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COVID Prevention and Cost-Benefit Analysis

Summary:
Douglas Allen of Simon Fraser University has a working paper that builds on “Life-Years Lost: The Quantity and the Quality,” one of my blog posts from last year.  Most of his paper critiques other researchers’ cost-benefit analyses of COVID policy, but Allen spends a whole section applying my method to Canada: As of March 2021 the pandemic has lasted one year, which means that the average Canadian has lost two months of normal life. The population of Canada is about 37.7 million people, which means that 6.3 million years of life have been lost due to lockdown. The average age of reported Covid-19 deaths in Canada is about 80.42. In Canada an average 80 year old has a life expectancy of 9.79 years. This means that the 6.3 million years of lost life is equivalent to

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Douglas Allen of Simon Fraser University has a working paper that builds on “Life-Years Lost: The Quantity and the Quality,” one of my blog posts from last year.  Most of his paper critiques other researchers’ cost-benefit analyses of COVID policy, but Allen spends a whole section applying my method to Canada:

As of March 2021 the pandemic has lasted one year, which means that the average Canadian has lost two months of normal life. The population of Canada is about 37.7 million people, which means that 6.3 million years of life have been lost due to lockdown. The average age of reported Covid-19 deaths in Canada is about 80.42. In Canada an average 80 year old has a life expectancy of 9.79 years. This means that the 6.3 million years of lost life is equivalent to the deaths of 643,513 80 year olds. As of March 22, 2021 Canada has had a total of 22,716 deaths due to Covid-19. That amounts to 222,389 lost years of life.

The question is, however, how many lost years of life would have resulted from Covid-19 deaths if there had been no lockdown? Consider two extremes:

a. Assume that the number of Covid-19 deaths would have been 10% higher had there been no lockdown. Then Canada would have experienced an additional 2,271 deaths, which means there would have been additional 22,333 years of lost life due to Covid-19 deaths. The benefit of lockdown, therefore, was the avoidance of this extra 22,333 years of lost life. However, the cost of lockdown, as noted, was 6,300,000 years of lost life. The cost/benefit ratio of lockdown is 282 = 6,300,000/22,333.

b. Assume that the initial ICL model forecasts were correct and without a lockdown Canada would have experienced 200,000 deaths. This would mean that Canada’s lockdown policies prevented 177,281 (200,000-22,716) deaths. Under the same age and life expectancy assumptions lockdown prevented the loss of 1,735,580 life years. The cost/benefit ratio of lockdown is 3.6 = 6,300,000/1,735,580.

Case (b) is highly unrealistic and nothing close to this rate of death happened anywhere in the world. However, even in this extreme case, lockdown is a failure as a policy by cost/benefit standards. The review of the literature suggests that Case (a) is closer to reality. If lockdown only had a marginal effect on deaths, then by cost/benefit standards, lockdown has been a public policy disaster.

Allen also reviews the basic empirics of COVID restrictions and COVID fatalities, and finds little connection.  Internationally, the correlation actually goes the wrong way.  His preferred explanation:

Generally speaking, the ineffectiveness of lockdown stems from voluntary changes in behavior. Lockdown jurisdictions were not able to prevent non-compliance, and non-lockdown jurisdictions benefited from voluntary changes in behavior that mimicked lockdowns. The limited effectiveness of lockdowns explains why, after one year, the unconditional cumulative deaths per million, and the pattern of daily deaths per million, is not negatively correlated with the stringency of lockdown across countries.

Theoretically plausible, but this implies that if we separately measured official COVID restrictions and unofficial COVID precaution, they would be negatively correlated.  As someone who spent about three months in Florida and Texas during the last year, this is hard to believe.  My observation is that the places with the least official restrictions were also the places with the least unofficial caution.

Eventually, I suspect we’ll have excellent measures of all the relevant variables.  Researchers will be able to figure out what happened.  And neither the public, the media, nor policymakers will care.  Santayana squared.

P.S. As I explained in the original post that inspired this section, my appeal to cost-benefit analysis is entirely in character with my Huemerian libertarianism:

At this point, you could protest, “Hey Bryan, I thought you weren’t a utilitarian.”  So what if the cost of COVID prevention greatly exceeds the value of life saved?  My answer, to repeat, is that I have a strong moral presumption in favor of human liberty.  So while I respect individuals’ rights to overreact to moderate risks, I oppose any act of government that does not pass a cost-benefit test with flying colors.

And no, I don’t think that an asymptomatic person who walks down the street unmasked is “aggressing” against passersby in any meaningful way.

Bryan Caplan
Bryan Caplan is Professor of Economics at George Mason University and Senior Scholar at the Mercatus Center. He has published in the New York Times, the Washington Post, the Wall Street Journal, the American Economic Review, the Economic Journal, the Journal of Law and Economics, and Intelligence, and has appeared on 20/20, FoxNews, and C-SPAN. Bryan Caplan blogs on EconLog.

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