The Benefits of Coronavirus Suppression: A Cost-Benefit Analysis of the Response to the First Wave of COVID-19 in the United States

Mercatus Working Paper, 2021

COVID Economics 67 (February 4, 2021), 128-171

73 Pages Posted: 26 Jun 2020 Last revised: 11 Feb 2021

See all articles by James Broughel

James Broughel

George Mason University - Mercatus Center

Michael Kotrous

George Mason University - Mercatus Center

Multiple version iconThere are 2 versions of this paper

Date Written: February 4, 2021

Abstract

This paper estimates the benefits and costs of state suppression policies to “bend the curve” during the initial outbreak of COVID-19 in the United States. Relative to a baseline in which only the infected and at-risk populations mitigate the spread of coronavirus, we estimate that total benefits of suppression policies are between $440 billion and $1,049 billion up to August 4, 2020. We employ a value-of-production approach that values the benefits of each prevented COVID-19 death as avoided losses to total production. The production value of life differs significantly from the value of a statistical life (VSL) commonly employed in cost-benefit analysis, and we identify several problems with using the VSL. Relative to private mitigation, the costs of suppression policies are estimated to be between $255 billion and $464 billion. The cost estimate is based on suppression policies being enforced in the United States for between 50 and 91 days, which reflects that many states lifted stay-at-home orders and nonessential business closures in May 2020. Our results indicate that the net benefits of suppression policies to slow the spread of COVID-19 are likely positive and may be substantial, but given significant uncertainty, net benefits may be close to zero.

Keywords: COVID-19, social distancing, cost-benefit analysis, value of a statistical life, pandemic, healthcare policy, crisis response

JEL Classification: E32, H12, I18, I31, J17, K23

Suggested Citation

Broughel, James and Kotrous, Michael, The Benefits of Coronavirus Suppression: A Cost-Benefit Analysis of the Response to the First Wave of COVID-19 in the United States (February 4, 2021). Mercatus Working Paper, 2021, COVID Economics 67 (February 4, 2021), 128-171, Available at SSRN: https://ssrn.com/abstract=3636090 or http://dx.doi.org/10.2139/ssrn.3636090

James Broughel (Contact Author)

George Mason University - Mercatus Center ( email )

3434 Washington Blvd., 4th Floor
Arlington, VA 22201
United States

HOME PAGE: http://www.mercatus.org/scholars/james-broughel

Michael Kotrous

George Mason University - Mercatus Center ( email )

3434 Washington Blvd., 4th Floor
Arlington, VA 22201
United States

HOME PAGE: http://www.mercatus.org/people/michael-kotrous

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