Calculating the economic logic of Covid 19 social distancing

[PedroArvy]

Should we let Covid 19 run wild with herd immunity?
Dunno, I can't find any data on this.
So I have tried to calculate it below.
You might argue the value of life is more than just dollars and cents but as a society we have put a cost on it.
Let’s see what that is.

How many deaths do you need to justify the reaction Australia has made?

I have heard the economic value of a person is between 1.5-4 million. That’s the amount of economic value people create. Let's take an average of 2.75 million. Now make it 1/4 of that as people who die for CV have lived for ¾ of their lives.

So if our current social distancing approach has prevented 240,000 deaths in Australia we have saved:

1/4 x 2,750,000 x 240,000 = 165, 000, 000, 000

That’s 165 billion that these people who have not died will inject into the economy.

Apparently, it is costing us 500 billion in this shutdown. However, even if we removed all social distancing there would still be a cost from lost international tourism, etc. I will assume that’s half the cost. So maybe we could save half at 250 billion with no social distancing and mass deaths.

If we let the virus rip we will need our total ICU bed capacity of 2378 at $5,000 per day for say 6 months 2,378 x 30 x 6 x 5000 = 2, 140, 200, 000. We also need to add normal hospital beds of which there will be more but at a lower cost. So I will double this number and add a bit to 5 billion.

There will also be a cost for people who have recovered but have long term medical bills. Let's assume that's 5 times the number of deaths and costs $1,000 per week for 20 years. That's 5 x 240,000 x 1000 x 52 x 20 = 1248,000,000,000 or 1248 billion.

So with social distancing we get
--------------------------------------------
240,000 lives saved
+ 165 billion economic value
- 250 billion extra in debt
--------------------------
-85 billion


Without social distancing we get
-------------------------------------------
240,000 lives lost
+ 250 billion saved
-5 billion hospital cost
-1248 billion long term medical costs
-----------------------------
-1003 billion

So according to this we are way infront with current strategy.

I have a feeling my numbers could be wrong, please advise if you can see an error or a major missed cost/benefit.


Sources
--------------

Deaths if no distancing 240,000 - https://www.abc.net.au/news/2020-04-01/ ... c/12108700

Shutdown cost of $500 billion - https://www.abc.net.au/news/2020-03-31/ ... r/12105774

ICU bed cost - $4375 per day https://www.mja.com.au/journal/2019/211 ... stry-study

ICU beds in Australia 2378 - https://www.mja.com.au/journal/2020/sur ... admissions

Last edited by PedroArvy on Fri 24 Apr, 2020 8:02 pm, edited 2 times in total.

[GregR]

Words fail me!!

It's Whiskey O'clock at The Richards, so Ill have a wee dram and let others loose on that one.

[ribuck]

It's good that people are doing their own "back-of-the-envelope" calculations, to help keep the politicians honest.

However, policy is not made based on mathematics, it's made based on a desire to avoid the political optics of the TV news showing lots of people on stretchers waiting to be admitted to hospitals that are way above their capacity limits.

[PedroArvy]

I am very suspicious of my own calculations but seeing there is nothing else to base it on I wanted to understand what is going on.

[north-north-west]

A calculation based on a false premise is meaningless.

You are assuming that herd immunity can be achieved purely through infection with, and survival of the illness caused by, the virus. There is no indication that can be done. The whole concept of herd immunity is based on the use of vaccines, not on survival of an epidemic. To date, no-one has ever developed a viable vaccine for a coronavirus.
Neither do your calculations take into account the extended impact on survivors. So far accounts indicate that return to full pre-infection health is rare - perhaps impossible - for those with a more acute illness.
And what about the social disruption caused by coping with that many deaths in a relatively short space of time?

As for what is going on, the powers that be have realised that retaining power depends, to some extent at least, on looking like they accept that there is something called "society" in which we live, not just an economy.

[PedroArvy]

north-north-west made a good point.

I added in:

There will also be a cost for people who have recovered but have long term medical bills. Let's assume that's 5 times the number of deaths and costs $1,000 per week for 20 years. That's 5 x 240,000 x 1000 x 52 x 20 = 1248,000,000,000 or 1248 billion.

Last edited by PedroArvy on Fri 24 Apr, 2020 7:59 pm, edited 2 times in total.

[PedroArvy]

deleted

[north-north-west]

And then we have the big issue.
How do we manage the medical system through the pandemic?
Make a blunt economic assessment of the potential value of every patient and knock them back if they don't have a sufficiently high score? Just refuse to treat everyone who contracts the virus? Because our medical system - in fact, any country's medical system - can not cope with the numbers of acutely ill people that would present when the pandemic peaks. And remember, the medical staff are at higher risk because of the potential virus load from treating patients, especially without appropriate PPE, which has been the case both here and in far too many countries overseas. That means a steady diminution in available doctors, nurses and support staff.
Supplying sufficient PPE to try to treat all the potential patients would come at enormous economic cost. Replacing the lost trained staff has a large future cost.

I could go on. This is just the tip of it.
It's far more complicated than just the potential economic cost of the average corpse.

[MrWalker]

The figure most often used is $4million per loss of life. That allows for a range of ages, so don't divide it by 4 just because they are old. Those people have the most wisdom and experience.

You may have overdone the calculation for people who recover. That looks like a number plucked out of the air.

Actually we won't know the best option until it's over. Sweden is the best example of a country that has little or no lockdown. Its death rate per million population now exceeds the US death rate and it is still climbing steeply. Their chief epidemiologist thinks that by now half the population are immune, but there is still no slowdown in the number of cases, and the death rate will continue to climb for about 2 weeks after the cases of disease stabilize.

At least with our low cases numbers right now we can watch and see what happens and choose our own path with the benefit of a bit of hindsight.

[Baka Dasai]

You've assumed it's possible to avoid a shutdown.

But if we didn't have a government-enforced shutdown, we'd have a lot of death, a lot of panic, and a disorganised, but still very extensive de facto shutdown.

In other words, there's no way to avoid a shutdown. The only question is whether you have an orderly and effective one, or a disorderly and less effective de facto one.

[Heremeahappy1]

How many to deaths to justify $ spent... No death can be justified, in this context. Any easing of restrictions will result in increased infections.
Restrictions until a vaccine is delivered. Current economic measures are merely buying us time to set up for the economy to operate in the 'new' world, moving to a position where Govt stimulus isn't required for the organic operation of the economy. We're in for the long haul until vaccine time. Mother nature will sort out the rest of the details.

[Gadgetgeek]

Pedro, I think you've shown yourself just how complex this is. If your back of the envelope is like that, even if you are within the right orders of magnitude, then each new detail is going to add that many more complications. I can't speak to your numbers, fundamentally these are the sorts of things that get projected into best-middle-worst case ranges, and even then they can be pretty wide.

There is a very valid instinct to not want to think this way, I think that its a Good Thing(tm) to have that as a reaction. There is room for it from experts, but we need to keep both sides in mind. There is nothing inherently wrong with asking the other question as well, asking should never be wrong in and of itself. To be clear, even if the numbers worked out that it would have been far cheaper to let the illness run through, and even if the effects would have been limited, the shut-down would still be the right call in my opinion.

As for the wider topic, it will be interesting to see what can be learned as to why we seem to have done so well compared to other places, and if it is just a function of population density, or if there were other factors at play. We will also see if Sweden's gamble payed off or if they were over-ambitious. There is an idea that the Swedes have a higher sense of social responsibility compared to other nations, but perhaps that is either not true, or not enough. All of that is of course academic in light of the needs of many people who have been caught out in this. Though given the low numbers and the risk fatigue setting in, Australia is at risk of having a hard rebound, though I feel like the risk of that is low considering its unlikely people would go on a free-for-all for the four weeks or so that it would take to spike the numbers hard. The remaining question is going to the the border, and international aid. Sounds like PNG and the other islands are struggling, even if the numbers there are low.

[ILUVSWTAS]

We're in for the long haul until vaccine time

And if that time never arrives? I know they say they're making progress but we've never created a corona virus vaccine before so It obviously isn't easily created.

Can't put a price on human life. However sometimes the cure is worse than the disease. There comes a point where we'll reach that. Economics aside, The long term health issues people will suffer in years to come from sitting at home all day not to mention the mental health impact can't be ignored.

[Heremeahappy1]

Good question 'If' a vaccine can not be found, the current multilayered non-phamaceutical interventions, while socially and economically disruptive, will continue to focus on the two predominant strategies, namely mitigation (slowing transmission, not maxing out health care resouces- which will still result in many deaths) or suppression (ie reducing new case numbers indefinitely until no transmissions or a vaccine) Suppression could include easing of restrictions temporarily until new cases spike and reintroducing restrictions.
Without a vaccine, we continue in this new reality.

My concern is we are yet to see Covid-19 during an additional disaster or emergency such as bushfire, floods, cyclones etc in Australia and the additional impacts these events have on healthcare, evacuation of communities, delivery of medical support while adhering to current interventions.
I anticipate Displan agencies along with ADF are already planning for additional mass casualty events during Covid-19. Any such disaster, natural or otherwise, could tip the balance.

[J M]

And if that time never arrives? I know they say they're making progress but we've never created a corona virus vaccine before so It obviously isn't easily created.

I think the reason we haven't seen a vaccine against any of the other coronaviruses is more due to a lack of demand than any particular difficulty (beyond what is normally required to make a good vaccine). Other coronaviruses are only responsible for common colds or in the case of SARS and MERS, haven't really caused enough damage to attract the kind of effort and funds needed for vaccine design.

Whilst there are a lot of questions left to answer, I'm hopeful that we'll have a decent vaccine in our hands within a year or two.

[MrWalker]

Whilst there are a lot of questions left to answer, I'm hopeful that we'll have a decent vaccine in our hands within a year or two.

There are some good reasons why viruses that affect the lungs are not very susceptible to antibodies, so a vaccine may not be very effective. The same reasons suggest that herd immunity may not work particularly well either.

I think we should totally eradicate the virus in Australia and NZ, rather than letting it run and just hoping that we eventually get a vaccine.

[Neo]

Could this be the catalyst for the four-day-week!?

Some experiments are of working the same hours over four longer days then having a three day weekend. Reports of improved productivity and wellbeing.

One pro could be additional jobs in industries that run seven days a week.
One con may be more people insufficiently employed.

[north-north-west]

I think we should totally eradicate the virus in Australia and NZ, rather than letting it run and just hoping that we eventually get a vaccine.

And how do you prevent it being brought back in with the next load of international visitors?

[ribuck]

I think we should totally eradicate the virus in Australia and NZ, rather than letting it run and just hoping that we eventually get a vaccine.

For sure. The only countries that can hope for eradication at this point are Australia, NZ, and some small islands. Most of the pain has already been endured; why not go the extra distance?

And how do you prevent it being brought back in with the next load of international visitors?

How about this: arriving visitors must have a week's quarantine immediately before boarding their flight, followed by two week's quarantine on arrival, during which time they will be tested more than once. Mechanisms will be in place for prompt re-quarantine and contact tracing when the occasional carrier inevitably slips through the net. It will work better than leaving the virus active within the country, which will lead to recurring restrictions whenever a hotspot flares up.

[MrWalker]

I think we should totally eradicate the virus in Australia and NZ, rather than letting it run and just hoping that we eventually get a vaccine.

And how do you prevent it being brought back in with the next load of international visitors?

There are tests that can be done in about 45 min. You arrive 60 min before departure and get tested. If your result is positive for the virus your trip is cancelled (with refund).
You might need another test 7-10 days later in case you had only just been infected shortly before departure.
There might also be a need for the proximity tracking app, just in case someone was found to be positive after arrival. So any virus entry would be promptly squelched.

[ribuck]

So any virus entry would be promptly squelched.

Certainly it should be much easier the second time around, when people and policy-makers know how it works and can respond faster and more effectively than when it was new.

[slparker]

There is a wicked problem here with potential visitors.

If you test positive for antibodies to Covid-19 you may have had the infection and got over it - antibodies stay in circulation for some time (that is their purpose), so excluding visitors with circulating antibodies might mean excluding those who are least likely to be infective.

For those who arrive free of antibodies: antibodies take days to develop post-infection, so people recently infected (say, by someone on the way to the airport) and asymptomatic may escape detection unless, as suggested above, they are quarantined for a week. What tourist would want to come to Australia if they were required to be in quarantine for a week or two?

I see this as a real barrier to tourism in the foreseeable future - which is a huge part of our economy. Not sure what the health department will come up with here...

[ribuck]

What tourist would want to come to Australia if they were required to be in quarantine for a week or two?

Well, SOME of them would come, for sure.

People are innovative, and there would be ways to make the quarantine experience less bad. For example, a quarantine hotel could offer online courses plus rooms equipped for learning to paint, learning to cook, fitness makeover, etc. It's not ideal, but it's better than nothing. There are also people who have always wanted to (e.g.) write a novel, and who would make use of two week's quarantine to fulfil their goal.

[slparker]

Free or reduced accommodation during quarantine may be a sweetener... especially if it is somewhere like the old quarantine stations in Manly or Portsea...

[MrWalker]

Free or reduced accommodation during quarantine may be a sweetener... especially if it is somewhere like the old quarantine stations in Manly or Portsea...

Should we make Maria Island a quarantine station for Tasmania? Visitors could go where they like as long as they don't leave the island.

[Son of a Beach]

Free or reduced accommodation during quarantine may be a sweetener... especially if it is somewhere like the old quarantine stations in Manly or Portsea...

Should we make Maria Island a quarantine station for Tasmania? Visitors could go where they like as long as they don't leave the island.

...or Bruny Island (ducks for cover).

[Moondog55]

"Tongue in cheek reply" Please be really, really offended.
A better solution might be to make Tasmania itself the quarantine point of entry for all International visitors and force them to spend 14 days cooped up in that state spending money at the casino, eating gourmet food { Hmmm Crunchy chips with truffled mayonnaise] and wasting lots of time at Salamanca Market.

[MrWalker]

"Tongue in cheek reply" Please be really, really offended.
A better solution might be to make Tasmania itself the quarantine point of entry for all International visitors and force them to spend 14 days cooped up in that state spending money at the casino, eating gourmet food { Hmmm Crunchy chips with truffled mayonnaise] and wasting lots of time at Salamanca Market.

Yes, that would make sense.
Then we could use all the spare cruise ships to take them to the mainland, on a roundabout route, taking a week to get there, to allow time for any infections show up.

[ChrisJHC]

What tourist would want to come to Australia if they were required to be in quarantine for a week or two?

Well, SOME of them would come, for sure.

People are innovative, and there would be ways to make the quarantine experience less bad. For example, a quarantine hotel could offer online courses plus rooms equipped for learning to paint, learning to cook, fitness makeover, etc. It's not ideal, but it's better than nothing. There are also people who have always wanted to (e.g.) write a novel, and who would make use of two week's quarantine to fulfil their goal.

Given that many of us have shown that we can work equally effectively while isolated, the process could be:

Self-isolate (and work) for a week before travel.
Travel.
Forced isolation (while still working) for two weeks.
Holiday.
Repeat for the return (or do whatever your “home” country requires).


Sent from my iPad using Tapatalk

[north-north-west]

What tourist would want to come to Australia if they were required to be in quarantine for a week or two?

Well, SOME of them would come, for sure.

People are innovative, and there would be ways to make the quarantine experience less bad. For example, a quarantine hotel could offer online courses plus rooms equipped for learning to paint, learning to cook, fitness makeover, etc. It's not ideal, but it's better than nothing. There are also people who have always wanted to (e.g.) write a novel, and who would make use of two week's quarantine to fulfil their goal.

Given that many of us have shown that we can work equally effectively while isolated, the process could be:

Self-isolate (and work) for a week before travel.
Travel.
Forced isolation (while still working) for two weeks.
Holiday.
Repeat for the return (or do whatever your “home” country requires).

Works fine for those for whom remote work is possible.