Cost-benefit analysis

What Kind of ‘Experts’ Didn’t Foresee This Lockdown Devastation?

We’re publishing today a piece by a Daily Sceptic reader, who wishes to remain anonymous, on the failure of ‘experts’ to foresee the many harmful consequences of lockdown. Here’s an excerpt.

To me, as a layman, I find it utterly astonishing that the conventional experts became so suffocated and obsessed by one risk that they managed to ignore all the empirical observations and experience of their lives that might have told them that ripping up the way human society functions, and how we build up resistance to disease, might possibly generate massive problems from mental breakdowns to economic decline and cancer to reduced immunity. Forgive me for saying so, but I’d have thought that was pretty obvious. If expertise prevents an expert from seeing that, or at least standing up and saying so, then what value is the expertise? …

The sheer recklessness of what has been done in the name of annihilating Covid (which didn’t happen anyway) is difficult to measure. One thing was clear from the outset: the ‘experts’ really didn’t have a clue and I’d suggest to a large extent they still don’t. The best thing about Boris Johnson’s Partygate is that not only has it terminally undermined the Government’s authority and basis for locking us all down, but also it has flagged up the sheer idiotic stupidity of some of the rules that – even if one believed an initial lockdown had some benefit – were manifestly not going to make a difference.

Worth reading in full.

Studies “Consistently” Find That Costs of Lockdown Outweigh Benefits, Say Researchers

Notable by its absence from the House of Commons’ pro-lockdown report was any mention of cost-benefit analysis. Indeed, the authors sidestepped the single most important question – was the lockdown worth it? – and went straight to saying that we should have locked down sooner!

Had they attempted to weigh up the costs and benefits, their report’s conclusions might have looked very different – assuming, of course, that they didn’t bungle the analysis. Remember: there are things to consider other than Covid outcomes.

Cost-benefit analyses published since the summer of 2020 have not been kind to lockdowns (which may explain their lack of inclusion in the House of Commons’ report). In a new paper, Ari Joffe and David Redman review 11 studies, each of which estimated impact using a common metric (e.g., the QALY).

Their results are shown in the table below. Each study’s main finding is given in the right-hand column.

All 11 studies found evidence that lockdowns do more harm than good. Among the nine that directly compared costs and benefits, the smallest ratio of costs to benefits was 2.5, and the largest was 26.

What’s more, the studies generally made assumptions favourable to lockdowns (e.g., that they have a large impact on the epidemic’s trajectory). Hence, in the authors’ words, their results “strongly suggest that lockdowns do not have a favorable cost-benefit balance”.

Joffe and Redman’s paper not only reviews cost-benefit analyses of lockdown, but also sets out an alternative plan for dealing with Covid (or, perhaps, with a similar pandemic virus in the future). Their plan specifies that the goal should be minimising harm to society “as a whole”, rather than – say – minimising the total number of Covid deaths.

It contains a number of appealing elements: increasing surge capacity; providing focused protection for the elderly; and reporting relevant information with context (e.g., number of deaths from all causes alongside the number of Covid deaths).

The paper by Joffe and Redman contains a lot of useful insights, and is worth reading in full.

Dutch Cost-Benefit Analysis Done During Lockdown Concluded, “The Costs Are Disproportionately High”

In a post written back in August, I said the following: “To my knowledge, no Western government has published a cost-benefit analysis of lockdown (presumably due to what it might show).”

While this may have been technically correct – since I said “published” – it appears that at least one Western country did carry out a cost-benefit analysis (though that analysis was never published).

According to Dutch newspaper Het Parool, documents obtained via freedom of information request show that the Ministry of Economic Affairs carried out a cost-benefit analysis in March/April of 2020. (Hat tip to Michael Senger for bringing the Dutch newspaper article to my attention.)

The FOI request was apparently made by a 66 year old lockdown sceptic by the name of Jan van der Zanden, who just assumed the Ministry of Economic Affairs would have tried to gauge the costs and benefits.

What did the Ministry conclude? In short, that the costs of lockdown far outweighed the benefits.

They assumed that one year of lockdown would prevent the loss of about 100,000 QALYs (quality-adjusted life years). And they attached a value of €80,000 to each QALY, which is the typical upper limit applied in analyses of this kind. Hence the expected benefits of lockdown were €8 billion.

As to costs, they projected an economic contraction of €40 billion, a loss of €25 billion due to the cessation of regular healthcare, plus a loss of €5 billion due to the “psychological consequences” of lockdown. Total expected costs were therefore €70 billion – almost nine times greater than the benefits.

The authors concluded that the “costs are disproportionately high”. They also said that “a one sided focus on mortality should be avoided” and the “health of the elderly should not be given an indisputable priority”.

The authors even proposed an alternative to lockdown, which involved expanding care and testing capacity to “get society going again”. Widespread testing would mean that infectious people could be isolated “in a targeted manner” and those who had “built up immunity” could return to work.

In the end, of course, the analysis by the Ministry of Economic Affairs was ignored. To date, the Dutch have endured 144 days of curfews and stay-at-home orders, along with assorted other restrictions. And the country has just entered another “partial lockdown” in response to rising infections.  

Het Parool contacted Eric Wiebes, who served as Dutch finance minister through January 2021. However, he “declined to respond to questions” about the cost-benefit analysis. This suggests the original probably conclusion probably hasn’t been overturned.

Did the Government and its Advisors Implement Measures Proportionate to the Risk, Asks Chair of New Cross-Party Group of MPs and Peers

As the Government sets out its ‘toolbox’ for its “winter plan” which continues to hold out the threat of new restrictions, a new cross-party group of MPs and Peers has formed to hold ministers’ feet to the fire.

The All-Party Parliamentary Group for Pandemic Response and Recovery brings together parliamentarians of all parties from both Houses of Parliament to examine the impact on society of the Government’s pandemic policy.

The group says that its aim is to provide a forum for scientists, health professionals and other experts to engage in broad, balanced and open discussion to inform a more focused and flexible approach to Government policy. It seeks to point the way to new approaches to pandemic management which prevent avoidable suffering and loss in the future. 

The Pandemic APPG is an officially registered Parliamentary Group co-chaired by Rt Hon Esther McVey MP (Conservative) and Graham Stringer MP (Labour). MPs on the Group include Conservatives Sir Charles Walker, Sir Graham Brady and Miriam Cates, Labour’s Derek Twigg and Emma Lewell-Buck, the Democratic Unionist Party’s Sammy Wilson and Ian Paisley. Peers on the group include Independent Baroness Fox of Buckley and Conservative Baroness Foster of Oxton, DBE.

Addressing its inaugural meeting, which took place on Wednesday September 8th, Robert Dingwall, Professor of Sociology at Nottingham Trent University and a former NERVTAG and JCVI member, and Dr John Lee, retired Consultant Histopathologist and former Clinical Professor of Pathology at Hull York Medical School, urged a fresh approach to policy making. 

Professor Dingwall commented:

Every policy measure to mitigate the pandemic has come with costs. We must test any ongoing measures, especially non-pharmaceutical interventions, against what we once thought necessary and assess the genuine risks. It is time also, to foster wider public debate that broadens the Government’s scientific advice network to involve a whole-of-science approach.

A good society is defined by life, health, liberty and the pursuit of happiness, not by the prevention of one disease alone.

Dr. John Lee added:

Another Cost-Benefit Analysis Finds That Lockdowns Weren’t Worth It

Did the costs of lockdown outweigh the benefits? Numerous analyses have concluded ‘yes’. However, these were all carried out by academics or independent researchers. To my knowledge, no Western government has published a cost-benefit analysis of lockdown (presumably due to what it might show).

In an unpublished paper, the economic consultant L. Jan Reid has attempted a cost-benefit analysis of lockdown in the United States. He in fact reports two separate analyses: first, what he calls a “traditional analysis”; and second, what he calls his “preferred analysis”.

Reid’s traditional analysis makes the unrealistic assumption that every life lost is valued equally at $7.8 million (which is the average value from a list of published estimates). It yielded a benefit/cost ratio slightly greater than one, suggesting the lockdowns were worth it. On the other hand, three out of four sensitivity analyses yielded benefit/cost ratios of less than one.

By contrast, Reid’s preferred analysis makes the much more realistic assumption that the value of lives lost decreases with age, such that each 20 year old represents a loss of $11 million, whereas each 70 year old represents a loss of $1.5 million.

To estimate the total benefits of lockdown, he multiplies the estimated number of lives saved in each age-group by the ‘economic value of life’ for that age-group, and then sums the values across all age-groups.

When calculating the costs of lockdown, Reid includes the hit to GDP, money spent on federal stimulus programs, lives lost from the restrictions themselves, and several other items. Overall, his preferred analysis yields a benefit/cost ratio far below one, indicating that the lockdowns weren’t worth it.

While I suspect Reid overestimates lives lost from the restrictions themselves, the benefit/cost ratio is still below one even excluding this particular item. What’s more, he uses a very liberal estimate of the number of lives saved by lockdowns – approximately two million. The true figure, I would guess, is substantially less than this.

Reid concludes that the “cost of the lockdowns was up to 10 times greater than the benefits”. You may not agree with all his assumptions, but the paper is worth reading in full.

Why Hasn’t the Government Published a Cost-Benefit Analysis of Lockdown?

When considering a policy as unprecedented and far-reaching as a nationwide lockdown, you’d assume the Government would carry out a cost-benefit analysis. After all, such analyses are routine in policy-making. 

For example, the Treasury maintains a document called ‘The Green Book’, which gives detailed guidance on how to compute the costs and benefits of particular actions. It refers to concepts such as opportunity costdiscount factors and adjusting for inflation.

You might say there wasn’t much time to carry out a detailed cost-benefit analysis before the first lockdown last March. (Though the Government could have provided a few rough numbers for the public to scrutinise.) However, it’s now more than a year later, and there still hasn’t been any attempt to weigh the costs and benefits.

In a report for the Institute of Economic Affairs published last December, the economist Paul Ormerod argued that the Government’s refusal to crunch the numbers reflects a general overreliance on epidemiological expertise, at the expense of economic expertise. 

As Russ Roberts, another economist, has observed, “Knowing a lot about the human body does not make you an expert in risk analysis, tradeoffs, or unintended consequences.” Note: this is not to imply that all or even most economists are opposed to lockdowns, but simply that key insights from that discipline have been overlooked during the course of the pandemic. 

Several cost-benefit analyses of the UK lockdowns have been published by persons outside the Government, and each one has concluded that the costs almost certainly outweighed the benefits. 

Since the NHS typically pays up to £30,000 to extend a patient’s life by one quality-adjusted life-year, a reasonable estimate of the benefits of lockdown can be obtained by multiplying the expected number of life-years saved by 30,000. 

For example, if we assume (generously) that lockdowns saved 50,000 lives and prevented 500,000 people from getting long COVID, then the total benefits would be about £16.5 billion. This figure then has to be weighed against some measure of the costs (including effects on the economy, health, education and civil liberties). Given that the fall in GDP alone last year was over £220 billion, it seems very unlikely that lockdowns would pass a cost-benefit test.

The Government’s lack of interest in cost-benefit analysis was highlighted in a recent LinkedIn post by Daniel Fujiwara – an expert in policy evaluation. Fujiwara was apparently invited to “meet with senior Government officials to discuss the pros and cons of lockdown”. However, despite offering his advice and input pro-bono, he “never heard back from them”. 

In the post, Fujiwara goes on to say, “Lockdowns should have stopped at the point where an additional day of #lockdown causes more damage to our society than it benefits us… My analysis of the impacts of lockdown last year suggests that we have gone well beyond this threshold.” 

One can only assume that the Government’s failure to publish even basic estimates of the costs and benefits of lockdown is due to fear of what those estimates might show…