The cost of reopening the economy, in lives

https://finance.yahoo.com/news/the-cost-of-reopening-the-economy-in-lives-201007725.html

Relaxing business closures and stay-at-home rules could cost 13,000 lives in Texas and 12,000 lives in Georgia by September 1. But it will also preserve $3.4 billion in statewide income in Texas, and $1.7 billion in Georgia. New York’s tougher restrictions will save 5,000 lives, but cost $2.4 billion in lost income.

These insights, from a new online tool built by the Rand research organization, highlight the agonizing tradeoffs governors and mayors face as they decide whether to let businesses reopen and risk a resurgence of the coronavirus that has shut down much of the world economy. The virus has infected more than 1.2 million Americans so far, and killed 68,000. President Trump has now raised his forecast death toll to as many as 90,000, and some estimates are higher.

Most states don’t meet the Trump’s administration’s criteria for relaxing restrictions meant to contain the virus, which include a prolonged decline in confirmed cases and flulike illnesses. But states such as Texas, Georgia, Tennessee and Colorado are easing restrictions anyway, allowing some businesses to operate under new sanitary guidelines.

A simulation by the Penn Wharton Budget Model estimates 116,000 total coronavirus deaths by the end of June if tough restrictions remain in place—but 353,000 deaths if those restrictions are partially lifted. If fully lifted, with no further restrictions, deaths would spike to 895,000. That would save jobs, though.

The Rand tool allows some additional tinkering with state-by-state scenarios under six different levels of restriction, ranging from no limits at all to the kind of strict rules in place in New York, New Jersey and California. Here are some of the results for four highly populated states and Georgia, which has the most lenient rules in place among states with significant infection rates.

Graphic by David Foster

In every instance, looser restrictions improve the performance of the economy but also lead to more deaths. If New York loosened restrictions by two notches, there’d be more business activity and $2.4 billion in additional statewide income. But 5,000 more people would die. Texas and Georgia now have moderate restrictions in place, which the Rand model estimates will cause 25,000 additional deaths in the two states combined. But it will also generate an extra $5.1 billion in income, combined.

Extrapolating to determine the income gained per death when comparing moderate and strict measures yield these figures:

New York: $163,000

Florida: $276,000

Georgia: $247,000

Texas: $254,000

California: $700,000

When evaluating the impact of government policies that affect public health, analysts place a statistical value of about $10 million on each human life as a way of measuring the appropriate amount of risk a policy may cause or mitigate. By that standard, the payback from reopening is low, although governors are factoring in other things such as the political mood, hospital capacity and demands from businesses.

Need for more testing

Nobody is sure how quickly to reopen. The worst outcome would be a premature reopening of businesses that lead to a resurgence of the virus, more infections and deaths and the need to force another round of closures. Health care analyst Chris Meekins at financial firm Raymond James places the odds of containing the virus nationwide by the end of May at 30%, with a 45% likelihood of containing it by July 4. He sees a 25% chance that the virus is still going on strong by Labor Day, with 100 million infections in the United States, and more than 250,000 deaths.

The biggest barrier to more thorough reopening is a lack of testing for the virus, which must be widespread and cheap. Without a vaccine, frequent testing is the only way to know if workers heading back to the job might be sick, and need to be sent home, to protect everybody else. Labs in the U.S. are now processing about 250,000 tests per day, a pace that has increased steadily. But experts say we need multiples of that to do enough screening to reopen businesses with confidence. The reopening experiments underway in Georgia and Texas might reveal who’s right.