Covid 19 – was lockdown the right choice?

“America would have been better off if we didn’t socially distance”. This sentiment, hardly a logical or reasoned thought, has plagued all of us. Why not just take the virus dead on, and let nature take its course? Are we better off hiding from one another?
Of course almost every nation in the world has imposed severe restrictions, and those that didn’t, like sweeden, are facing questions of their own, dealing with higher fatalities than their neighbors norway and finland.
If we can get back to logic, lets figure out which was actually the better choice in retrospect.
Two different methods are typically used to evaluate the correctness of a decision: money and lives saved. This being an article for a financial advisor blog, let’s go with money.

First, we need to make some assumptions, either our own or other’s. How many more would have died without social distancing? Well, now we have 330 million Americans. Without some restrictions, epidemiologists say the total infected usually rises to 50-100% of the population.
The best estimates are 1-2% of those infected would die. This seems to be backed up by the infected vs. dead in New York City. 
So we can multiply, and for those who have their own numbers, plug them in!
Today, the U.S. Office of Management and Budget puts the value of a human life in the range of $7 million to $9 million.  

We can go all the way down to $7 million for this estimate, it won’t change the results.
We now multiply 1% * 330 million * 50% = 1.65 million people and  $11.55 trillion dollars.
America will lose 30% of its GDP over the quarter due to social distancing, but it would lose quite a bit of GDP if it didn’t, due to fear.
U.S. GDP is currently $21.43 trillion.  We would lose $6.4 trillion in a year, or $11.55 trillion in lives.

This math is that we should be willing to spend 2 years in social distancing, rather than let the disease spread. Currently, we are trying to handle a month and a half (mid march in my region) in this condition, and we are having issues. 
Play with the numbers all you like, but unless your numbers are very unrealistic, then a month and a half of social distancing is easily justified.
Forbes has their own analysis, coming to about the same conclusion:

  • If the United States were to abandon aggressive social distancing measures after 14 days, more than 125 million people will contract the virus, some 7 million could be hospitalized, and 1.9 million people will die.

If the sheer number of dead in America (and worldwide, because America will be spreading it), is not enough, remember that $7 million per person.
In short, the social distancing makes sense. But could we get the same effect for a lot less money? Yes.
Future articles will be about less expensive measures that we could take, and things we can do to reduce waste and mitigate the time and education that we are currently losing.
Where is the break-even point? It depends on how expensive the social distancing is vs. the lives that will be lost by ending it.
By my calculation, cautious reopening should be started, and it is being done.
The above is all based, of course, on the secondary effects being approximately equivalent. Letting a virus spread causes fear, panic, mutations, and makes future waves of it worse. Social distancing leads to mass unemployment, poverty, and social unrest.

Whichever way we go, we could justify it, so let’s justify staying safe and helping others to stay safe.

math quant

Performance, and calculations

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