The Benefits and Costs of Using Social Distancing to Flatten the Curve for COVID-19

Forthcoming Journal of Benefit-Cost Analysis

27 Pages Posted: 27 Mar 2020 Last revised: 14 Apr 2020

See all articles by Linda Thunstrom

Linda Thunstrom

University of Wyoming

Stephen Newbold

University of Wyoming - College of Business - Department of Economics and Finance

David Finnoff

University of Wyoming

Madison Ashworth

University of Wyoming

Jason F. Shogren

University of Wyoming

Date Written: April 14, 2020

Abstract

We examine the net benefits of social distancing to slow the spread of COVID-19 in the United States. Social distancing saves lives but imposes large costs on society due to reduced economic activity. We use epidemiological and economic forecasting to perform a rapid benefit-cost analysis of controlling the COVID-19 outbreak. Assuming that social distancing measures can substantially reduce contacts among individuals, we find net benefits of about $5.2 trillion in our benchmark case. We examine the magnitude of the critical parameters that might imply negative net benefits, including the value of statistical life and the discount rate. A key unknown factor is the speed of economic recovery with and without social distancing measures in place. A series of robustness checks also highlight the key role of the value of mortality risk reductions and discounting in the analysis and point to a need for effective economic stimulus when the outbreak has passed.

Note: Funding: No external funding.

Competing interests: Authors declare no competing interests.

Keywords: COVID-19, coronavirus, social distancing, flatten the curve, benefits, costs

JEL Classification: D12, D18, D61, D78, D81, E17, E61, F13, H12, I15, I18, O11

Suggested Citation

Thunstrom, Linda and Newbold, Stephen and Finnoff, David and Ashworth, Madison and Shogren, Jason F., The Benefits and Costs of Using Social Distancing to Flatten the Curve for COVID-19 (April 14, 2020). Forthcoming Journal of Benefit-Cost Analysis, Available at SSRN: https://ssrn.com/abstract=3561934 or http://dx.doi.org/10.2139/ssrn.3561934

Linda Thunstrom (Contact Author)

University of Wyoming ( email )

P.O. Box 3985
Laramie, WY 82071-3985
United States

Stephen Newbold

University of Wyoming - College of Business - Department of Economics and Finance ( email )

P.O. Box 3985
Laramie, WY 82071-3985
United States

David Finnoff

University of Wyoming ( email )

1000 E University Ave
Laramie, WY 82071
United States

Madison Ashworth

University of Wyoming ( email )

Box 3434 University Station
Laramie, WY 82070
United States

Jason F. Shogren

University of Wyoming ( email )

Department of Economics
BU292
Laramie, WY 82071-3985
United States
307-766-5430 (Phone)
307-766-5090 (Fax)

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