WORKING PAPER Does Social Distancing Matter? · 1 Greenstone ([email protected], corresponding...
Transcript of WORKING PAPER Does Social Distancing Matter? · 1 Greenstone ([email protected], corresponding...
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WORKING PAPER · NO. 2020-26
Does Social Distancing Matter?Michael Greenstone and Vishan NigamMARCH 2020
1
DoesSocialDistancingMatter?1
MichaelGreenstone*
UniversityofChicagoandNBER
VishanNigam
UniversityofChicago
March2020
AbstractThispaperdevelopsandimplementsamethodtomonetizetheimpactofmoderatesocial
distancingondeathsfromCOVID-19.UsingtheFergusonetal.(2020)simulationmodelof
COVID-19’sspreadandmortalityimpactsintheUnitedStates,weprojectthat3-4monthsof
moderatedistancingbeginninginlateMarch2020wouldsave1.7millionlivesbyOctober1.Of
thelivessaved,630,000areduetoavoidedoverwhelmingofhospitalintensivecareunits.
Usingtheprojectedage-specificreductionsindeathandage-varyingestimatesoftheUnited
StatesGovernment’svalueofastatisticallife,wefindthatthemortalitybenefitsofsocial
distancingareabout$8trillionor$60,000perUShousehold.Roughly90%ofthemonetized
benefitsareprojectedtoaccruetopeopleage50orolder.Overall,theanalysissuggeststhat
socialdistancinginitiativesandpoliciesinresponsetotheCOVID-19epidemichavesubstantial
economicbenefits.
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Greenstone([email protected],correspondingauthor*)andNigam
([email protected])contributedequallytothiswork.Theauthorsdeclarenocompeting
interests.WethankClaireFan,IanPitman,CatherineChe,andespeciallyAliceSchmitzfor
excellentresearchassistance;andOrleyAshenfelter,MagneMogstad,IshanNath,Jonathan
Cohen,ChinmayLohaniandAtakanBaltaciforseveralvaluableconversations.Allerrorsareour
own.
Preprint:https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3561244
Codeanddata:https://www.michaelgreenstone.com/paperscategories#vsl
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Introduction
Thenovelcoronavirus(COVID-19)pandemicisconsideredthegreatestpublichealththreatsince
the1918InfluenzaPandemicthatinfectedone-thirdoftheworld’spopulationandkilledatleast50
millionpeople.COVID-19casesandfatalitiesaregrowingexponentiallyandthereismuchuncertainty
aboutitsultimateimpactsglobally.Perhapsasunsettlingastheseestimatesistheuncertaintyaround
thehealthimpactsthatarewrackingsocietieswithfear.
Intheabsenceofvaccines,countriesaroundtheworldareimplementingvariousformsof“social
distancing”asapolicytoslowthevirus’spread.Thissocialdistancingtakesmanyformsbut,atitscore,
itsaimistokeeppeopleapartfromeachotherbyconfiningthemtotheirhomesinordertoreduce
contactrates.TheimpactsofsocialdistancingareevidentinthedatafromChina,especiallywhen
comparedwithItalywhichimplementedsocialdistancingpoliciesmoreslowlyandsporadically.Atthe
sametime,theeconomicscostsareclearintheChineseandItaliandata,andintheUSGoldmanSachsis
projectingquarteronquarterannualizedgrowthratesof-6%inQ1and-24%inQ2(Hatziusetal.2020).
Further,historicallyunprecedentedUSunemploymentclaimshavebeguntoarriveandthenearterm
outlookforthejobmarketisgrim(Hatziusetal.2020).ThedemonstratedbenefitsinChina(aswellas
SouthKoreaandSingapore)andthesharpandlargeeconomiccostsnaturallyraisecriticalquestions
aboutwhethersocialdistancingisworthit(HilsenrathandArmour2020;BenderandBallhaus2020;
Thunstrometal.2020).
Thispaperdevelopsandimplementsamethodtoestimatetheeconomicbenefitsofsocialdistancing.
Ourbaselinefindingisthatamoderateformofsocialdistancingisprojectedtoreducefatalitiesby1.76
millioninthenext6monthsandthatwouldproduceeconomicbenefitsworth$7.9trillion.These
benefitsareoverone-thirdofUSGDPandlargerthantheentireannualfederalbudget.Distributed
amongUShouseholds,theyareroughlyequaltocurrentmedianhouseholdincomeof$60,000.
Further,thesebenefitsarelikelyalowerbound.Thisisbecausetheydonotaccountforsocial
distancing’simpactonreducinguncertaintyaboutmortalityimpacts,thepotentialforreducing
morbidityrates,andimprovingqualityofmedicalcarefornon-COVID-19medicalproblems.Itisalso
worthunderscoringthattheestimatesdependonassumptionsaboutthevalueofastatisticallife(VSL)
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andestimatedbenefitsremainsubstantialwhenotherplausibleassumptionsaremade.Finally,wefind
thatthebenefitsfromsocialdistancingalsoremainsubstantialinlessaggressiveCOVID-19scenarios;
forexample,thebenefitsofsocialdistancingare$3.6trillioneveninascenariowherethepeakofdaily
deathratesis60%lowerthanintheImperialCollegemodel(Fergusonetal.2020)ofCOVID-19spread
thatwerelyoninthispaper.
Themethodhastwomainsteps.First,wecomparetwoscenariosfromtheprominentFergusonetal.
(2020)COVID-19study:amitigationscenario,whichtheydefineas“combininghomeisolationof
suspectcases,homequarantineofthoselivinginthesamehouseholdassuspectcases,andsocial
distancingoftheelderlyandothersatmostriskofseveredisease”thatlastsfor3-4months,anda“no
policy”scenario.ThemitigationscenarioisprojectedtoreducethenumberofCOVID-19caused
fatalitiesbyatotalof1.76millionovera6-monthperiod,relativetothenopolicyscenario.This
reductioninfatalitiesiscomposedof1.13millionfewerdeathsofCOVID-19patientstreatedin
hospitals,particularlyinintensivecareunits(ICUs);and0.63millionfewerdeathsofCOVID-19patients
thatareunabletoreceiveICUcarebecauseofpandemic-relatedovercrowding.
Second,thereductioninfatalitiesfromthemitigationscenarioisdividedinto9agecategoriesandthen
monetizedusingtheUnitedStatesGovernment’sVSLthatweadjustforage(ThalerandRosen1976;
AshenfelterandGreenstone2004;MurphyandTopel2006;OMB2003;USEPA2015).Intotal,the
benefitsfromthemitigationscenarioequal$7.9trillion.Deathsavoidedandmonetizedbenefitsare
unequal:cohortsunderage50comprise11%ofmonetarybenefits(3%oftotaldeathsavoided);ages
50-69comprise52%ofmonetarybenefits(28%ofavoideddeaths),andthose70andoldercomprise
37%ofmonetarybenefits(69%ofavoideddeaths).Thedifferencesinmonetarybenefitsacrossage
groupsreflectthatCOVID-19mortalityratesareincreasinginagewhiletheVSLisgenerallydecreasing
inage.
Finally,wenotethattheparticularbenefitsestimatesareonlyasreliableasFergusonetal.’sprojections
onCOVID-19’sspreadandhealthrisks.Themethodcanbeusedwithanysetofprojections,soasmore
informationarrivesandresearchadvances,thisapproachcanbeappliedtootherprojectionsandto
inferthebenefitsofalternativepolicyresponses.
Theremainderofthepaperisorganizedasfollows.SectionIdescribesourmethodstoprojectthedirect
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and“overflow”COVID-19causeddeaths,basedonFergusonetal.(2020).SectionIIdescribesour
approachtomonetizingtheavoideddeathsinordertodevelopanestimateofthebenefitsofthe
mitigationsocialdistancingscenario.Finally,SectionIIIinterpretstheresults,discussessomecaveats,
andconcludes.
I. MortalityImpactsofSocialDistancing
ThissectiondevelopsestimatesoftheprojectedmortalityimpactsofCOVID-19,exclusivelyrelyingon
Fergusonetal.’s(2020)“individual-basedsimulationmodel”thatwasdevelopedtosupportpandemic
influenzaplanning.Thepaper,whichhasbeenhighlyinfluentialinthepolicyarena,combinesdataon
earlyoutbreaksofCOVID-19withdemographicandhospitalavailabilitydatafromtheUnitedStatesto
projecttheinfectionrates,hospitalizationrates,demandforcriticalcare,andmortalityrates.It
attemptstodisciplinetheseprojectionswithdataonCOVID-19experiencesinChina,Italy,GreatBritain,
andtheUnitedStates(Fergusonetal.2020).
OuremphasisisonFergusonetal.’s“nopolicy”andmitigationsocialdistancingscenarios.Intheno
policyscenario,thereisuncontrolledgrowthofthecoronaviruspandemicthatleadstoan81%infection
rateintheUnitedStatesbyOctober1and2.2milliondeaths.Asabasisofcomparison,inlateFebruary
theCDCprojecteda48-65%infectionrateanddeathsof0.16million(witha0.25%infectionfatality
rate)to1.7million(1%fatalityrate)overayearstartingMarch2020(Fink2020).Importantly,other
empiricalstudiesnowpointtoacasefatalityratecloseto1%(Verityetal.2020,MizumotoandChowell
2020),andotherexpertestimatessuggesta30-70%US-wideinfectionrate(Axelrod2020,Ramsey
2020).TheFergusonetal.estimates,whileslightlymorepessimistic,arethusbroadlyconsistentwith
otherprojectionsofCOVID-19transmission.
ThemitigationscenarioemphasizedbyFergusonetal.isamoderateformofsocialdistancingthat
consistsof7-dayisolationforanyoneshowingcoronavirussymptoms,a14-dayvoluntaryquarantinefor
theirentirehousehold,anddramaticallyreducedsocialcontactforthoseover70yearsofage.
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All
measuresbegininlateMarch.Theisolationandhouseholdquarantinemeasuresareassumedtobein
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Fergusonetal.alsomodelothersubsetsofmitigation,suchasschoolanduniversityclosures,butthesehave
limitedimpactandthemortalityimpactsarenotemphasized.
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placeforthreemonthsandreducedcontactforpeopleover70lastsfourmonths.Fergusonetal.
projectthatthemitigationscenariowillreducepeakhospitaldemandbytwo-thirdsandtotaldeathsto
1.1million.
WefocusonthemitigationscenariobecauseitapproximateswhattheUnitedStatesisimplementing,
albeitunevenlyacrossthecountry.WithperhapstheexceptionofCalifornia,WashingtonandNewYork,
mostUSstateshavenotpushedChina-styleshutdownsofthelevelnecessarytosuppressCOVID
transmission(Glanzetal.2020).Inotherwords,theUSmay“flattenthecurve”ofinfectionbutnotstop
itentirely.Fergusonetal.alsomakeprojectionsabouta“suppression”scenariothatincludes
dramaticallyreducedcontactfortheentirepopulation,andinvolveseitherareboundepidemic(that
stronglyresemblesourmitigationscenario)orrepeatedimpositionofsocialdistancingfortwoyears.
WeviewthelatterasfarfromanythingbeingimplementedintheUnitedStates.Onethingtonoteis
thatboththenopolicyandmitigationscenariosonlyextendthroughOctober1,soitisreasonableto
assumethatavaccinewillnotbedevelopedinthistimeframe.
AnovelfeatureofouranalysisisthatweimproveuponFergusonetal.’sestimatedmortalityprojections
byaccountingforthepotentialshortagesinthesupplyofhospitalintensivecareservices,forexample
ICUbeds,respirators,andtrainedstaff.Specifically,Fergusonetal.’sheadlinedeathprojectionsassume
thatallCOVID-19patientsreceivetheappropriatemedicalcare,sotheirprojectionsdonotaccountfor
potentialshortagesinICUbedsorrespirators.Indeed,itispreciselythepossibilityoftheseshortages
thataccountforthepolicypushto“flattenthecurve”andavoidtheirrepercussions.Ourapproachisto
labeltheFergusonetal.projectionsofdeathsas“directdeaths”anddevelopprojectionsof“overflow
deaths”whicharethosethatresultfromhospitalICUsreachingcapacityandbeingunabletoservesome
COVID-19patients.Aswedetail,weprojectthatsocialdistancingwouldreduceoverflowdeathsbyan
additional630,000fatalities.
Insummary,weprojectthatsocialdistancingreducesCOVID-19causeddeathsby1.76milliondeaths.
Thisiscomposedofreductionsof1.13milliondirectdeathsand630,000overflowdeaths.The
remainderofthissectiondescribeshowwedeveloptheseprojectionsofthereductionsindirectand
overflowdeathsduetosocialdistancingandtheirdistributionacross9agecategories.
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Fig1.ModelingofDirectDeathsfromCOVID-19
Notes:Figureshowshowweconstructdailydirectdeathsundervarioussocialdistancingpolicies.TheoriginaldistributionofUSdeathswithnopolicyfromFergusonetal.(2020)isgiveninPanelA.PanelBshowsournormal
approximationofthisdistribution,andasimilarpolicyundermitigationsocialdistancing.Totaldirectdeaths(areas
underthecurves)are2.2millionwithnopolicyand1.1millionwithmitigationsocialdistancing,exactlymatching
reporteddeathsinFergusonetal.
A.DirectDeaths
WebeginbyreproducingtheFergusonetal.estimatesofdirectdeathsintheUS:2.2millionwithno
policyand1.1millionwith“mitigation”socialdistancing.Todoso,wedevelopamethodthat,under
simpleassumptionsabouttheprogressionofcoronavirus,allowsustoconstructthefulldaily
distributionofdeaths.Thisstepisnecessarybecauseitwasinfeasibletoacquirethefulldataset
underlyingtheFergusonetal.analysis,undoubtedlyduetothegreatdemandsplacedontheauthorsas
theymodeltheprogressionofCOVID-19andreplayupdatedfindingstopolicymakers.
OurapproachassumesthatdailyCOVID-19cases,deaths,andICUbeddemandfollowanormal
distribution.Normaldistributionsroughlyapproximateepidemicgrowthcurves,whichareslightlyright-
skewedsincetheygrowexponentiallyuntilreachingherdimmunity.Normalityisalsoconvenient
becausegiventhecenter(dateofpeak),heightatpeak,andwidth(distancefromstarttopeak),itis
possibletorecoverthefulldistribution(i.e.,dailyfatalitycounts).
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Foranexampleofourstrategy,considerFigure1.PanelAreproducesFergusonetal.’sdistributionof
dailydeaths,whichweextractedfromtheirpaper.
3
ThecenterofthedistributionisaroundJune1and
thestandarddeviationvisuallyappearstobeabout16days,sowecanplotanormaldistribution.Lastly,
about55,000deathsperdayhappenatthepeak.Wethenscaletheentiredistributiontopeakatthat
valueandsumdeathsacrossalldaystoobtaintotaldeathsfromMarch1toOctober1,2020.So
althoughwedon’thavetheunderlyingdata,weareabletoreproducethisdistributionwiththeredline
inPanelB;ourreconstructedversionaddsuptothesame2.2milliondirectdeathsthatFergusonetal.
projectfortheirnopolicyscenariobyconstruction.
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ThebluedistributioninPanelBfordailydeaths
underthemitigationscenarioisrecoveredwiththesameapproachand,againbyconstruction,produces
exactlythe1.1milliondeathsthatFergusonetal.project.
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ThebottomlinefromthisanalysisisthatsocialdistancingisprojectedtoreducethenumberofCOVID-
19deathsby1.1millionbetweenMarch1andOctober1.Thisissimplythedifferenceinthenumberof
directdeathsinthenopolicyandmitigationscenarios.
B.OverflowDeaths
WenextestimateICUoverflowdeathsunderthenopolicyandmitigationscenarios,aswellastheir
differencewhichisthenumberoffatalitiesavertedthroughCOVID-relatedsocialdistancing.Webelieve
thatthesearethefirstprojectionsofoverflowdeathsor,putmoreplainly,themortalitycostsoffailing
to“flattenthecurve”.Previouswork(e.g.,Fergusonetal.2020,Jhaetal.2020)projecthospitalbedand
ventilatorneedsinexcessofcapacity,butdonotprojecttheimpactoftheseshortagesontotal
fatalities.
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3
PanelAcorrespondstotheUScurveinFigure1aofFergusonetal.(2020),whichisexpressedindeathsper
100,000people;wemultiplythroughbytheUSpopulationtoobtaintotalUSdeaths.
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Forsomedistributions,wehaveevenlessinformation.TheonlyFergusonetal.(2020)plotshowingcurveswith
andwithoutmoderatedistancingisforcriticalcarecasesinGreatBritain,notdeathsintheUSA.However,that
plotstillletsusinferthattheepidemicpeakisone-thirdashighandtakes40%moretimetooccurrelativetoApril
1,andhasa40%largerstandarddeviation,comparedtonopolicy.Thesepointsaresufficienttoconstructdirect
deathswithmitigationintheUnitedStates.
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Weaddameanzeroerrortoourreconstructednormaldistributions,suchasinPanelB.
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Thechallengeinestimatingoverflowdeathsisthatthedeathratechangesasafunctionofthenumberof
patients,soastandardSIRmodelthattakesCOVID-19deathratesataninputwillnotdirectlycapturethis
phenomenon.Incontrast,empiricalcomparisonsbetweenoverwhelmedandcalmerhospitalsystems(ex:Wuhan
vs.restofChina)arechallengingbecausedistancingpoliciesaremostseverelyimplementedinoverwhelmed
areas,confoundingcomparisons.
8
AlittlebackgroundonICUservicesishelpfultounderstandthiscalculation.PatientsintheICUreceive
specializedbeds,ventilators,andcarefromdoctorsandnurseswithspecializedtraining.TheUnited
Stateshas85,000bedsinintensivecareunits(Tsaietal.2020).Ofthose,32,000(37%)areunoccupied
andimmediatelyavailabletotreatCOVID-19patients.ThetotalnumberofbedsthatCOVID-19patients
couldfill,knownas“surge”capacity,liesbetweenthetwo.Intimesofemergency,somespacecanbe
madebycancelingelectivesurgeries,butcancerpatientsandotherswithongoingtreatmentmuststay
put.WefollowFergusonetal.inassumingICU“surge”capacityof45,000beds(=32,000unoccupiedICU
bedsplus13,000ICUbedsmadeavailablebycancelingelectivesurgeries).
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IncreasingICUcapacityany
furtherrequiresnewphysicalbedsandequipment,aswellasproportionalincreasesinthenumberof
ICUdoctorsandnurses.
ThefirststepinprojectingoverflowdeathsisthentoprojectthenumberofICUbedsavailableeachday
forCOVID-19patientsandthedailynumberofnewpatientsinneedofICUcare.WefollowFergusonet
al.andassumethateachICUpatientoccupiesabedforexactly10days.Giventhesurgecapacityof
45,000ICUbeds
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,thismeansthatatotalof4,500ICUbedsbecomeavailableeachdayforCOVID-19
patients.Fergusonetal.projectsthenumberofnewCOVID-19patientsthatneedICUserviceseachday
forbothscenarios.
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Figure2reportstheresultsfromthisexercise.ThedashedblacklineisthenumberofICUbedsthat
becomeavailableeachdayforCOVID-19patientsinneedofICU-levelcare.Theredandblue
distributionsarethenumberofnewCOVID-19patientsthatrequireICUserviceseachdayundertheno
policyandmitigationsocialdistancingscenarios,respectively.Thepatientsunderneaththedashedblack
linereceiveICUservices,whilethoseaboveitareprojectedtobedeniedthem.
Undersocialdistancing,1.57millionfewerCOVID-19patientsthatmeritICUservicesaredeniedthem.
Specifically,thenopolicynumberofCOVID-19patientsinneedofICUservicesthataredeniedthemis
equaltothesumoftheleft(1.92million)andcenter(0.60million)shadedregions.Inthemitigation
socialdistancingscenario,thisisequaltosumofthecenter(0.60million)andright(0.35million)
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TheauthorsassumetheUShas14ICUbedsper100,000people,whichis45,000overall.Thisisslightlylower
thantheTsaietal.(2020)estimateof58,000potentiallyavailableICUbeds.
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Fergusonetal.(2020)reportthatUSICUsurgecapacityis14bedsper100,000people;wemultiplybyUS
populationanddivideby10days/ICUpatienttoobtaintheICUsurgecapacityshowninFigure2.
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PlotsinFergusonetal.(2020)areofprojectedICUbedsoccupiedbyday,whichwedivideby10daysperICU
patienttoobtainthenumberofnewpatientsperday,asshowninFigure2.
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Fig2.PredictedICUPatientFlows
Notes:FigureillustratesourcomputationofoverflowdeathsfrompatientsunabletoreceiveICUcare.Dailyflows
ofpatientsrequiringICUcareareconstructedfromFergusonetal.(2020)projectionsofbeddemand.Patients
aboveUSsurgecapacity(blackline)aredeniedICUtreatment:theredandorangeareaswithnopolicyandthe
orangeandyellowareaswith“mitigation”socialdistancing.Thedifferenceof1.6millionrepresentsCOVID-19
patientsdeniedICUtreatment,eachofwhichhasa50%chanceofsurvivalwithICUtreatment(Fergusonetal.
2020)anda10%chanceofsurvivalofdeniedcare.
regions.Therefore,thebenefitofsocialdistancing(i.e.,thedifferenceinthesetwonumbers)isthe
differencebetweenthesetwonumbersor1.57million.
Theprospectsforthese1.57millionICUindicated,butdenied,patientsarepoorandweprojectthatan
additional630,000ofthemwoulddie.Thiscalculationrequiresanestimateofthedifferencein
mortalityratesforICU-indicatedCOVID-19patientswhocanandcannotgetICUservices.Werelyon
Fergusonetal.’sassumptionthatthesurvivalrateforICU-levelCOVID-19patientsinICUsis50%andour
readoftheliteraturethatsuggeststhatthesurvivalratefallsto10%orbelowiftheyaredeniedICU
services(Emanueletal.2020,Longetal.2015).Insummary,1.57millioncoronavirusICUpatientsfacea
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40%higherdeathrateinthenopolicyscenario,relativetothemitigationsocialdistancingscenario.Put
anotherway,socialdistancingreducestheprojectednumberofoverflowdeathsby630,000inthe
UnitedStatesbetweenMarch1andOctober1,2020,providingaquantitativerationaleforeffortsto
“flattenthecurve”.
C.AgeDistributionofCOVID-19Deaths
ThenextstepintheanalysisistoassignprojectedCOVID-19causeddeaths–whichwehavecomputed
fortheentireUSpopulation–toagegroups.Fergusonetal.(2020)reportthedistributionoftotal
deathsfromthenopolicyscenarioacross9agegroups(i.e.,0-9,10-19,…,70-79,and80+).
10
Weapply
thissamedistributionoftotaldeathstothemitigationscenario.Thisisnotaninnocuousassumption,
becausethemarginaldeathsinthisscenariomayhaveadifferentagedistribution,butalternative
informationisunavailable.
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II. TheMonetaryValueofSocialDistancing
Thissectiondescribesourapproachtomonetizingreductionsinfatalitiesandthenusesittodevelopan
estimateofthebenefitsofthemitigationsocialdistancingscenario,relativetothenopolicyscenario.
A.TheValueofaStatisticalLifeandtheMonetaryBenefitsofChangesinMortalityRates
Itisnaturaltoconsidersocialdistancinglikeanyofhundredsofpoliciesthataimtoreducetherisksthat
peopleface.Asjustoneexampleofsuchpolicies,governmentspayforguardrailsonthesideofroads,
becausetheyincreasesurvivalratesincaraccidents.Apolicylikesocialdistancingsimilarlyincreases
survivalrates.
Toconvertthemainbenefitofsocialdistancing–reducingthemortalityimpactofCOVID-19–into
dollarterms,weturntothevalueofastatisticallife(VSL).TheVSLisatoolfromeconomictheorywhich
isnowastandardingredientinthecost-benefitanalysesthatundergirddecision-makingbytheUnited
StatesGovernment,andscoresofforeign,state,andlocalgovernments(OMB2003).Inprinciple,the
VSLmeasureshowmuchtheaverageUScitizeniswillingtopayforareductionintheprobabilityof
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Fergusonetal.reporttheinfectionfatalityrateandprobabilityofrequiringICUcarebyagegroup.Wemultiply
eachby2017age-grouppopulationfromtheUSCensustoobtaintheage-wisedistributionofdirectand
overflowdeaths,respectively.
11
Inanextremecase,supposedistancingpurelyinhibitscoronavirusfromreachingnursinghomes;ifso,our
approachwillprojectdeathstoelderlypopulationswheninrealitynonehavedied.
11
death.
12
Itisonestatisticallife,whichisareductioninmortalityratesequivalenttosavingonelifeon
average.Forinstance,supposetheaverageAmericaniswillingtopay$10,000toavoida0.1%chanceof
death,thentheVSLisequalto$10,000/0.001livessavedor$10millionperstatisticallifesaved.So,a
policythatisexpectedtosave1lifehas$10millioninsocialbenefits.
Therearetworeasons,onetheoreticalandonepractical,tousetheVSLtocapturethebenefitsofsocial
distancingpolicies.First,theVSLcapturesthefullbenefitsanindividualexpectstoderivefromherown
life,includingfromleisure,timewithfriendsandfamily,andconsumptionofgoodsandservices.The
legalsystemoftenreliesonindividual’sremaininglifetimeearnings,butsuchameasurefailstocapture
manyfeaturesofwhatpeoplevalueabouttheirlife,includingtheirconsumptionofnon-marketgoods
likeleisuretimespentwithfamilymembers(MurphyandTopel2006).
Second,ourapproachisastandardone:USfederalagenciessuchastheEPAandDepartmentof-
TransportationhaveusedtheVSLformanydecadestoevaluatealonglistofpoliciesinavarietyof
domains(transportationandenvironmentaretwocommonareas).Thesepolicies,likesocialdistancing,
havebenefitsmeasuredinlowermortalitybutcostsmeasuredindollars;theVSLallowstheUS
governmenttocomparethetwo,ratherthanneglectingthatwhichcannotbevalued.
Inpractice,wecomputethesocialbenefitsofreducingCOVID-19mortalityratesas:
!"#"$%&' = *+,- ∗ (0-123456 ∗ 789- + 0-;<43=>;? ∗ 789-)
-
wherejistheagegroup.0-123456isthereductioninthedirectdeathratefromimplementationofthe
moderatesocialdistancingscenario,relativetothenopolicyscenario,thatwasoutlinedinSectionIA.
0-;<43=>;?
istheanalogforICUoverflowdeathsratethatwasdescribedinSectionIB.Finally,789- isthe2017USpopulationforthejagegroupand*+,-isthevalueofastatisticallifethatisallowedtovarywithage.TheVSLisallowedtovarywithagefollowingMurphyandTopel(2006),butwerequire
theaverageforpeople18andovertoequal$11.5million
13
whichmatchestheEPA’sVSLforadults(US
EPA2015).
12
ItisimportanttounderscorethattheVSLisnottheamountofmoneythatapersonwouldbewillingtotradefor
certainlossoflife(presumablyalloftheirwealth)butratherforasmallchangeintheprobabilityofdeath.
13
TheUSEPAemploysa2020VSLof$9.9millionin2011dollarsaspartoftheCleanPowerPlanFinalRule
RegulatoryImpactAnalysis.Thisestimateaccountsforincomegrowthto2020;adjustingforinflation,theVSLis
$11.5millionin2020dollars.
12
B.EmpiricalEstimatesoftheMonetaryBenefitsofSocialDistancing
Table1summarizesthepaper’skeyresults.Therowsreportoneachofthe10agecategoriesandtheUS
total.Column(1)reportsthetotalUSpopulation.Columns(2d)detailstheprojectedreductionindirect
deaths due to social distancing,with columns (2a) – (2c) reporting the ingredients in this calculation.
Columns(3a)–(3d)repeatthisexerciseforoverflowdeaths.Thetotalreductionindeathsduetosocial
distancing(i.e.,thesumof(2d)and(3d))isreportedin(4a).(4b)liststheage-specificVSL,whichreflects
thefactthatincomeandremaininglifeexpectancyvaryacrossagesandmanyinfluencewillingness-to-
pay for reductions in mortality risk. To obtain column (4b) We obtain estimates of the VSL-age
distributionfromtheauthorsofMurphyandTopel(2006)andrescalesothatthepopulation-weighted
average for US adults (18+) equals the US EPA VSL of $11.5million. Finally, column (4c) reports the
monetizedvalueoftheprojectedreductioninfatalitiesduetosocialdistancing.
The topline result is that social distancing is projected to reduce COVID-19 caused fatalities by 1.76
millionbyOctober1andthatthisisworth$7.9trillion.Thisprojectedreductioninfatalitiesiscomposed
of1.13millionfewerdeathsofCOVID-19patientsreceivingappropriatetreatment(i.e.,directdeaths)
and 0.63 million fewer deaths of COVID-19 patients that are unable to receive ICU care because of
pandemicrelatedovercrowding(i.e.,overflowdeaths).
Figure3 illustrates that the impacts are strikinglyheterogeneous across age categories. Peopleunder
theageof50have$0.85trillion(11%)oftotalbenefits,reflectingtheirlowchanceofdeathfromCOVID-
19.Peopleaged50-69have$4.14 trillion (52%)of totalbenefits, almostdouble their shareofdeaths
avoidedthroughsocialdistancing; incontrast,people70andolderget$2.95trillion (37%)ofbenefits
despite comprising over two-thirds of deaths avoided. Cohorts aged 50-69 have larger total benefits
than the 70+ group because the former have a higher VSL, reflecting the greater remaining life
expectancies and expected future incomes of younger cohorts. More generally, it is apparent that
COVID-19’s risks and the benefits of social distancing are disproportionately concentrated among the
olderagegroups.
13
Table1.SocialDistancing’sProjectedMortalityBenefitsandtheirValuationintheUnitedStates
Notes:TableexplainshowprojecteddeathsavertedthroughsocialdistancingareconvertedtotheirvaluetoAmericans.Mitigation-typesocialdistancingreducestheaverageperson’schanceofdyingdirectlyfromCOVID-19bytherateincolumn(2c)(e.g.,3.1percentforpeople80+),andadditionallyreducestheprobabilityofdeathfromhospitalovercrowdingby(3c).Wescalebytotalpopulationtocomputestatisticallivessaved(2d)and(3d).Lastly,wesumlivessavedandmultiplybytheVSLtocomputetotalbenefits;VSLsarelowerforolderpopulationsbecauseoflowerincomesandlifeexpectancies.Thebenefitsin(4c)thereforerepresentthetotalvaluetoallAmericansofthereductionsinmortalityriskin(2c)and(2d),notthevalueofsavinganyparticularlifewithcertainty.
Table 1: Social Distancing Benefits Americans By Lowering Chance of Death
Population Direct Deaths Overflow Deaths All
No Mitigation No MitigationPolicy Distancing Di�erence Policy Distancing Di�erence
(1) (2a) (2b) (2c) (2d) (3a) (3b) (3c) (3d) (4a) (4b) (4c)Age US pop in Pct Pct Pct Death Pct Pct Pct Death Death VSL in Benefits in
group millions of pop of pop of pop count of pop of pop of pop count count million USD trillion USD
0-9 39.8 0.001 0.001 0.001 265 0.001 0.000 0.000 177 442 14.7 0.0110-19 41.4 0.004 0.002 0.002 827 0.002 0.001 0.001 554 1,381 15.3 0.0220-29 45.0 0.020 0.010 0.010 4,487 0.009 0.003 0.005 2,405 6,892 16.1 0.1130-39 42.7 0.052 0.026 0.027 11,364 0.023 0.009 0.014 6,091 17,455 15.8 0.2840-49 40.2 0.098 0.048 0.050 20,032 0.045 0.017 0.028 11,048 31,080 13.8 0.4350-59 42.9 0.391 0.192 0.200 85,635 0.179 0.069 0.111 47,598 133,234 10.3 1.3860-69 36.4 1.435 0.704 0.732 266,364 0.656 0.250 0.405 147,585 413,949 6.7 2.7670-79 21.3 3.327 1.631 1.696 362,001 1.514 0.578 0.936 199,692 561,694 3.7 2.0680+ 12.4 6.067 2.974 3.093 382,484 2.791 1.066 1.725 213,339 595,824 1.5 0.89
US Total 1,133,460 628,491 1,761,951 7.94
1
14
Fig3.MonetaryBenefitsofProjectedMortalityReductionsfromSocialDistancing
Notes:Figureshowstotalbenefits(willingness-to-pay)forreducedCOVID-19mortalitythroughsocialdistancing.
Totalbenefitsof7.94trilliondollarsequalthesumacrossagegroups,whereeachagegroup’sbenefitsarethe
changeinexpectedmortalitytimestheage-specificvalueofastatisticallife.Despitefacinglowermortalityrisk
thanabove-70cohorts,50-59and60-69yearoldsseelargebenefitsbecausetheyhavemoreyearslefttoliveand
thereforehigherVSLs.
C.RobustnesstoAlternativeAssumptions
Thecredibilityoftheestimated$8trillioninbenefitsreliesdirectlyonparametersintheImperial
Collegemodel.Thissubsectionexamineshowthemonetizedbenefitsofthemitigationsocialdistancing
scenariochangeunderalternativeassumptionsaboutthevirulenceofthenopolicyscenarioandsurge
ICUcapacity,aswellasthechoiceofanalternativeVSL.
Table2reportsonthisexercise.Row(1)repeatsthefindingsfromthispaper’sbaselineanalysis.We
considerwhathappensifthepeakdailymortalityrateisreduced,throughanyofavarietyof
mechanismsincludinglowerinfectionratesandlowermortalityratesconditionaloninfection.A
reductioninthepeakdailymortalityrateby30%reducesthebenefitsofsocialdistancingto$6.5trillion
(row(2a)),whilea60%reductiondecreasesitto$3.6trillion(row(2b)).Row(3)revealsthatalthough
doublingICUcapacitywouldmeaningfullyreducethecostsofCOVID-19itwouldhavelittleimpacton
15
Table2.MonetaryBenefitsofProjectedMortalityReductionsfromSocialDistancingwithAlternative
Assumptions
Notes:Tableshowsthatthatthetotalbenefitsofmortalityreductionsduetosocialdistancingaresimilarundera
seriesofalternativeassumptions.(1)isthemainestimate.In(2),weassumethepeakoftheepidemic,intermsof
casesanddeathsperday,wassomefractionlowerthaninFergusonetal.(2020).In(3)wedoubleUSsurgeICU
bedcapacityandfindasimilarestimateofbenefits,sinceICUcapacityincreasesleadtofewerdeathsbothwith
andwithoutdistancing.In(4a)weapplytheUSEPA2020VSLof$11.5milliontoalldeathsaverted,without
accountingforpatientage,andshowthatunderUSregulatorypracticetheestimatedbenefitswouldbeover$20
trillion.(4a)isanalogousto(1)exceptthatitusesaVSLof$3.5million,obtainedfromAshenfelterandGreenstone
(2004)andadjustedforinflationandincomegrowthto2020.(4c)isanalogousto(4a)butusestheupdated
AshenfelterandGreenstone(2004)VSL.
thebenefitsofsocialdistancing.Thismayseemsurprising,butitisbecausethebenefitsofadditional
ICUcapacityareroughlyequalinboththenopolicyandmitigationsocialdistancingscenarios.
Lastlyrows(4a)–(4c),reportthesocialbenefitswhenalternativeassumptionsabouttheVSLare
implemented.Row(4a)appliesanage-invariantversionoftheUSGovernment’sVSLof$11.5million,
ratherthanallowingittovarywithageasisdonethroughouttherestofthepaper(USEPA2015).In
thiscase,thetotalsocialbenefitsareabout$20trillion,morethan2.5timeslargerthanthebaseline
estimates.Thisfindingisnotsurprisinginlightofthehighproportionofsavedlivesthatoccuramong
peopleolderthan60,whohaverelativelylowVSLsinTable1becauseoftheirlowerremaininglife
expectancy.Whiletheage-invariantVSLhasalegalbasisinthatitisUSGovernmentpolicy,itis
challengingtojustifyfromeconomicfirstprinciplesofindividualbehavior.
16
Rows(4b)and(4c)useanupdatedversionofAshenfelterandGreenstone’s(2004)estimateoftheVSL,
whichequals$3.5millionwhenweadjustupwards14forincomegrowthto2020andconvertinto
currentdollars.ThislowerVSLnaturallyproducessmallerestimatesofthebenefitsofdistancing.With
ageadjustment,thetotalsocialbenefitsare$2.4trillion,andwithoutageadjustmenttheyare$6.2
trillion.ItisevidentthatassumptionsabouttheVSLplayanimportantroleinourexercise,butevenat
thelowerendsocialdistancingstillproducesbenefitsofseveraltrilliondollars.
III. InterpretationandConclusions
Inthispaper,wemonetizeonebenefitofsocialdistancingpolicies:alowerchanceofdyingfromCOVID-
19.BuildingonFergusonetal.,weshowthatamoderatesocialdistancingscenario,implemented
nationwide,isprojectedtosave1.76millionlivesintheUnitedStates,including0.63millionpurelyfrom
shortagesofhospitalICUbeds.ApplyingestimatesoftheVSLbasedoneconomictheoryandpeggedto
theUSgovernmentVSL,thepaperfindsthatAmericanswouldbewillingtopayapproximately$8trillion
forthisreductioninmortalityrisk.Putanotherway,theestimatedbenefitsofthismitigationsocial
distancingscenarioareroughly$8trillion.
Itisworthtakingamomenttocontextualizethisfinding.$8trillionisoverone-thirdofUSGDPand
largerthantheentireannualfederalbudget.Putanotherway,thebenefitsofsocialdistancingare
roughlyequaltocurrentmedianhouseholdincomeof$60,000.Whetherinregulartimesorduringa
pandemic,itisdifficulttothinkofanyinterventionwithsuchlargepotentialbenefitstoAmerican
citizens.Importantly,whilewemeasurebenefitsofdistancingindollars,theyreflectthehighvalue
Americansplaceonsmallreductionsintheirchanceofdeath–includingconsumption,leisure,timewith
family,andotheraspectsoflifenoteasilymonetized.
Itislikelythatthe$8trillionfigureisanunderestimateofsocialdistancing’sbenefitsbecauseitmisses
severalotherchannels.Forexample,theanalysisdoesnotaccountforthereductioninuncertainty
aroundthemortalityimpactsofCOVID-19,andvaluingitinwaysthatreflectmeasuredriskaversion
wouldcertainlyincreasethebenefits.Thereisalsothepotentialforsocialdistancingtoreducetherates
ofnon-fatalsicknessexperiencedbythepopulation,althoughthisultimatelydependsontheimpactson
14
Consistentwithexistingliterature(e.g.,Carletonetal.2019),weuseanelasticityoftheVSLwithrespectto
incomeofunitytoadjusttheAshenfelterandGreenstone(2020)VSLtothepresent.
17
longruninfectionrates(Yangetal.2020).Almond(2006)isanimportantdatapoint,becauseit
documentssubstantiallong-rundamagesfrominuteroexposuretothe1918influenzapandemic.
Further,itseemsreasonabletopresumethatsocialdistancingwillincreasethequalityofcarefornon-
COVID-19medicalproblemsbyreducingthestrainonmedicalproviders,facilities,andsupplies.Finally,
itseemsplausiblethatthechangesinmortalityratesbeingconsideredhereare“non-marginal”;the
availableevidencesuggeststhattheVSLisincreasingfornon-marginalchangesinfatalityrisk,meaning
thattheanalysisshouldusealargerVSL(Greenbergetal.2020).
Whileitistemptingtoundertakeafullcost-benefitanalysisofsocialdistancing,thiswouldrequire
reliableestimatesofitssubstantialcosts.Weareunawareofcomprehensiveestimatesofthesecosts
andtheirdevelopmentisbeyondthescopeofouranalysis,sothepapercannotgofurtherthan
developinganestimateofthegrossbenefitsofsocialdistancing.
Finally,weareundoubtedlyintheearlydaysoflearningaboutCOVID-19andthepotentialpolicyand
societalresponses.Thispaper’sbroadestfindingisthatithasdevelopedamethodtoestimatethe
monetarybenefitsofsocialdistancingandotherpolicyresponsestoCOVID-19astheyemerge.
18
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