One of the major concerns related to the pandemic caused by the new coronavirus, as debated as the importance of prevention, concerns the economic impacts resulting from the containment measures to reduce contamination rates – with quarantine and temporary closure of several activities the most evident . As a result, authorities constantly debate the need to relax such measures to avoid collapses, rising unemployment rates and so on. However, does preserving lives come at a price? Second study, yes. About 5.2 trillion dollars.
This is the estimate of British researchers published in the JOurnal of Benefit-Cost Analysis, from the University of Cambridge. According to the article, the financial results of closing the trade are indeed disastrous when compared to a “normal” situation, but this changes the picture in a pandemic reality. After all, the ideal scenario no longer exists, being necessary to deal with the consequences of the reality in question.
Therefore, it is necessary to understand that, at this moment, the calculation considers how much it costs to restrict circulation and what would be the results of not adhering to the action, exposing the population to covid-19.
What is the value of life?
Pricing life is a bit tricky because it essentially involves moral issues. Examples on social networks abound: if, for example, seven deaths from the disease can be considered an acceptable risk, when the fatalities involve family members, is the weight the same? This is a classic dilemma.
In another example, even if the value of human life is said to be infinite, hardly anyone would exhaust the world’s resources to save a single person. Even so, there is a consensus that this “good” deserves the investment of high figures — and this statistic is part of our daily lives.
When you pay the fees for a vehicle, you are even contributing to monetary reimbursement in the event of an accident. The risk premium for certain activities received by those who exercise them is also a pricing of the risks inherent to the profession. In this arm wrestling between the generation of resources and the loss of those who produce them, we arrive at the so-called “value of life”, used by economists around the world to quantify the implicit costs of death and how much they should be reverted to the living.
Although variations are applied according to each membership, in the United States the value of life is estimated at around US$ 10 million — the same number considered in the studies by researcher Linda Thunström with specialists to understand the financial impacts of social distancing.
And how much is it worth preserving life?
Considering that distancing measures manage to preserve around 1.24 million lives at an average of 38% effectiveness in the absence of contact, the amounts are converted into US$ 12.4 trillion. If the forecast of the financial group Goldman Sachs is correct, the GDP of the United States, for example, will shrink 6.2% with the measures, representing a total loss of about US$ 13.7 trillion.
Thus, the isolation scenario must be compared to the non-isolation scenario. According to the same company’s estimates, maintaining the activities can usually shrink the country’s economy in numbers ranging from 1.5% to 8.4%. The researchers then suggested a 2% retraction. Thereafter, the economic impact would be smaller, reaching $6.49 trillion — less than half of the insulation losses. Therefore, in these scenarios, the cost of social distancing is $7.21 trillion.
For example, with values in trillions of dollars:
- 13.7 (loss forecast with isolation) — 6.49 (loss forecast without isolation) = 7.21 (cost of isolation).
- 12.4 (value of life) — 7.21 (cost of isolation) = 5.19 (price of lives saved).
In these examples, preserving life costs, on average, nearly $5.2 trillion. The benefit of life therefore comes at a price that can be recovered for 1.2 million people saved.
Everything changes all the time
Of course, all this is just an assumption and that all values presented can be changed, both the applied life value and the economy retraction. The rate of effectiveness of social distancing combined with the degree of mortality of the coronavirus can bring completely different scenarios.
A model published by Imperial College London, for example, indicates that the death toll in the US without any measure could reach 2.2 million. The economic impacts would be incalculable. However, on April 26, fatalities reached “only” 50,000. If in August they do not exceed 60,000, there would be 2.14 million lives saved — almost double the study. In the worst-case scenario, with 124,000 deaths, social isolation would still save 1.24 million people.
Despite the variables, American universities have reached a consensus: the economy’s restart should only happen with a big increase in testing capacity and a well-formed plan to control new outbreaks. There, the survivors can continue to fight to recover the economy as soon as possible.