When President Donald Trump spoke in late March, he believed that the damage to the economy caused by placing orders at home was not a good way to avoid COVID-19 ’s death, he wrote on Twitter: “We The problem itself cannot be worse than this. "Economists across the country are already busy with the exact cost-benefit analysis implied by the president.
Their conclusions are very different from Trump.
Economists at the University of Wyoming estimated that the benefits of the lives saved by the economy ’s efforts to “smooth curve” exceeded the expected huge blow to the country ’s economy, reaching a staggering $ 5.2 trillion. Another study conducted by two economists at the University of Chicago estimated that distance from society may save a lot of money. "It is hard to think of any interventions that have such a large potential benefit for American citizens."
These scholars are What to do, and what Trump has done tweets are coming-the extreme efforts to avoid the death of COVID-19 are being measured compared to the devastating economic consequences. They do this by marking the price of the number of deaths avoided. The federal government has been doing this when deciding whether to require automakers to install new safety features or drug manufacturers to add new warning labels.
However, for large new regulations, such as road safety laws and pollution control, this is required by law. However, the debate on how to deal with the COVID-19 pandemic has been lacking this method, which has almost killed 100,000 Americans and contributed to the historic unemployment rate.
This calculation (that is, statistical life value or VSL) is the amount of money people are willing to spend to reduce risk to save a life. The VSLs of most federal agencies have been developed over decades, and are approximately US $ 10 million. If a new regulation estimates that one death can be avoided each year, it may cost up to 10 million dollars and still make economic sense.
The debate about reopening the economy or protecting more lives has become one of the many political struggles to divide politics. country. However, the use of VSL for cost-benefit analysis is far from perfect, but it will force decision makers to face the reality of their decisions in a more precise manner. Without it, they will be unable to speak out, educated guesses or political arguments.
Two major federal agencies have previously used this type of research to support policy decisions led by Trump, including the Centers for Disease Control and Prevention and the White House. The Office of Management and Budget, which oversees federal regulations, said they did not use this cost-benefit analysis in response to the pandemic.
"The information was missing from the discussion," said Linda Thunstrom, an economist at the university. Wyoming, "So, on the contrary, you have such a loud voice on both sides-advocate that all lives should be saved, or, no, we need to open the economy. But there is a trade-off. This is difficult (hard.
Economist That said, such research can help guide decisions about reopening businesses, restoring schools, determining which social alienation measures are worthwhile, and how to evaluate decisions that seem to target a pandemic for the elderly. It offsets the economics of fighting the virus, and the economy The cost is easy to measure, such as the Atlanta Federal Reserve ’s forecast that the country ’s GDP may plunge by nearly 43% in the current second quarter.
Economists have tried to answer “What is The value of life? "By trying to calculate the" statistical value of life ", that is, the price people are willing to spend to reduce the probability of death.
" The problem here is, how do you view the value of risk reduction? "Think tank" Future Resources " Economist and former member of President Clinton's Economic Advisory Committee Alan Krupnik Alan Krupnick said that he is working on the topic. "The economist's answer is to ask people and observe their behavior."
Economists use polls about the risk of death. How many hazardous jobs they studied. They studied How much people are willing to spend on safety equipment, such as bicycle helmets. This information will then be used to calculate VSL.
The FAA uses VSL to help determine whether pilots are required to use flight simulators for training and testing. National Highway Traffic The National Highway Traffic Safety Administration uses it to calculate the cost savings of the more stringent pressure-resistant car roof standard. The US Food and Drug Administration uses it to determine the adverse events caused by the new labeling of asthma inhalers Less and cost savings.
In each case, the cost of complying with the new rules (installing a flight simulator or strengthening the roof of an SUV) is specific. The value of reducing the number of deaths is not without.
Economy Scientists say that the COVID-19 pandemic provides a good Yes, to help policy makers think through their response to the shocking numbers on both sides — economic and social deaths.
“There is nowhere to escape, COVID is a terrible thing,” Michael Economist, University of Chicago · Greenstone (Michael Greenstone) said he co-authored a study on the impact of VSL and the pandemic. "Now, we are only trying to find out how to balance two problems, namely loss of life and loss of income."  However, the CDC has not conducted any cost-benefit analysis of the social isolation measures of the epidemic, the agency spokesman Tom Skinner said.
The CDC is no stranger to this kind of research. Scientists from the Centers for Disease Control and Prevention (CDC) published a study in 2019 that looked at the benefits of fighting hospital-acquired infections when considering the value of saving lives.
The White House Management and Budget Office stated that this was not an agency official who asked to discuss internal affairs anonymously, saying that they also conducted a cost-benefit analysis of the pandemic.
The White House Economic Advisory Committee, through spokesperson Rachael Slobodien, declined to comment on whether the issue has been investigated.
Trump ’s Economic Advisory Committee had previously used VSL and proposed in 2017 The costs associated with the national opioid crisis are "substantially" underestimated because they do not take into account the economic losses caused by overdose deaths.
In early May, the committee hinted that it was investigating a pandemic, when it posted a chart on Twitter that Americans are expected to stop dying of COVID-19 by the middle of this month. H. But the chart only tracks the number of deaths, and like medical disease models, remains silent about the economic cost of these deaths.
The chart has been widely criticized for its mortality prediction, which is wrong. University economist Thunstrom said that more than 1,000 people still die from COVID-19 every day.
Wyoming economists sent a copy of their cost-benefit study to the White House Advisory Committee, but they did not respond.
Their study looked at models that predict the number of deaths in a pandemic, the impact of social alienation efforts, and the economic impact. The study estimates that the US economy has shrunk due to an uncontrolled pandemic (GDP fell by 6.49 trillion US dollars) to a lesser extent than the pandemic reduced by social alienation (GDP dropped by 13.7 trillion US dollars). However, staying away from society halved the maximum infection rate, resulting in a 1.2 million death toll, which resulted in VSL reaching $ 12 trillion. The study estimates that, therefore, the value of social alienation will reach a net gain of $ 5.16 trillion.
So far, the death toll is below the study's expectations, Thunstrom said. What we assume. "The benefits seem to be greater than expected. However, the decline in GDP also seems to be worse than expected.
" There are still many uncertainties, "she said.
The Wyoming study also pointed out that the lack of cost-benefit analysis may be Potential costs: Public health savings may Thunstrom said that the public does not know very well about it, so the public only focuses on unemployment and GDP decline, which may undermine voluntary compliance with valuable social alienation measures.
There is no doubt that the cost of social alienation is enormous, but, "The problem is that
think tank economist Krupnik said.
The pandemic offers many opportunities to study this trade-off and decide how the country should respond.
It may be that the pandemic VSL should be even higher than the traditional government ’s $ 10 million, so efforts to avoid COVID-19 are even more valuable.
The virus is frightening and research has already begun. Krupnik said that people in the country are willing to pay more to avoid the risk of dying of cancer than traffic accidents.
And it is contagious. VSL does not record the price people pay to avoid diseases that may cause death to others.
The additional remuneration provided to basic staff (such as grocery store cashiers and slaughterhouse staff) is a sign that these staff consider their work to be dangerous.
The government ’s VSL did not reflect a willingness to avoid injury, such as stroke or breathing problems associated with COVID-19 cases.
But the most controversial aspect is whether the elderly should be assigned the same VSL as the young. The Environmental Protection Agency recommended in 2002 that the establishment of clean air rules would bring fewer benefits to the elderly. Some scholars agree with the agency's reasoning. However, when critics regarded it as a "high-level discount", it proved politically untenable.
This issue is especially important in a pandemic where a pandemic seems to be particularly fatal to the elderly.
A VSL that declines with age finds that even if about 90% of the proceeds will be used to save the lives of people at least 50 years old, social alienation is still economically significant for the entire country.
But the federal government has not yet publicly participated in this debate.
"I don't think this type of analysis has any effect," said Stephen Newbold, an economist who studies Wyoming. "We need to make sure that we don't make mistakes in one direction, one direction or the other."