Social distancing is worth the economic fallout, economists say

Several anti-lockdown protests took place over the weekend all across the US. The people involved in and leading these protests believe their constitutional rights have been infringed upon by the coronavirus lockdown that’s brought the entire country to a halt for roughly a month at this point. 

The subject of when to open up the US economy is a divisive topic right now. Scientists and doctors maintain that social distancing should be continued for the foreseeable future, but that hasn’t stopped media figures like Dr. Oz from openly speculating that a 2-3% fatality increase in the event of schools being reopened is an “appetizing opportunity.” President Trump has also been quite vocal, as always, about how he feels on the matter.

Everyone is entitled to their opinion, and at the end of the day, no one can look into a crystal ball and accurately predict how this pandemic is going to turn out over the coming months. We’re all in an unprecedented situation, and no matter what course of action is taken, there will undoubtedly be some unhappy people and lingering questions about what could have been done differently. It shouldn’t be all that difficult, though, for most of us to agree that our main goal through all of this should be to save as many lives as possible.

On that note, a team of economists from the University of Wyoming has weighed in on the debate surrounding reopening the US for business. There’s no getting around the fact that businesses of all sizes and the economy as a whole have taken a gigantic hit, but their analysis has concluded that the lives saved thanks to social distancing far outweigh the damage being done to the US economy.

“Our benefit-cost analysis shows that the extensive social distancing measures being adopted in the U.S. likely do not constitute an overreaction,” says lead author Linda Thunstrom, an assistant professor in the UW Department of Economics, in a university release. “Social distancing saves lives but comes at large costs to society due to reduced economic activity. Still, based on our benchmark assumptions, the economic benefits of lives saved substantially outweigh the value of the projected losses to the U.S. economy.”

Social distancing and lockdown measures have caused countless Americans to lose their jobs. But, the research team says that if the economy is reopened too quickly and the coronavirus once again spreads like wildfire, the resulting loss of life would be much more detrimental to the economy. This prediction, combined with the fact that it would cause thousands if not tens of thousands of more deaths, makes the question of whether or not to reopen the economy an easy choice.

Working under the assumption that current social distancing measures are effective in mitigating the spread of COVID-19, the study’s authors estimate that lockdown policies will ultimately outweigh their economic costs by $5.2 trillion once everything is said and done.

For their analysis, the team at UW utilized the latest available information on the spread of the coronavirus and its effect on economic activity thus far.

“It should be possible to conduct a more detailed analysis after more data are available,” comments study co-author Stephen Newbold, an assistant professor of economics. “But a rapid assessment, based on the best currently available information, adds much-needed rigor to the public discussion about the policy response to this outbreak.”

Researchers also considered the big benefits social distancing is providing for the country’s healthcare infrastructure. They believe that if current lockdown measures are maintained for the foreseeable future and allow the coronavirus to run its course, the average contact rate among US residents will drop by 38%. That would decrease the infection curve’s peak by more than half. If these predictions are even just half correct, hospitals and ERs across the country will be able to care for patients properly without being overwhelmed.

There are many positives to social distancing, but there certainly negatives as well. Even the study’s authors themselves admit that those on the lower end of the socio-economic spectrum have been hit the hardest by the lockdown. 

“It stands to reason that the most vulnerable groups in society will be the hardest hit. For example, the service industry will be disproportionately affected by these policies, which will lead to mass layoffs of low-income workers,” the study reads. “It also is likely that the most economically disadvantaged groups will suffer the most severe adverse health consequences from COVID-19.”

The analysis didn’t consider how social distancing may influence the development of a second COVID-19 wave in the US. Instead, the research team worked under the assumption that current social distancing policies will “buy enough time” for more long-term solutions to be developed and put in place (treatments, drug combinations, vaccines).

The US, and the world as a whole, finds itself in a no-win situation. No one is saying these measures are painless, but they’re a necessary evil at this point. The economy will rebound, but lives lost can’t be recovered.

“Our analysis suggests that the aggressive social distancing policies currently promoted in the U.S. probably are justified, given that no good contingency plans were in place for an epidemic of this magnitude,” the study concludes. “But the costs and consequences will be painful. To avoid these in the future, there are likely large social benefits to ensuring that we are better prepared for the next pandemic.”

The full study can be found here, published in the Journal of Benefit-Cost Analysis.