Is the lockdown worth it?


Trade, Development, and Immigration
Energy and Environment
Toby Young has been given plenty of stick for an article which asked whether the UK government has overreacted to the coronavirus crisis by locking down the economy, and which concluded that it had. In my view, he was right to pose the question, but gave the wrong answer.

The thrust of his argument is that the economic costs of the measures being taken are too high to justify “extending the lives of a few hundred thousand mostly elderly people with underlying health problems by one or two years”. This is a clumsy way of expressing the problem and, as I shall explain later, his numbers are way off. Nonetheless, he makes a potentially valid point.

It’s common practice for health economists to put a monetary value on people’s lives according to the number of years they have left and the quality of that life. This is the concept of a “QALY”, or quality-adjusted life year, where one QALY is one year in “perfect” health.

The Treasury’s Green Book, which provides guidance on how to appraise and evaluate policies, projects and programmes, values one QALY at £60,000. This is an answer to the “normative” question of what value society should place on health outcomes, based on “willingness to pay”.

The National Institute for Health and Care Excellence NICE uses a lower figure of £30,000 in assessing new treatments for the NHS. This figure is based on a more pragmatic assessment of the funds actually available (and is the one that Young uses). In both cases, a monetary value is being placed on a human life.

Crucially, this is not “eugenics”, nor is it about people’s “wealth-producing capacity” or “economic productivity” (as many of Young’s critics assume). If you believe this concept is morally wrong, imagine you were on the Titanic and had a straight choice between rescuing a healthy child or a sickly old man. Whom would you save, and why?

Similarly, we have to draw the line somewhere in allocating limited resources. For example, if we could save just one person’s life at a cost of £10,000, almost everyone would surely say yes. But what if it would cost £1 million (possibly)? Or £1 billion (presumably not)?

Indeed, policymakers are making these sorts of judgements all the time. The same techniques are used to assess the value of lives that might be saved by road safety improvements, and in determining awards of damages in court judgements. The BMA’s own guidance to medical professionals underlines that it is both legal and ethical to prioritise treatment among coronavirus patients.

But I still don’t agree with Young’s conclusion. Let’s begin by dissecting his cost-benefit analysis, assuming this approach is indeed the right one here. (I’ll come back to that assumption too.)

On the benefit side, he has attempted to value the additional lives that might otherwise be lost to COVID-19 if the government took a more relaxed approach.

To be fair, his conclusion does not actually rely on the assertion that the tougher measures would only extend the lives of those saved by “one or two years”, which is obviously false. (Young has taken an out-of-date number for the average age of those who have died, and compared this to the average UK life expectancy at birth rather than at the age already reached.)

In practice, he uses a reasonably high number for the potential number of fatalities (370,000) and a more realistic (but still low) figure for the years of life lost (an average of 11). Assuming each year of life is valued at £30,000, this implies a total cost of £330,000 per life, and £122 billion in total. But both these figures are still questionable, especially if the NHS becomes so overwhelmed with patients that it cannot effectively look after younger people with non-coronavirus related problems too.

There is also a huge amount of uncertainty here. If it goes horribly wrong, the first figure could be as high as 500,000 and the second as high as 20. We’d then be looking at a total cost of £330 billion. And you could also justify using a much higher number for the cost of a life, such as the “Value of a Statistical Life” saved by a road safety improvement, which is more than £1 million. At the very least, the Green Book’s £60,000 for a QALY seems closer to the concept that Young is trying to capture.

On the cost side, Young starts by focusing on the headline figure of £350 billion for the additional government support announced by Rishi Sunak on 17th March. He does then acknowledge that most of this (£330 billion) took the form of loan guarantees that may never actually be needed, but only cuts his number to £185 billion.

In reality, the direct costs to the Treasury of the measures announced so far are likely to be in the range of £50-100 billion. What’s more, this can be seen as a transfer from one group of people (mainly current and future taxpayers) to others (such as those whose incomes would otherwise have disappeared), rather than a net loss to the economy.

Young also makes the fair point that recessions themselves can cost lives. There is plenty of evidence that life expectancy is lower in more deprived areas of the UK, and that the pace of improvement generally has slowed since 2011. It’s not a huge leap to conclude that an economic slump could itself have a major impact on the health of the nation.

However, the reality this time may again be more complicated. For a start, there is a big difference between a temporary drop in GDP, even a very big one, and a prolonged recession. Provided the great majority of businesses, jobs and basic incomes are protected – which is the focus of the economic policy responses – normal life should resume relatively quickly once the emergency health measures are lifted.

Some would also argue that it was “austerity” that led to the deterioration in health trends in the 2010s, rather than the recession itself. That’s still debatable (something for another day), but there is no doubt that the fiscal responses to coronavirus are very different from those that followed the global financial crisis.

A lot of the economic costs are also inevitable, whatever policymakers had done. For example, the government’s early analysis of coronavirus suggested that, in a reasonable worst-case scenario, up to a fifth of the labour force might be off work at any one time. That would have hit GDP hard, even if the government had done nothing (and probably by more without the measures that the government has taken).

Put another way, the economic measures being taken now have both costs and benefits, as they prevent bigger losses further ahead, including the accumulated loss of future income (potentially substantial) that would result from the premature deaths of a large number of younger people.

In the meantime, people stuck at home might be bored and even depressed. But most seem to accept the need for the tougher measures and community spirit seems high. At least, fewer people will be drinking themselves to an early death down the local pub, or losing their lives to traffic accidents.

On this basis, it would be relatively easy to redo Young’s analysis with different and better numbers and conclude that the government’s measures are actually good “value for money”.

Finally, though, it is worth asking whether the standard cost-benefit analysis, which you might apply to the approval of a new medicine or an individual railway project, is appropriate to a national emergency, like the coronavirus crisis. To use an extreme example, we wouldn’t have assessed the pros and cons of fighting World War II in this way.

Similarly, we may well be willing to put a much higher price on protecting the lives of people who face a ghastly end in a converted conference centre, especially if we could avoid this simply by chilling at home for a few weeks longer. By all means let’s keep everything under review, but, “yes”, I do think the lockdown is worth it.


This article was originally published on Julian Jessop’s blog.

Julian Jessop is an independent economist with over thirty years of experience gained in the public sector, City and consultancy, including senior positions at HM Treasury, HSBC, Standard Chartered Bank and Capital Economics. He was Chief Economist and Head of the Brexit Unit at the IEA until December 2018 and continues to support our work, especially schools outreach, on a pro bono basis.

9 thoughts on “Is the lockdown worth it?”

  1. Posted 03/04/2020 at 15:42 | Permalink

    At least, fewer people will be drinking themselves to an early death down the local pub

    No. They will be taking up solitary drinking, which is worse. All my friends have considerably increased their alcohol intake under lockdown.

    To use an extreme example, we wouldn’t have assessed the pros and cons of fighting World War II in this way.

    No because a war is when you sacrifice lives to gain liberty and/or wealth. We are sacrificing liberty and wealth to save lives. So the metric is 100% the wrong way round.

  2. Posted 04/04/2020 at 23:01 | Permalink

    “you could also justify using a much higher number for the cost of a life, such as the ‘Value of a Statistical Life’ saved by a road safety improvement, which is more than £1 million”

    No you can’t, because the £1 million figure is per life, so you can’t multiply that by the life years that you’re using.

    Anyway, £1 million per “Statistical Life” is less than NICE’s £30,000 per QALY (at £30,000 per QALY, that’s only 33 years for a “life”).

  3. Posted 05/04/2020 at 22:44 | Permalink

    On a smallish point: the years of life lost is presumably rather lower than 11, since most who die have multiple comorbities and so presumably have a rather shorter than average life expectancy. Perhaps more like half that?

  4. Posted 06/04/2020 at 00:20 | Permalink

    So 80+ years old with several illnesses could live another 11 years if coronavirus don’t exist ? Would this person contribute £30k a year to economy ? Hmmmm , don’t think so.

  5. Posted 13/04/2020 at 14:02 | Permalink

    Surely it is fundamental that every human life has equal value? Certainly that is my moral judgement. Otherwise, it is a slippery slope – who next can be sacrificed after the elderley? Fat people, smokers, drinkers, drug addicts, assylum seekers, young people with expensive medical conditions etc? Where will that end? Which family will be happy to sacrifice their own elders? Western society has more than enough resources, but nowadays makes very selfish choices about the allocation. We have already for a number of years now been unwilling but not unable to fund a decent social care system for the care of those unable to care for themselves, but they are all members of someone’s family. Numerous life decisions are not based upon economic rationallity, otherwise life becomes survival of the fittest – how many people would vote for that?

  6. Posted 14/04/2020 at 22:32 | Permalink

    There are major problems with this calculation whichever way you do it.
    Even the models that the government were using to justify lockdown show that it won’t reduce the number of people getting Covid very much, just slow it down, simultaneously slowing down herd immunity so that the virus is more likely to resurge as soon as lockdown is lifted. This could save lives if it prevents the NHS from being so overwhelmed that people who actually could have been saved are not, but as long as we are at a level where there are hospital beds free then any further lockdown measures save hardly any lives at all, while dragging out the effects on society over a longer period of time. In a situation where the more you lock down, the longer you have to lock down for there are no simple answers. The above article completely ignores the length of time the lockdown lasts on the effect it has on both the economy and the virus, neither of which are linear.

    It is not just people feeling a bit depressed that we are worried about – this can lead to increased violence and suicide. Though this works both ways: it looks like teen suicides may actually be falling during lockdown in the UK. But in the long run, unemployment is the biggest trigger of suicide in adult men, and loneliness in women. This should not be ignored in the analysis.

    It’s not lives Vs money, it’s lives Vs lives.

    There will also be “life-years” lot due to many people getting less excercise and being more stressed during lockdown. And economic costs now mean less money for the NHS and so more life-and death decisions limited by money in future.

    Another set of major problems is there simply isn’t enough data, about Covid19 in particular but also the economy and, for obvious reasons, the future, to generate any truly meaningful numbers for your calculations. We simply don’t know how many people would die in any given scenario, by a few orders of magnitude. Anyone expoundinding on this subject in the press is going on emotions and opinions, not data and reasons: the back-of-the-envelope numbers are just cover.

    Finally and perhaps most importantly, this article also fails to address quality vs quantity of life. Many of us, old and vulnerable people included, would choose one year with their families and friends and leisure activities over two years of life without. Which I think may have been Toby Young’s main point?

  7. Posted 06/05/2020 at 07:54 | Permalink

    It’s obvious governments have lost sight of the Green Book and NICE limits. I read a report in the US that they are spending effectively up to $3m per life saved. And little account has been taken of the extra deaths which the lockdown will bring (poverty, addiction through boredom and so on). Lockdown life is definitely unhealthy for humans (and ironically healthy for the planet).

    So it’s a question of not if, but when. Perhaps a regional release, the three other countries of the UK being obvious examples. Or start with counties based on their distance from London.

  8. Posted 02/06/2020 at 20:42 | Permalink

    Julian, this seems a well reasoned summary. Thank you. I would be very interested for you to appraise the original decision in exactly the same manner based on current data, and indeed to present the analysis from this point forward….

  9. Posted 24/07/2020 at 10:37 | Permalink

    This article relies heavily on research findings which are not adequately justified yet in my opinion – most obviously the early mortality forecasts from UCL (I am yet to see evidence that these appear to be true). Additionally, as others have pointed out, the use of Value of Statistical Life calculation here appears questionable, as are assumptions about the likely life expectancy (and net potential contribution to the economy) of a person typically categorised as at high risk of mortality following infection from this virus. Furthermore, assumptions regarding potential impacts to the health service are debatable, as their basis appears to be the previously mentioned mortality forecasts from UCL. Finally; “In reality, the direct costs to the Treasury of the measures announced so far are likely to be in the range of £50-100 billion. What’s more, this can be seen as a transfer from one group of people (mainly current and future taxpayers) to others (such as those whose incomes would otherwise have disappeared), rather than a net loss to the economy.”…requires justification with reference to how this plays out over time.

    My sense is that the decisions made with regards to lockdown are; (1) probably not justifiable on economic grounds, (2) that (1) will be evidenced gradually over time, and (3) that they are mostly politically driven and will continue to be tethered to the public mood and perceptions until economic circumstances become critical, for example in the case of a severe and sustained depression.

    To me the key risk is in failing to accurately evaluate the decisions made in order to justify them for whatever reason – something which appears to have a high likelihood and yet also a high severity of consequences.

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