of billions to the national debt. In my view, a second national lockdown would be a double hit from which it would be much harder to recover.
Plain-speaking Economics 