The Data Are In: It’s Time for Major Reopening

Four new analyses of actual results show how the initial projections overestimated the value of lockdowns

By David R. Henderson and Jonathan Lipow. Excerpts:

"Fortunately, economists no longer have to rely on inherently flawed projections. We can use real data. In what might turn out to be the best paper on the economics of Covid-19, a team of economists from the University of California, Berkeley carefully evaluated empirical data on social distancing, shelter-in-place orders, and lives saved. To measure the impact of social distancing, they gathered data from cellphones on travel patterns, foot traffic in nonessential businesses, and personal interactions."

Their findings? Social-distancing measures reduced person-to-person contact by about 50%, while harsher shelter-in-place rules reduced contact by only an additional 5%. Then, using data on Covid-19 infection and mortality, they estimated that these measures saved 74,000 lives. Finally, after using demographic data to adjust the VSL—which is lower for older people, who have fewer years to live—the study found that the gross benefit of social distancing has been a mere $250 billion.

That finding casts major doubt on the value of lockdowns and even social distancing as a method of reducing the spread of Covid-19. While we can’t yet estimate a specific figure, the economic cost of social distancing and lockdowns will likely be more than $1 trillion. And that’s an understatement of the costs when you consider increased suicides and other social losses not captured in gross domestic product. For example, parents of young children have widely noted their kids’ gloomy outlook when not allowed to be with friends.

An even more recent study from economists affiliated with Germany’s IZA Institute of Labor Economics suggests that the Berkeley estimate of 74,000 lives saved over the past four months is best understood as an upper bound. The reason is that shelter-at-home policies don’t so much reduce Covid-19 deaths as delay them. Delaying deaths will reduce them if a vaccine or cure is found in time. But we can’t be sure that an effective vaccine will be produced and available any time soon."

"a team of economists from the Massachusetts Institute of Technology recently published the results of a study that compared various alternative strategies for limiting the spread of Covid-19. They concluded that twice as many lives could be saved if governments focused limited resources on protecting the most vulnerable people rather than squandering them on those who seem to face almost no risk, such as children."