The lieutenant governor of Texas set off a firestorm by suggesting that older Americans should be willing to sacrifice their lives to save the economy, which has been devastated as businesses shutter to stem the virus's spread and people stay home.Who knew saving lives would be so beneficial to the US economy? Obviously not the posters here who erroneously believed that pausing the economy is far worse than continuing on and letting the virus run more rampant through vulnerable sectors of our society.
But in many respects, the either-or choice is a false one. A new working paper from Michael Greenstone and Vishan Nigam of the University of Chicago's Becker Friedman Institute for Economics underscores that the two goals are complementary.
"When you have a comparison going between money and something else, money almost always wins in our political debate," Greenstone said in an interview. Converting lives to dollars puts those lives on equal footing and helps "focus the mind," he added. To do this, they turned to a tool regularly used by policymakers in evaluating the costs and benefits of a given piece of legislation: the value of a statistical life (VSL).
Greenstone and Nigam used previously published work to set an average VSL of $11.5 million for American adults, which is in line with the number used by the federal government to assess clean-air regulations.
They then apply the $11.5 million VSL to the total number of lives saved [by social distancing practices], which they estimate at 1.76 million, accounting for the age distribution of the lives saved. They arrive at a staggering number: $7.9 trillion, or about $60,000 per American household. And it all happens in the next six months, according to their estimate.
"$8 trillion is over one-third of US GDP and larger than the entire annual federal budget," they wrote. "Whether in regular times or during a pandemic, it is difficult to think of any intervention with such large potential benefits to American citizens."
Social distancing is both pro-life and pro-growth. Who knew?