Applying Cost-Benefit Analysis to the Coronavirus Response

The following is from Wirepoints:

The other curve: We’re not flattening it, it’s flattening us. – Wirepoints

By: Mark Glennon*

We got a nice email from a professor at the University of Chicago’s Booth School of Business complimenting us on a recent article and pointing us to a paper he has in draft that makes the same point but with academic rigor.

The email is from Prof. Joseph Pagliari and it was about our article, “Huge Flaw in Federal Guidelines Feeds Wrongheaded Thinking on ‘Opening Up’”

This is particularly timely because Greg Hinz at Crain’s just published a new article illustrating beautifully what so many don’t understand about this crisis and about economics in general.

Hinz says we just want to “throw grandma under the bus” and let survival of the fittest rule.

A teaching moment is at hand.

Our article that Pagliari liked had two points.

First, poverty, recessions and depressions kill, too, and those deaths must be weighed against the deaths directly from the virus, along with all the other costs.

Second, the balancing has to change each day as we plunge deeper into an exceptionally severe economic hole that will be difficult to dig out of. The “gating factors” for opening up, in other words, should not be fixed and static.

Prof. Pagliari put that in the chart below. Now, don’t panic if you don’t like charts and economics. The concept here is actually very simple.

The red line is the all-in direct cost of the virus, including lost lives.

Moving further to the right means keeping stay-at-home rules in place longer, which brings that cost down.

The longer we keep the rules in place the more lives we save.

So far so good.

The green lines, however, show the all-in indirect costs of keeping stay-at-home rules in place.

That’s not just the trillions of dollars government is paying out but the other lives lost over the long run due to a crippled economy.

Those costs soar as the rules stay in place longer.

Comparing value of lives saved to damage to others and the economy.

That description is my simplified version. Read Pagliari’s whole paper to do full justice to his work.

The point, however, should be clear: We are dealing with two killer curves, not one. Reasonable people may differ on what to do with stay-at-home rules, but we at least have to think about this rationally and balance the deaths, costs and risks on both sides, and the calculation changes every day. At Wirepoints we happen to think the rules should be redirected to laser focus on protecting the high risk groups where the vast majority of deaths are occurring.

Note that the red line, which includes deaths directly from the virus, eventually flattens out. But the green lines, which include deaths and other costs of a wrecked economy, just goes up and up as more time passes.

We will be writing more about Hinz’s mischaracterization of us. We sure as heck don’t believe in some sick version of social Darwinism Hinz used as a straw man. To the contrary, it’s those with Hinz’s view of the world who are throwing an unknown number of victims under the bus.

*Mark Glennon is founder of Wirepoints.


Applying Cost-Benefit Analysis to the Coronavirus Response — 27 Comments

  1. 1. We are at the far left of the curve because it is not flattened yet, so there is a long way to go.

    2. He does not take into consideration partial quarantines, or people breaking the rules all the time.

    3. Looks like academic BS, that even his peers are not going to approve.

    That being said,

    The Trump Administration is following the major guidelines,

    1. Considering non coronavirus factors such as suicides and more;

    2. Daily revisions of the model projections.

  2. Yes, we have quarantined to avoid a much larger and faster spread of Covid-19.

  3. What about lives lost bc of the lockdown?

    People aren’t getting routine cancer/other disease tests/surgeries.

    Suicides up.

    Shootings way up bc policing during lockdown way down.


    Fake news media hysterics be damned!

    JB don’t care, he’s a multi-billionaire.

  4. Don’t spend frivolously.

    I know it feels like we’re just about to get out of prison, but if you go and spend hundreds of dollars eating at restaurants, you’re really going to regret it when the next lockdown rolls around and you don’t have enough supplies.

    Han Bell: are you koo koo?

  5. The government is deceiving you. The pandemic is a ploy spread by the fake-news media, and if you care about your lives, go out and buy guns now!

  6. The real question in all of this should be: who and what is driving various governments’ disastrous lockdown policy?

    After reviewing the evidence, you can rule out one possibility: it’s certainly not the science.

  7. More deaths vs. more economic stagnation.

    Has Sweden found a balance?

    Has New Zealand and perhaps Australia found a better balance?

    Does Bill Gates have a plan to **** us all over or is he just a mascot on the autistic spectrum being used by the truly evil ones, sort of like a high functioning Greta?

    Do governments in general not give a flying **** about the citizenry or are there genuine exceptions?

    Is Donald Trump a raving moron or a stable genius?

    Fauci is an evil fellow.

    Why does Trump still keep him?

  8. The real question here is: How about the curve of my sunshine blogger’s exponentially immense belly? Off the charts? Stay tuned…tic, tock, tic, tock, tic, tock, hug a blogger, tic, tock, tic, tock, tic, tock, meeeeeeoooooooowwwwwwwwwwwwww…

  9. Responce? It’s Response!

    Is States Attorney Patrick Kenneally doing editorial content work for this blog?

    If so, it’s on par with his work as an attorney in my opinion.

  10. Angel, do you have nothing positive to say about anything or anyone, or are you trying to provide and example of the low quality / hateful people that we have working in the public school system?

    You’re doing a fine job of showing everyone why it’s failed us.

  11. bred winner can’t stand when people go against the status quo.

    I know it’s hard to handle when you believe so deeply in lies.

    You’ve gotta do everything that you can to destroy others if you can’t convince them to believe it.

    Insult, shame, berate, even try to take their jobs away.

    That’s the trend now of the radicals.

    Gotta do everything to make sure that you can convince yourself that what you believe in is true.

    Am I right?

  12. If you apply cost/benefit to the 20 odd tax increases since JB has been in office, I ask you one and all, a simple question,

    Cui Bono????

  13. As the only Shaman here, it has been revealed to me.

    That everyone in Illinois needs to remain on lockdown, in their spacesuits, for one additional earth year.

  14. Cindy, I don’t know that calling someone an idiot is going to help get your point across.

    Furthermore, a lot of people here don’t buy into the covid-19 hype but they also aren’t being irrational about it either.


    Sheriffs recognize that not wearing a mask is not a violation of Illinois statute. Nor will it ever be, because Illinois lawmakers are on extended vacation until El Supremo Pritzker decides that they are allowed to meet again.

    They say that if you don’t wear a mask, you could be arrested for potentially breaking other laws.

    That means that if you are told to leave a store for not wearing one, they could arrest you under a criminal trespass charge.

    Of course, most people are always living in fear, and also don’t know how to interpret the law.

    A neighbor told me that I could be arrested for even driving without a mask.

    That’s how much the people have been mislead.

  16. This is great for our overlords like Fats and Booboo Boy, JacKowiec Franks.

    The love it.

    Rule over the proles while they dine on caviar.

  17. Some Guy? It’s a secret message. (Hint: I have been fighting this battle for many months now.)

  18. Huzzah!

    An economist has finally put a price on human life.

    This will solve many problems that religion and society has been trying to solve since the creation of money.

  19. This has been done for decades regarding Federal regulations.

  20. Per Costco website:

    “To protect our members and employees, effective May 4, all Costco members and guests must wear a face covering that covers their mouth and nose at all times while at Costco.”

    Wonder how many people will try to get into a store without a mask.

    Each store should have a supply of masks available at the front door for purchase by customers.

  21. It’s probably about like it was before the mandate.

    Only about half of people believe that the mask is effective or even should be worn at all.

    The remaining half are in total fear. Some people will comply even if they don’t believe it.

    Others will not.

    So, probably roughly 1/4 will try to avoid the mask.

    1/4 will scream, shame, or call the cops if they see those who oppose.

    The other half are somewhere in the middle.

    There is almost no reason that someone needs to go into a store anyway right now.

    Non-compliance types will order online or do curbside pickup for everything.

  22. Ms Trumpion -thanks for putting that link on the Blog!

    Before I saw that today,last week I was already SAYING that elderly in nursing homes were dying of the usual causes & being counted as as Coronavirus deaths.

    Why ?

    Because Prickster wants to inflate the Illinois deaths to get Federal funding & money for bailing out Hell-inois pension & fiscal problems.

    It’s as plain as the masks on our faces.

  23. I think both of these graphs are wrong.

    There are not cumulative amounts,

    But they are daily amounts.

    Both curves should be a bell curve.

    Eventually the human cost, death, will diminish one way or the other.

    And eventually the quarantine related cost will diminish because we will run out of assets.

    I haven’t read the paper yet, but I believe both human and quarantine related costs are actually bell-shaped curves.

    Certainly, quarantine related class cannot keep Rising forever.

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