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As the coronavirus pandemic continues to worsen, some people are worried that continued forced social distancing could be disastrous for the U.S. economy. But a pair of researchers at the University of Chicago say it could ultimately save the country $8 trillion.
Michael Greenstone and Vishan Nigam, in a working paper on the university’s Becker Friedman Institute for Economics’ website, base their estimate on a simulation of the spread of COVID-19. That model, from Imperial College London, projects social distancing could save 1.7 million lives between March 1 and Oct. 1.
“Using the projected age-specific reductions in death and age-varying estimates of the value of a statistical life (VSL), we find that the mortality benefits of social distancing are over $8 trillion or $60,000 per U.S. household,” the researchers say.
Even if the virus ultimately proves to be less aggressive than models suggest, the benefits remain. The researchers say if the peak of daily death rates is 60% below the Imperial College model, social distancing will still have benefits totaling $3.6 trillion.
To put the numbers in perspective, $8 trillion is more than one-third of the U.S. gross domestic product—and larger than the current federal budget. And the economists note that the figure likely underestimates the benefits of social distancing, since it doesn’t account for other variables, like the spread of other illnesses beyond the coronavirus.
Greenstone and Nigam do concede, though, that there is some guesswork in their estimate, but that’s because there’s a lack of hard data to analyze at present.
“While it is tempting to undertake a full cost-benefit analysis of social distancing, this would require reliable estimates of its substantial costs,” they wrote. “We are unaware of comprehensive estimates of these costs, and their development is beyond the scope of our analysis, so the paper cannot go further than developing an estimate of the gross benefits of social distancing.”
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