All Costs Considered

What do speeding while driving, binging another TV episode, and hitting the snooze button again have in common? To our point, what do these things have in common with the national response here in the US to the COVID-19 pandemic? 

The answer? Simple cost-benefit analysis… at least in theory. How well did we use this basic economic tool when locking down the country? Did we consider both the costs and benefits of a shutdown on our economy and human flourishing? Or just the potential benefits? Let’s examine some of the data.

Most of us acquiesced to the prudence of a temporary lockdown in order to “flatten the curve.” As the weeks passed, however, phrases like “the new normal” became the norm on news stations across the country, and it quickly became clear that “temporary” regulations, and the fear that trademarked policies, were here to stay. As “temporary” turned into months and years, lockdown costs became apparent and unavoidable. 

Politicized and one-sided policy deliberations focused only on immediate benefits that brought with them bitter consequences. Frédéric Bastiat would undoubtedly scold modern policymakers for only considering the visible lockdown benefits: fewer lives lost to COVID while largely ignoring, downplaying, or dismissing the cost concerns of shutting down the country. Heightened rhetoric quelled meaningful debate with those who dared raise such concerns. The concerns of the infectious disease epidemiologists and public health scientists behind the Great Barrington Declaration, along with other AIER researchers calling for lockdown cost considerations, were dismissed as unenlightened and out-of-tune distractions by those working hard to convince the public they were doing the right thing. Yet a recent Johns Hopkins meta-analysis concluded that while the “lockdowns have had little to no public health effects, they have imposed enormous economic and social costs where they have been adopted.”

Government officials sold the lockdowns and restrictions as a way to save lives and alleviate the strain on hospitals and other health care facilities. But in attempting to do so, how many lives did the lockdowns destroy? Bastiat wrote: “The sweeter the first fruit of a habit is, the more bitter are the consequences.” Bitter indeed are the secondary effects of the lockdowns that initially went unexamined: the mass unemployment, surge in suicides, undiagnosed cancers, and untreated accidental injuries

The data show that the national pandemic response itself – not just the COVID-19 virus – led to thousands of deaths. Our World in Data explains that the United States suffered significantly more total excess deaths in 2020 than the number of confirmed COVID deaths. Similar findings occur in an NBER working paper by Virat Agrawal et al., and by Leslie Scism’s WSJ coverage of life insurance payouts. Issues such as increased rates of suicide, drug use, obesity, and strains (present and future) on the healthcare system all contributed to increased excess deaths.

As the lockdowns took tolls on peoples’ lives and families, anger and bitterness began pulling the country apart. National tensions rose as it became clear that lockdown burdens fell unevenly on the American people. Many white-collar lockdown advocates could work from home. In contrast, others, such as small business owners, and workers in the hospitality and service occupations bore disproportionate burdens through job loss, deferred healthcare treatments, eviction notices, and more. National leaders spoke on selflessness and social responsibility, seemingly forgetting that not all Americans could afford the cost of putting their lives on hold. While COVID relief benefits offset some of these costs at the time, clearly, making deposits in millions of American bank accounts could not solve all the nation’s problems. Statistics reveal that the lockdown had both monetary and psychological costs, hitting low-wage and minority workers the hardest. While middle and upper-income workers speak about the importance of adhering to strict COVID guidelines, lower-income workers struggle with the effects of one of the deepest recessions in American history, first in the form of income loss and now, as they return to work, rising inflation.

Rising mental health issues are visible through soaring number of drug overdoses and alcohol-related deaths. One year into the pandemic, hospitals across the country reported significant increases in the number of alcoholic hepatitis and liver failure patients – particularly those in relapse. The CDC reported 26 percent more drug overdoses in the third quarter of 2020 than a year earlier and a JAMA report indicates that alcohol-related deaths jumped 25 percent from 2019 to 2020, compared to 5 percent from 2018 to 2019. Isolation and increased rates of self-reported anxiety and depression exacerbated substance abuse and relapses, both of which likely contributed to the climb in suicides. Emergency room visits for adolescent suicide attempts increased by almost 40 percent in the winter months of 2021 compared to the same period during 2019.

Mental health researchers report that for every suicide, approximately twenty more suicide attempts occurred, suggesting further effects of the COVID-19 response on the lives and mental health of thousands of Americans than those reported here. Psychiatric researchers also tie unemployment to increased suicide risk. Combined with the fact that over 40 percent of the labor force suffered losses in jobs, hours, and income from the shutdown restrictions, such tragedies are hardly mysterious. Perhaps factors to the climb in suicides include the overwhelming feelings of disconnectedness and isolation associated with unemployment, which may also contribute to young people’s reduced employment and college enrollment rates

Failure to seriously consider the potential death and devastation lockdowns could cause is concerning. How can the American people be expected to trust the advice of those who refuse to openly acknowledge the other side of the coin? Such reluctance signals the severity of a major national divide that may be difficult to reconcile. Arguing that lockdown benefits outweigh the costs is one thing, ignoring the costs entirely another. At best, Bastiat would characterize this behavior as poor policy, seizing a handful of immediately visible short-term benefits while ignoring the less easily seen suffering. Two years after the nationwide shutdown began, we can identify some of the unseen costs. We may, however, need decades to fully understand both the costs and benefits of the economic lockdown and the extent of the damage.

While we are confident the United States will fully recover from its response to the pandemic and restrictions will recede, we will only learn from this costly experience if we go forward with a deeper understanding of the importance of recognizing both the seen and the unseen. Perhaps then we will have gained something. The future will undoubtedly bring more difficult decisions that will require effective cost-benefit analysis to identify the best course of action. When facing calls to “do something” no matter the cost, we must remember that there is no magic wand, nor are there solutions, only trade-offs.

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This article, All Costs Considered, was originally published by the American Institute for Economic Research and appears here with permission. Please support their efforts.

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