Going the Distance

UW team studies the effects of social distancing on the economy.

Throughout the course of the COVID-19 pandemic, government and policymakers were faced with a number of difficult decisions. At the pandemic’s start, one of the most central questions was whether or not the United States should enter a full lockdown. While staying home and shutting down businesses would save lives, it would also cause great damage to the economy. Would the cost of the lockdown outweigh the benefits?

The question was addressed by a group of researchers at the University of Wyoming’s Department of Economics, including Linda Thunstrom, Stephen Newbold, David Finnoff and Jason Shogren, as well as Ph.D. student Madison Ashworth.

“This study was essential because it was clear that the social distancing policies that were implemented or being considered by policy makers, such as physical distancing and shutting businesses and schools down, had severe consequences for the economy, and it wasn’t clear those consequences were justified, even if they would clearly have public health benefits,” Thunstrom said.

While the question of social distancing measures raised much debate across political party lines, epidemiologists and businesses, the researchers really had no idea what their research would indicate.

“We didn’t know what the answer was going to be,” said Newbold. “We wanted to let the result fall where it would fall and report it in the most straightforward way possible. We thought that was the most useful service we could do at the time, because there were so many questions. Different people had different ideas about where the answer would fall.”

The research team utilized computer modeling and simulations to estimate the costs and benefits of social distancing measures that considered variables such as the value of statistical life, complexities of the modern economy, how the gross domestic product changes over time, human behavior as well as epidemiological information about the virus.

“Our model focused on the economic costs and benefits. For the costs, the model considered how much employment and income would be lost. For the benefits, the model considered what would happen under a completely uncontrolled scenario, as if we would have reacted to the novel coronavirus like the seasonal flu with no extra control measures. How many people would we expect to fall ill or die under such an uncontrolled scenario versus an alternative scenario involving widespread social distancing?” Newbold said.

After the model was run, the research team compared the dollar amount the impact of a lockdown would have on the economy to the dollar value assigned to the estimated number of lives that would be saved through a lockdown.

While they considered a range of possible scenarios, their most plausible estimate suggested that social distancing measures would

6 FEET APART

6 FEET APART

provide social net benefits of $5.2 trillion. In short, the social distancing measures were worth it.

“That doesn’t mean that the economy would do better with lockdowns,” Thunstrom said. “On the contrary, our best estimates suggest that the economy would still do worse with lockdowns but the lives that we saved with lockdowns would be so many that it was still worth it to implement those policies.”

To estimate the benefits of the lives saved from lockdowns and compare those to the costs, the researchers had to assign a dollar value to each human life saved. While it might sound immoral and a bit odd to do so, this is something economists work with quite often. The value of a statistical life is a number used by federal government agencies when evaluating policies that involve risk to human lives.

“The numbers we used in our analysis, such as the statistical value of human life, allow for us to be transparent and allow for the research to be replicated,” Shogren said. “There’s nothing up our sleeves, there’s no magic involved or politics. It’s just science. We’re using the data we have to estimate the outcome of policies and provide much-needed information to people who have to make hard policy decisions—whether that’s to enforce social distancing and stay-at-home orders or some other policy.”

Something that was of utmost importance to the research team was the transparency and replicability of the study and findings. There were valid opinions and arguments for and against lockdowns, but the team prioritized a nonpartisan, unbiased, economic approach to the discussion.

Pulling off this study was no small feat, either. During a pandemic, there isn’t time to conduct research at your leisure. The team wanted to make sure it was done as quickly and efficiently as possible so that those who needed information to base their difficult decisions on had it in a timely manner.

“It was very much a team effort. There is no part of our team that could have been missing—we just wouldn’t have been able to pull it off. I don’t think we’ve ever produced an academic study in such a short amount of time,” Thunstrom said.

Thunstrom, Shogren, Finnoff, Newbold and Ashworth also want to stress the importance of economic research to evaluate prospective policies to help determine if they are beneficial to society overall.

“We want to integrate economics with the natural sciences to get better policy analysis, because people affect nature and vice versa. We also want to stress the policy analysis should be transparent, accountable and debatable—especially on something as important as this. Those two things are fundamental to what we do here at the University of Wyoming and in the Department of Economics,” Shogren said.

The group continues to do research on COVID-19 related topics and contribute and engage in community efforts. This study informed policymakers about the costs and benefits of a lockdown before the vaccine. However, with a vaccine now available for COVID-19, the research team is confident that as of now, the best thing society can do to help the economy is get vaccinated.

“We are engaged in committees and organizations within the communities to contribute knowledge about policies that might increase vaccination. We’ve used what we’ve learned from our research to directly engage with community efforts,” Thunstrom said.