Moving Away from Isolation

As governments begin to grapple with when and how to move away from the extraordinary isolation measures that, on the one hand, have been necessary to curtail the exponential growth of Coronavirus cases and deaths, yet on the other hand are hugely disruptive to the economy and our personal lives, it is important to bring some perspective to the consequences and costs that alternative strategies may entail.

The consequences and costs for the economy are relatively straightforward to assess. Different strategies (for example, earlier or later reversal of the isolation and industry shutdown measures) will significantly impact employment and business activity. The losses in employment and business income under the different strategies provide a measure of the economic cost they entail.

The consequences and costs for Coronavirus-related illness and death are much more difficult to measure. Nevertheless, one can build on estimates of the number and severity of coronavirus cases to bring some perspective to the costs of the illness and deaths the different strategies entail.

For example, in a March 25 article in the New York Times, Nicholas Kristoff and a team of epidemiologist modellers provide information on the Coronavirus consequences of different time frames for ending the isolation measures in the US. Their estimates of the number of Coronavirus cases and deaths that one could expect if the US were to lift the isolation measures after 3 to 6 weeks are shown in the table below. 

The estimates are no doubt rough and do not take into account the mitigation measures that could be implemented in place of isolation. Nevertheless, they do indicate how severe the consequences could be. An early end to the isolation (after the first 3-week period) could result in 104 million Coronavirus cases in the US (almost 30% of the population) and some 1 million deaths. Ending the isolation measures after 6 weeks could cut the total number of cases by over 50% and the number of deaths by almost two-thirds, but would still have staggering effects (with an estimated 45 million cases and 356,000 deaths).

Weeks of Isolation	3	4	5	6
Cases (millions)	104	81	61	45
Deaths	1000000	787000	553000	356000

To some people it is impossible or even immoral to try to estimate the costs of illness and death. But to decide how to manage economic-health trade-offs, one needs some sense of the cost that people place on the risk of serious illness and premature loss of life – the amount of resources they would want government to allocate or income they would be willing to forego in order to reduce the number of illnesses and deaths.

With respect to illness, a minimum measure of the cost is the estimated average health care cost that will be incurred to treat more and less severe Coronavirus cases. As for deaths, economists look at the decisions people make with respect to more and less risky occupations, and to more and less safe automobiles or other products to gauge the cost they assign to the risk of loss of life. How much higher wages do people need to offset increased occupational risks or how much higher prices will they pay for safer products.

Based on studies of those choices people make and also on direct surveys, economists have concluded that on average people in wealthy countries like the US or Canada assign a cost in the order of $5 million to $10 million to the risk of the loss of one life. Taking $7.5 million as a mid-range estimate, the cost of the one million lives that could be lost if the isolation measures in the US were lifted after three weeks would be some $7.5 trillion dollars

The Table below uses an average health care cost of $25,000 per illness and a loss of life cost of $7.5 million per premature death to develop estimates of the total US Coronavirus health care and premature death costs when the isolation measures are lifted after 3 to 6 weeks.

Weeks of Isolation	3	4	5	6
Health care ($billions)	2,600	2,025	1,525	1,125
Loss of life ($billions)	7,500	5,900	4,150	2,670
Total Costs ($billions)	10,100	7,925	5,675	3,795

It must be emphasized that these numbers are rough – they are useful not in their precision but rather as an indication of the order of magnitude of the costs involved. And in that regard they are very clear.

Firstly, it is clear that the costs of illness and death are huge. If the US were to lift the isolation measures after 3 weeks with no effective alternative mitigation measures to take their place, the total cost would be over $10 trillion – almost one half of the US GDP in 2019.

Secondly, the costs do fall considerably with each additional week of isolation – if the measures are kept in place for 6 weeks the total costs would be $3.8 trillion – 60% less than if isolation were lifted after 3 weeks. However, they would still be huge. Costs of $3.8 trillion are equivalent to almost 20% of US GDP.

If the goal of the isolation measures has been to flatten the curve in order that hospitals can cope, the goal of delaying the lifting of isolation measures must be to develop and put in place mitigation measures that could effectively replace isolation. Delay in lifting the isolation helps but still leaves unacceptably high costs of illness and death. And unlimited delay is not sustainable – the economic costs would be overwhelming.

To avoid massive costs of illness and death if the isolation measures are lifted too soon, or of massive loss of income if the isolation is excessively prolonged, planning and preparation for effective alternatives to isolation have to start today.