Coronavirus and the Economic Value of Human Life

Abstract

COVID-19 has revealed familiar problems in health economics and cost-benefit analysis and the "tragic choices" that sometimes must be made. Policymakers frequently have to attach a monetary value to a human life based on the number of years that a person might have left to live and that life's quality (the concept behind "QALYs"). It is reasonable to acknowledge that the mortality rates for those with Covid-19 are higher for elderly people and those with pre-existing health problems. It is also important to recognise the "identifiable victim" problem, which may lead policymakers to focus too much on those at risk of dying from COVID-19 and not enough on less visible costs. While there may be a risk of over-estimating the economic and fiscal costs of the lockdown itself, as the economy was already weakening before the lockdown began and many people were changing their behaviour without state direction, there is ample evidence that the lockdown has compounded the economic hit. This recession is unprecedented. GDP will have fallen by a relatively large amount in a relatively short period of time. But the economy could still rebound quickly, as the threat recedes. A temporary pause would be less costly than a prolonged slump. However, the longer the lockdown remains in place, the greater the margin by which the costs are likely to outweigh the benefits and risk to make the damage permament. It may still be right to focus on the impact on health, rather than any short-term economic costs. Yet the balance is shifting even on this score, given that patients are not getting treated for other conditions and younger people who are missing out on education and job opportunities.