2nd Place Submission: Quantifying the costs and benefits of a lockdown

Author: Lao Jing Hui

This article is being featured as the 1st Runner Up in SEIC Opinionated Piece Competition 2021. Participants were tasked to comment about the following question: "The imposition of lockdowns during the pandemic was the best compromise between public health and the economy".

Lockdowns were the most popular approach for many countries in order to curb the spread of the pandemic. However, many often view lockdowns as prioritizing public health over the economy, especially disgruntled citizens who had lost their incomes during this period. To evaluate whether lockdowns achieved the best compromise between public health and the economy, it is useful to quantify the costs and benefits of imposing a lockdown. Furthermore, lockdowns can be implemented at different levels of stringency, thus constantly revisiting the costs and benefits of lockdowns to the economy is important.

Hence, to calculate the benefits, an estimate of the potential number of lives saved can be calculated based on infection and fatality rates estimated from epidemiological models, multiplied with the value of statistical life to compute the dollar value of saved lives (Ketchell, 2020) . On the other hand, the economic costs of a lockdown, apart from a decreased GDP and lost employment opportunities, also includes underpriced yet valuable activities like the value of recreation and leisure, quality of life, and even costs of stress due to increased household conflict. Therefore, as the value of these costs will increase over time as the lockdown drags on, incorporating flexibility in determining the level of stringency for the lockdowns will better ensure balance between the economy and public health.

The benefits of striking the right compromise between public health and the economy can be seen in the below graph. The chart reflects the relationship between deaths per million and percentage change in per capita GDP during the second quarter of 2020.

Chart from Theconversation.com

If suppressing the virus and implementing a lockdown meant that there would be worse impacts on the economy, there would be a positive correlation in the above graph. However, countries with the most stringent lockdown measures like New Zealand, Korea and Japan instead have the more minimal change in GDP per capita compared to other countries that took a more laissez-faire approach towards the pandemic.

This also positively supports the case for lockdowns as compared to achieving herd immunity within the country. Some citizens view that by letting the virus spread, achieving herd immunity is possible. However, this theory has been refuted by WHO’s Director-General Tedros Adhanom (October, 2020), stating that “herd immunity is achieved by protecting people from a virus, not by exposing them to it.” Therefore, lockdowns are much more effective than simply letting the virus spread, unregulated.

Lockdowns can also take on various levels of stringency, such as in the case of New Zealand’s 4-level Covid-19 Alert system. Each Alert Level informs citizens of precautions to take, with increasing levels implying greater control measures and social-distancing required. This gives countries certain levels of flexibility, especially if the costs of a higher level of lockdown appears to outweigh the benefits from that same level. At this juncture, governments can then review the country’s policy to decide if the country can proceed to a less strict lockdown level, which also brings benefits to the economy, such as greater consumer spending.

References

1. Adhanom, T. (2020, October). WHO Director-General's opening remarks at the media briefing on COVID-19 - 12 October 2020. World Health Organization. https://www.who.int/director-general/speeches/detail/who-director-general-s-opening-remarks-at-the-media-briefing-on-covid-19---12-october-2020

2. Misha Ketchell. (2021, February 5). Data from 45 countries show CONTAINING COVID vs saving the economy is a false dichotomy. https://theconversation.com/data-from-45-countries-show-containing-covid-vs-saving-the-economy-is-a-false-dichotomy-150533.

3. Quah, E., Eik, L. S., & Park, D. (2020, November 24). The COVID-19 DILEMMA: Public health versus the economy. https://blogs.adb.org/blog/covid-19-dilemma-public-health-versus-economy.