COVID-19 Lockdown Cost-Benefit: Is the Cure Worse than the Disease?

The data behind the cost of the pandemic tells a surprising story.


As the second quarter of 2020 came to a close, scientists and economists surveyed the impact of SARS-CoV-2, the coronavirus that causes COVID-19, on the health and economy of the United States.

Stay-at-home orders in Washington state and elsewhere have been blamed by residents, elected officials and media alike for inflicting unnecessary damage on communities while doing little to mitigate the effects of a disease that, judging by popular resistance to social distancing and face masks, many consider harmless.

The numbers tell a different story.

According to a study titled “The Effect of Large-Scale Anti-Contagion Policies on the COVID-19 Pandemic,” published in the July 2020 edition of the peer-reviewed journal Nature, international researchers analyzed containment efforts around the world and concluded that stay-at-home orders prevented about 60 million coronavirus infections in the U.S.

The report compared infection rates before and after public health measures were imposed, like business closings and travel bans. They concluded that the six countries in the study prevented 62 million test-confirmed infections. But since most people don’t get tested, the researchers estimated the actual number to be about 530 million in the six countries, extrapolating an additional 4.8 million diagnosed infections and 60 million actual infections in the U.S. from known rates of infection.

There were over 3,300,000 confirmed coronavirus infections in the U.S. at press time (mid-July), according to the U.S. Centers for Disease Control and Prevention.

Researchers at the University of Cambridge published a study May 2 suggesting there is no absolute trade-off between health and the economy in developed countries, and that the price of inaction could be far higher than a lockdown. A second study from the Dornsife School of Public Health at Drexel University, also published in May, came to the same conclusion using a different methodology.

These reports provide a starting point for a very rough cost-benefit analysis of nationwide lockdowns.

The Bureau of Economic Analysis of the U.S. Department of Commerce anticipates a 10% drop in value of the gross domestic product in the first six months of 2020. The GDP usually moves in fractions of a percentage point, but it dropped 8.4% in the fourth quarter of 2008, heralding the Great Recession.

The current cash value of the GDP, according to the U.S. Federal Reserve Bank, is just over $22.3 trillion.

The U.S. Environmental Protection Agency estimates the value of a statistical human life (VSL) at $10 million when determining the affordability of government regulations or projects. (Other agencies use VSLs ranging from $5 to $11 million.) For example, the cost of a warning label on a product is weighed against the number of fatalities that product could cause without a warning. If the cost in lives lost exceeds the cost of labeling, the EPA recommends approving the regulation for labeling.

The U.S. COVID-19 mortality rate in mid-July was 4.07% of those testing positive for it, according to the Johns Hopkins University of Medicine. There is controversy over how those deaths are counted — more than 135,000 at press time — but the CDC, the National Institutes of Health and the Washington State Department of Health have all said that COVID-19 deaths in the U.S. are likely undercounted.

With estimates of lives saved and money lost in the U.S., the price of lockdown policies can be seen or at least estimated:

  1. According to the report in Nature, lockdowns in the U.S. prevented 60 million novel coronavirus infections. Assuming a less dramatic U.S. COVID-19 mortality rate of just 1% for ease of calculation, that translates to 600,000 lives saved.
  2. If GDP did indeed shrink by 10% during the lockdown, according to the Federal Reserve that is a loss of $2.2 trillion from the national economy.
  3. If the EPA values a human life at $10 million, saving 600,000 lives saved the economy $6 trillion for a net gain of $3.8 trillion by preventing the loss of wealth and productivity and reducing hospitalizations, while keeping survivors and their families out of poverty due to lingering effects of the disease and attendant medical bills.
  4. If the Nature report is wrong and only 30 million infections were prevented, that translates to 300,000 lives and $3 trillion saved, yielding a net gain of $800 billion.
  5. If a human life is discounted to just $3,670,000, at 600,000 lives saved the U.S. breaks even.

And that is assuming a mortality rate less than one-quarter of the current estimate.

While this is an oversimplification that does not account for the age or quality of individual lives saved, on the macroeconomic scale lockdowns appear to pay for themselves.

But that is small comfort to anyone losing their livelihood because of them, or for children kept out of school, or the unquantified human cost of addiction, depression and suicide because of a lockdown. Those variables are left out of this equation.