There is a current debate as to how soon and how quickly the
government should reopen the economy in the face of the COVID-19 pandemic.
People opposed to reopening tend to accuse people in favor of reopening of
caring more about the economy than about lives. In this entry I am attempting
to estimate the amount of life-years lost caused by the shutdown to compare to
life-years lost caused by opening up the economy.
The
continued shutdown of the economy has direct loss of life due to increases in
suicide, domestic abuse, and other factors. On the flip side, a continued
shutdown saves lives unrelated to COVID-19 in the reduced number of homicides,
traffic fatalities, and other factors. However, I am not going to get into
those matters.
I want
to estimate the lost life-years that result from reduced incomes. It is well established that higher lifetime incomes are related to
higher life expectancies. This JAMA article
estimates that the difference in life expectancy between the richest 1% and the
poorest 1% is 14.6 years. Similarly, a 2015 National Academy of Sciences (referred to here) study finds
a 12.7 year difference in life expectancy at age 50 between the top and bottom
quintile for men born in 1960. I’m going to make a simplifying estimate that an
extra $10,000 in annual income increases life expectancy by one year. Speaking
simply, a low-income individual with average lifetime income of $20,000 per
year might have a life expectancy of 75 while the life expectancy of someone
making $100,000 per year on average might be 83.
The overall economic impact of COVID-19 is
going to be huge with estimates ranging from 2-5% of GDP which would reduce
median income somewhere between $1,000 and $3,000. Even when growth returns, we
will be growing from a lower starting point so this really represents a loss of
$1,000-3,000 per year unless there is some reason to believe that the growth
rate would be different than it otherwise would be. It could very well be either higher or lower.
This means that the life-years lost
due to the economic impact is far greater than the direct loss of life. Given
the age and comorbidities of the victims, their average remaining life
expectancy might be 10 years so that 70,000 deaths equals 700,000 life-years lost.
If COVID-19 could reduces average annual income by $2,000, then this would
reduce life expectancy by 73 days for all 330 million people in the US which
translates into 66 million life-years lost.
While most of the decline in GDP is the result
of the disease, some may be the result of shutting down the economy to slow the
spread of the disease. If the shutdown reduces average annual income by just
$100, then this reduces life expectancy by 3.65 days or 3.3 million life-years.
In this case, continuing the shutdown would have to save 330,000 people to be
justified on a life-year basis. It is for this reason that the economy must be
opened up sooner rather than later. COVID-19 is not the only killer out there.
