Some economists and business leaders believe the costs of constraining the virus have exceeded the benefits. They point to unemployment totals not seen since the Depression and entire industries shut down, compared to virus death totals that may reach only the numbers from a bad flu season (55,000).As more data become available, the epidemiological trajectory of the virus is becoming clearer, allowing us to estimate the costs of COVID-19 and whether government restrictions are worth the price we are paying.
By looking at what we are willing to pay to reduce the risk of death—for example, how much will we pay for a smoke detector at home or air bags in the car—economists assign a dollar figure to a life year, now typically measured at $150,000. Applying that measure to the age distribution of the deceased, and adding the costs of treating the infected population, the total cost of COVID-19 in the U.S. under current restrictions appears to be about $150 billion. This estimate pales in comparison to the $2.3 trillion stimulus package alone and seems to support Wisconsin Sen. Ron Johnson’s recent concern that “the cure is worse than the disease”.
But what would the cost be if governments had not imposed restrictions and simply let the virus run its course? Suppose, if unchecked, 30% of Americans became infected, far below most estimates, including California Gov. Gavin Newsom’s projection that 56% of his state’s residents would be infected without mitigation. Applying the same rates of hospitalizations and mortality to this higher rate of prevalence increases the cost of COVID-19 to nearly $3 trillion. And if we assume, quite reasonably, that mortality rates would rise from 0.5% to 1.5% as hospitals become increasingly overrun, the estimated cost of COVID-19 increases to $5.6 trillion, by my calculations.
Chosen excerpts by Job Market Monitor. Read the whole story @ Are we overreacting to the coronavirus? Let’s do the math – MarketWatch