Economic benefits of social distancing outweigh GDP losses by $5.2T: analysis
The economic benefits of social distancing outweigh the pandemic’s hit to U.S. gross domestic product (GDP) while also saving more than a million lives, according to a soon-to-be published study from the University of Wyoming.
“Social distancing policies likely do not constitute an overreaction to COVID-19. In a variety of plausible scenarios based on the best available information as of April 3, 2020, we find that the economic benefits of lives saved outweigh the value of the projected losses of GDP by about $5.2 trillion,” researchers led by economist Linda Thunstrom wrote in an article that’s being published by a Cambridge University journal, the Casper Star-Tribune reported Tuesday.
According to the Wyoming newspaper, the analysis used a common epidemiological model to project the spread of the coronavirus and the monetary value the federal government assigns to a person’s life — $10 million.
While the analysis acknowledged the fact that social distancing has a considerable effect on GDP, it also found that the economic consequences of not practicing social distancing during the pandemic would be much worse.
“Based on our … model, the total number of infections is projected to reach 287 million without social distancing and 188 million with social distancing,” the researchers wrote. “When combined with the differential mortality rates when the health system capacity threshold is exceeded versus when not, the difference between the infection curves translates into about 1.24 million lives saved.”
Thunstrom admitted that the $10 million figure used to represent a human life is “controversial” because it doesn’t account for age, but she noted that several federal agencies use that dollar amount for various analytics.
She also said the model used in the analysis would change if more information, such as the availability of a working vaccine, becomes available. Thunstrom told the newspaper she hopes everyone adheres to social distancing guidelines.
“Stay home, stay home,” she said. “You see the cost: You might lose your job, you might lose your income. You might see local businesses you love really suffering. It’s really easy to imagine: ‘This makes no sense.’ Even if the costs are large, it’s a sensible policy by the best type of analysis that we can make, so we should all do this and try to do it as well as we can so we can get out of this situation as fast as possible.”