No, economists don’t want to sacrifice your grandparents to save the economy.
An undercurrent of animosity has persisted against economists since the financial crisis in 2007/8, however the most recent cause of adverse sentiment against economists is not merited. Despite a flurry of right-wing journalists writing articles about how the lockdown must be discontinued to protect the economy this view falls well outside the consensus of the profession.
I will draw upon evidence from two recent academic articles by leading economists and also a poll of prominent economists from across the political and economic spectrum including multiple Nobel Prize winners.
Firstly, Greenstone & Nigam argue that social distancing in the US in late March 2020 will save in the order of 1.7 million lives by 1 October, 630,000 of which are due to avoided overwhelming of hospital intensive care units. In economic terms, using the age-varying estimates of the United States Government’s value of a statistical life, they find that the mortality benefits of social distancing are about $8 trillion (or 37% of US GDP). Overall, the analysis suggests that social distancing initiatives and policies in response to the COVID-19 epidemic have substantial economic benefits.
Using geographic variation in mortality during the 1918 Flu Pandemic in the US, Correia, Luck, & Verner advise that more exposed regions experienced a sharper and more persistent decline in economic activity. Or, in other words they found that cities that used used non-pharmaceutical interventions (e.g. social distancing) earlier and more aggressively did not perform worse and, if anything grew faster after the pandemic is over. As such they conclude that lockdowns not only lower mortality; they also mitigate the adverse economic consequences of a pandemic.
Having summarised the evidence from these two recent articles, I will demonstrate that their conclusion are not supported by some select economists, but form the consensus view within the academy.
Using data from the University of Chicago’s Initiative on Global Markets research centre, which polled 44 of the most influential American economist they found that 0% of economists disagreed that “A comprehensive policy response to the coronavirus will involve tolerating a very large contraction in economic activity until the spread of infections has dropped significantly”.
Similarly, IGM’s polling showed that 0% of economists disagreed that “Abandoning severe lockdowns at a time when the likelihood of a resurgence in infections remains high will lead to greater total economic damage than sustaining the lockdowns to eliminate the resurgence risk.”
In conclusion, despite some relatively well publicised attempts to argue that lockdown is not the appropriate policy response to Covid-19, the consensus among academic economists is the policy responses that preserve lives are aligned with the policy responses that preserve the economy.
References:
Barro, R., Ursua, J., & Weng, J. (2020). The coronavirus and the great influenza pandemic: lessons from the “Spanish Flu” for the coronavirus’s potential effects on mortality and economic activity. Nber Working Paper Series, 1–26.
Correia, S., Luck, S., & Verner, E. (2020). Pandemics Depress the Economy, Public Health Interventions Do Not: Evidence from the 1918 Flu. 1–45. Retrieved from https://dx.doi.org/10.2139/ssrn.3561560
Greenstone, M., & Nigam, V. (2020). Does Social Distancing Matter? 1–20. Retrieved from https://dx.doi.org/10.2139/ssrn.3561244
http://www.igmchicago.org/surveys/policy-for-the-covid-19-crisis/
