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I& #39;ve been doing some homework on the economics of social distancing, and its implications for reopening. Not surprisingly, the Trump admin is refusing to do cost-benefit analysis 1/ https://www.washingtonpost.com/business/2020/05/23/government-has-spent-decades-studying-what-life-is-worth-it-hasnt-made-difference-covid-19-crisis/">https://www.washingtonpost.com/business/...
But there have been a couple of studies estimating the payoff of social distancing relative to letting the virus rip. They conclude that the cost in GDP so far has been well worth it 2/ https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3561934">https://papers.ssrn.com/sol3/pape... https://bfi.uchicago.edu/wp-content/uploads/BFI_WP_202026.pdf">https://bfi.uchicago.edu/wp-conten...
I& #39;ll add a back-of-the-envelope answer to a related but somewhat different question: what would the payoff have been to moving more quickly? Columbia researchers estimate that locking down a week earlier would have saved 36,000 lives by May 3 3/ https://www.medrxiv.org/content/10.1101/2020.05.15.20103655v1.full.pdf">https://www.medrxiv.org/content/1...
Meanwhile, we have a pretty good estimate of the effect of lockdown on GDP: around -10% (NOT 40% — that& #39;s an annualized growth rate). That& #39;s approximately $40 billion per week 4/ https://www.frbatlanta.org/cqer/research/gdpnow">https://www.frbatlanta.org/cqer/rese...
Now, total deaths that would been avoided is more than the 36,000 avoided by early May; even 40K is lowballing it. But even that means $200 billion if we use a fairly standard estimate, taking the differential effect on older people into account, of $5 million per life 5/
The pressing question, of course, is the cost/benefit of the rush to reopen. I don& #39;t have the numbers to do that calculation, but my strong guess is that it looks like a really bad idea. And uncertainty should be grounds for more caution, not less 6/
Of course, we aren& #39;t having a rational debate here: if the economy were really the issue, Trump would be doing everything he could to get people wearing masks. But still worth noting that deaths versus the economy is a false choice. For most of us, not dying is worth a lot 7/
