The true price of a very long lockdown

By Bjørn LomborgCountries have imposed social distancing regulations to avoid overwhelming their healthcare capacity during the Covid-19 pandemic. Such a policy makes a lot of sense. The first peer reviewed cost-benefit analysis of the US shows just that (bit.ly/3dTgt3G). It looks at moderate social distancing, an approach similar to Sweden’s.Here, social interaction is reduced about 40%, allowing schools and work to stay open, but dramatically reducing contacts in all other public areas.Had this been done across the US, it would have cost $7 trillion more in lost GDP, but more than half the death toll would have been avoided, compared to a scenario in which no regulations were put in place. The social benefits of saving these lives add up to about $12 trillion — each dollar in cost achieves $1.70 in social benefits. The study uses rather optimistic assumptions, especially assuming away a second wave of infections. This means the real social return is likely lower.Along-term lockdown policy during which schools and work are also shut down, however, would cost much more, but save fewer additional lives.This would likely leave society worse off. So, has India’s dramatic and strict Covid-19-mitigation policy been right? For developing countries like India, the benefits of Covid-19 lockdown policies are sharply lower, as documented by an April Yale University study (bit.ly/2XMVHgH).First, poorer countries have substantially fewer old people who would benefit from social distancing. Second, they already have low hospital capacity, so flattening the curve will help little, and still see hospitals overwhelmed — as is becoming apparent in India’s cities. Third, poorer people face several challenges and die from many other, preventable causes. This means that they value any risk reduction from Covid-19 much less.Together with the National Planning Commission in Malawi, eastern Africa, Copenhagen Consensus and the African Institute for Development Policy have conducted a cost-benefit study on Covid-19 policies for a developing country (bit.ly/2XMtk25). Its findings are stark. Along with limiting Covid-19 deaths, moderate social distancing will also improve treatment of some diseases like HIV, but reduce the effectiveness of other treatments, such as those for malaria and tuberculosis.It will also lower the number of traffic deaths, but increase the number of malnourished children. The study finds that the policy can avoid almost 7,000 deaths in a country of 19 million people. That is encouraging.However, there are significant costs. While a pandemic creates an economic cost, moderate social distancing will have a somewhat higher economic impact. The total economic loss for Malawi runs to $6.7 billion, almost equivalent to a year’s GDP. Put bluntly, moderate social distancing and school closures can save 7,000 lives at the cost of about $12 billion in lower life quality for its future. Is that worthwhile?Moreover, most of the saved lives from Covid-19 in poorer countries are older people, while most of the lives saved from HIV, malaria, tuberculosis and child nutrition are much younger.Just in terms of life years saved, moderate social distancing will, thereby, likely losemore life years than it will gain. And it will cost $12 billion. Going by the Malawi study, each dollar spent on moderate social distancing to tackle Covid-19 will deliver only 4 cents of social benefits.Faced with the spectre of the pandemic, initial frenzied action is understandable.And moderate policies in rich countries are likely justified. But for the majority of the world, the benefits are smaller and the costs are higher.India, like Malawi and other poorer countries, should, of course, continue aseries of sensible, low-cost social distancing measures like cocooning the elderly, no large gatherings and handwashing. It should keep health services for tuberculosis, malaria and vaccinations running. It should provide masks for health personnel.But, crucially, developing nations should not shut down their schools or economy to tackle Covid-19. The damages will vastly outweigh the benefits.The writer is visiting fellow, Hoover Institution, Stanford University, US.

from Economic Times https://ift.tt/3fc7F9n