So, the math, in broad strokes: First, assume that Gross Domestic Product was going to grow at 1.75 percent a year without the pandemic, but that instead social distancing will shrink GDP by 6.2 percent. That’s the cost.
Then also assume that all the mitigation measures reduce the Covid-19 fatality rate from 1.5 percent when hospitals are overwhelmed to just 0.5 percent. That saves 1.24 million lives, with a VSL of $10 million each.
A group of economists at the University of Wyoming have already done the arithmetic, in a paper in press at the Journal of Benefit-Cost Analysis. (Yes, that’s a thing.)
GDP would have been $13.7 trillion, but now it’ll drop to $6.5 trillion.
Cost: $7.2 trillion.
Social distancing will save 1.2 million lives at a VSL of $10 million a pop.
Benefit: $12.4 trillion.
Analysis: Social distancing to fight the spread of Covid-19 saves $5.2 trillion…
Stop there, and the problem does indeed seem simple. But of course it’s not.