The Economic Effect of the COVID-19 Lockdown in the United States: Was the Cure Worse than the Disease?

Abstract

COVID-19 is an ongoing global outbreak of coronavirus disease 2019, an infectious disease caused by severe acute respiratory syndrome coronavirus 2 (SARS-CoV-2). The World Health Organization (WHO) declared the outbreak a Public Health Emergency of International Concern on January 30, 2020; and a pandemic on March 11, 2020. Several mitigation measures have been used in attempts to limit the spread of the virus, including mandatory wearing of masks in public; bans on unnecessary travel; and the closure of non-essential businesses. This paper defines a lockdown as the closure of non-essential businesses combined with requirements that all citizens stay at home except for grocery shopping, trips to a pharmacy, and medical appointments. The effectiveness of lockdowns is controversial. Proponents tend to argue that lockdowns would have been more effective if enforcement had been increased and if lockdowns had been extended for a longer period of time. Opponents have argued that lockdowns hurt the economy, hurt children, and have had little positive effect on public health. The paper addresses the economic effect of COVID-19 lockdowns in the United States using a Benefit/Cost Analysis (BCA) framework. Two separate analyses are provided: a traditional BCA analysis, which assumes that the value of life is constant regardless of age; and a Preferred Analysis, which adjusts the number of deaths, and values the economic cost of the deaths based on the age of the deceased. Keywords: benefit/cost analysis, COVID-19, GDP, lockdowns, unemployment