What is the Cost of the Lockdowns?

Recent research suggests that we are already pushing a fifth of small businesses into bankruptcy, many of which will have taken a lifetime of honest toil to build. The proportion is forecast to rise to a third after three months of lockdown.

Jonathan Sumption, Sunday Times, April 5th 2020

One of the most persuasive arguments for ending the lockdown is that prolonging it will lead to a greater loss of life in the long run – the cure will end up being worse than the disease, to paraphrase Donald Trump. Why? Because a prolonged lockdown will lead to a massive economic contraction and that will have a negative impact on public health. Kenneth Rogoff, the Harvard economist, thinks the “economic catastrophe” caused by locking people down is “likely to rival or exceed that of any recession in the last 150 years”, potentially leading to a “global depression”.

This argument has been set out by Philip Thomas, a professor of risk management at Bristol University, who calculates that an economic contraction of more than 6.4% in GDP per head in the UK over the next two years will result in more years of life lost than abandoning the lockdown. And a contraction of at least that size seems overwhelmingly likely, with the OECD predicting the UK economy will shrink by 25% over the next two years if the lockdown is prolonged for 18 months. “I’m worried that in order to solve one problem we’d create a bigger problem,” says Professor Thomas.

Needless to say, Thomas’s analysis has been vigorously challenged, with some economists disputing that downturns cause an overall loss of life. (Curiously, the people challenging Professor Thomas’s research are often the very same people who claim that “austerity” killed 130,000 people.) While it’s true that the years 2007-09 saw a rise in suicide rates in the US and Europe, and economic slumps generally coincide with a rise in ill-health, domestic abuse and violent crime, that doesn’t necessarily translate into a rise in mortality. For instance, during the eurozone debt crisis Greece’s economy shrank by 30%, with a corresponding rise in suicides, as well as a rise in mortality for older people. But overall mortality continued to decline and even began to decline more rapidly for Greeks aged 20-34. There’s also evidence that the Great Depression didn’t have a negative effect on mortality in the US. One academic paper summarised the evidence as follows:

Evidence from high-income countries indicates that the association between economic growth and overall mortality is pro-cyclical, whereby mortality decreases during economic recession. This decrease in mortality is observed despite known negative health consequences of unemployment, declines in self-reported health and mental health, and increased suicide rates during recessions.

‘Effect of economic recession and impact of health and social protection expenditures on adult mortality: a longitudinal analysis of 5565 Brazilian municipalities’, Thomas Hone et al, The Lancet, November 2019

However, the same paper found that recessions do coincide with a rise in mortality in low-income and middle-income countries (LMICs). In addition, a 2009 paper found that unemployment has a negative impact on mortality, with workers laid off en masse due to factory closures and the like seeing a reduction in life expectancy of 1 to 1.5 years.

Even supposing this calculation could be made with some confidence, and it showed that the lockdown will “do more harm than good”, in the words of Professor Thomas, the difficulty for the Government is that the electorate would place a higher value on the lives lost as a result of ending the lockdown (assuming it did result in more people dying from COVID-19) than the lives saved as a result of avoiding a deep recession. As one Cabinet minister told the Sunday Times on April 12th: “Real deaths happening now are more politically powerful than projections from a model.” The lost lives would be visible, whereas the saved lives would be invisible. And the converse doesn’t apply. Suppose the Government keeps the lockdown in place and, in 18 months’ time, mortality from non-COVID-19 deaths starts to rise. The electorate probably wouldn’t value those lost lives more highly than the lives saved as a result of maintaining the lockdown.

Does that mean it’s politically naive to expect the Government to dial back extreme social distancing measures any time soon? Not necessarily. As the lockdown continues, the public will inevitably begin to tire of it and there may come a point when it no longer considers preventing the spread of the virus a price worth paying, particularly if we’re no closer to developing a vaccine. It’s also possible that once the peak has been flattened the public will stop observing extreme social distancing measures, believing the danger has passed. Absent public consent, it will be hard to keep the lockdown in place.

One final consideration: If the daily death toll begins to climb steeply after restrictions are lifted, that might deter people from returning to work, thereby negating the point of ending the lockdown. The Government could incentivise people to go back to work, e.g. stop paying them 80% of their wages if they’re not working, but that, too, would be politically risky.

Further Reading

The macroeconomic effects of a pandemic in Europe – A model-based assessment‘, Lars Jonung and Werner Roeger, Economic Papers, European Commission, June 2006

Job Displacement and Mortality: An Analysis Using Administrative Data‘, Daniel Sullivan and Till von Wachter, Quarterly Journal of Economics, August 2009

Life and death during the Great Depression‘, José A. Tapia Granados and Ana V. Diez Roux, PNAS, October 2009

Will the Largest Quarantine in History Just Make Things Worse?‘ by Howard Markell, New York Times, January 27th 2020

J-value assessment of how best to combat Covid-19‘, Philip Thomas, Nanotechnology Perceptions, March 2020

Achieving A Fair and Effective COVID-19 Response: An Open Letter to Vice-President Mike Pence, and Other Federal, State and Local Leaders from Public Health and Legal Experts in the United States’, Letter signed by over 800 Yale professors, Yale, March 2nd 2020

Compared to what?‘ by Heather Mac Donald, New Criterion, March 13th 2020

Crashing the economy will also cost lives‘ by Matthew Paris, The Times, March 21st 2020

It’s not just about the NHS, it’s about all of us‘ by Peter Lloyd, Conservative Woman, March 22nd 2020

Economic Costs Are Human Costs‘ by Esther O’Reilly, Arc Digital, March 25th 2020

The Grim Costs of Total Lockdowns‘ by Richard A Epstein, Hoover Institute, March 30th 2020

Singing stops in Italy as fear and social unrest mount‘ by Angela Giuffrida and Lorenzo Tondo, The Guardian, April 1st 2020

The longer lockdown continues, the more imperilled we become‘ by Lionel Shriver, The Spectator, April 4th 2020

Lockdown must end very soon‘ by Dr Ian Pearson, Timeguide.wordpress.com, April 5th 2020

On Coronavirus, economists think differently to the “common sense” crowd‘ by Ryan Bourne, CapEx, April 6th 2020

Revealed: Lockdown is costing Britain £2.4billion a DAY with young workers and women the worst hit‘ by Matt Oliver and Daniel Martin, Daily Mail, April 6th 2020

When Will the Pandemic Cure Be Worse Than the Disease?‘ by Peter Singer and Michael Plant, Project Syndicate, April 6th 2020

Recession could kill more than coronavirus‘ by Philip Thomas, iai News, April 7th 2020

Economy will struggle to escape coronacoma‘ by Rob Colville, The Times, April 7th 2020

Mapping the COVID-19 Recession‘ by Kenneth Rogoff, Project Syndicate, April 7th 2020

Coronavirus: More than 9 million expected to be furloughed‘ by Andy Verity, BBC News, April 8th 2020

The Normal Economy Is Never Coming Back‘ by Adam Tooze, Foreign Policy, April 9th 2020

Boris is worried lockdown has gone too far, but only he can end it‘ by Fraser Nelson, The Telegraph, April 9th 2020

Coronavirus: Health effects of a COVID-19 recession “could be worse than the pandemic”‘ by Ali Fortescue, Sky News, April 9th 2020

It’s time to start loosening the lockdown‘ by Daniel Hanan, The Telegraph, April 11th 2020

Clock Down: When should Britain lift its coronavirus lockdown?‘ by Toby Young, Sun on Sunday, April 11th 2020

Threat of 30% hit to GDP prompts calls for end of lockdown‘ by Steven Winford, The Times, April 13th 2020

U.K. economy could shrink by 35 per cent in April-June period: OBR‘, Reuters, April 14th 2020

The OBR’s coronavirus analysis‘, OBR, April 14th 2020

Who says a Covid recession would mean more people dead?‘ by Ed West, UnHerd, April 14th 2020

Too few have realised the true cost of this ruinous new economic Ice Age‘ by Allister Heath, The Telegraph, April 15th 2020

The lockdown is killing people, too‘ by Brendan O’Neill, Spiked, April 16th 2020

Coronavirus to have ‘profound’ mental health fallout as billions struggle with isolation‘, The Japan Times, April 16th 2020

The rational risk-taking of the restless caveman’ by Barry Norris, Argonaut, April 17th 2020

Andrew Bailey backs forecast of big UK economic downturn‘ by Chris Giles, Financial Times, April 17 2020

Breakingviews – Chancellor: Economic Consequences of Mr. Johnson‘ by Edward Chancellor, Reuters, April 17th 2020

‘No, the coronavirus lockdown cure ISN’T worse than the disease – and here’s why‘ by Dominic Lawson, Mail Online, April 20th 2020

Who will pay for this Covid catastrophe?’ by Peter Franklin, UnHerd, April 20th 2020

Managing COVID-19 Pandemic without Destructing the Economy‘, David Gershon, Alexander Lipton, Hagai Levine, Cornell University, April 21st 2020

Lockdowns Don’t Work‘ by Lyman Stone, Public Discourse, April 23rd 2020

There is no empirical evidence for these lockdowns‘ by Wilfred Reilly, Spiked, April 22nd 2020

Full lockdown policies in Western Europe countries have no evident impacts on the COVID-19 epidemic‘, Thomas Meunier, medRixv, April 24th 2020

Virus deaths may not be the greatest challenge ahead for Africa‘ by Aidan Hartley, Spectator, April 25th 2020

Coronavirus: the hidden health costs of the UK lockdown‘ by Sebastian Payne, Financial Times, April 26th 2020

Lockdowns versus living‘ by Jon Hersey, Objective Standard, April 27th 2020

Come on, Boris. It’s time to end the lockdown‘ by Toby Young, Critic, April 28th 2020

Lockdown only made corona crisis worse, claim experts‘ by Abigail Klein Leichman, Israel 21C, April 29th 2020

The Case For Ending Lockdown‘ by Ryan Kemper, RyanKemper.io, April 29th 2020

Nearly half of world’s workers risk losing their livelihoods over Covid-19 lockdowns‘ by Tokunbo Salako, euronews, April 29th 2020

LOKIN-20: The Lockdown Regime Causes Increasing Health Concerns‘ by Iain Davis, Off-Guardian, April 30th 2020

Isolation as dangerous as smoking 15 cigarettes a day, lockdown adviser warns‘ by Haley Dixon, The Telegraph, May 2nd 2020

Impact of non-pharmaceutical interventions against COVID-19 in Europe: a quasi-experimental study‘, Philip Raymond Hunter et al, medRxiv, May 1st 2020

Could the lockdown have side-effects no one has considered?‘ by Dr John Lee, Spectator, May 2nd 2020

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November 2022
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