The Scythe versus the Hammer: Health and Economic Costs of COVID-19 Control in Australia

19 Pages Posted: 26 May 2020

See all articles by Tom Kompas

Tom Kompas

University of Melbourne

Quentin Grafton

The Australian National University

Nhu Che

Australian National University (ANU) - Crawford School of Public Policy

Long Chu

Australian National University (ANU) - Crawford School of Public Policy

James Camac

University of Melbourne

Date Written: May 23, 2020

Abstract

We evaluate whether a lock-down to control COVID-19 infections is justified by estimating the economic costs for the ‘scythe’, the absence of any government-imposed suppression measures and the ‘hammer’, an early lock-down intended to drastically reduce community transmission. Using a fit-for-purpose compartment model for Australia estimated from actual data, and a value of a statistical life year (VSLY) to measure welfare losses of COVID-19 patients, we find: (1) economic costs of the scythe are several times greater than the hammer; (2) VSLY welfare losses of fatalities equivalent to GDP losses from a lock-down indicate that for the hammer not to be the preferred strategy requires that Australians prefer more than 30,000 deaths to an 8-weeks lock-down; and (3) in a high-income countries, like Australia, the preferred response to COVID-19 from both a public health and and economy perspective is to ‘go hard, go early’.

Keywords: Coronavirus, SARS-CoV-2, suppression controls, compartment models, VSLY

JEL Classification: I10, C63, Q58

Suggested Citation

Kompas, Tom and Grafton, Quentin and Che, Nhu and Chu, Long and Camac, James, The Scythe versus the Hammer: Health and Economic Costs of COVID-19 Control in Australia (May 23, 2020). Available at SSRN: https://ssrn.com/abstract=3608596 or http://dx.doi.org/10.2139/ssrn.3608596

Tom Kompas (Contact Author)

University of Melbourne ( email )

Parkville, Victoria
Melbourne, Victoria 3010
Australia

Quentin Grafton

The Australian National University ( email )

Crawford School (Bldg 132)
The ANU
Acton, Canberra, Australian Capital Territory 2601
Australia

HOME PAGE: http://https://crawford.anu.edu.au/people/academic/quentin-grafton

Nhu Che

Australian National University (ANU) - Crawford School of Public Policy ( email )

ANU College of Asia and the Pacific
J.G. Crawford Building, #132, Lennox Crossing
Canberra, Australian Capital Territory 0200
Australia

Long Chu

Australian National University (ANU) - Crawford School of Public Policy ( email )

7 Liversidge Street
Lennox Crossing
Canberra, ACT 0200
Australia

James Camac

University of Melbourne ( email )

185 Pelham Street
Carlton, Victoria 3053
Australia

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