5757 S. University Ave.

Chicago, IL 60637

Main: 773.702.5599

bfi.uchicago.edu

WORKING PAPER · NO. 2020-26

Does Social Distancing Matter?Michael Greenstone and Vishan NigamMARCH 2020

1

DoesSocialDistancingMatter?1

MichaelGreenstone*

UniversityofChicagoandNBER

VishanNigam

UniversityofChicago

March2020

AbstractThispaperdevelopsandimplementsamethodtomonetizetheimpactofmoderatesocial

distancingondeathsfromCOVID-19.UsingtheFergusonetal.(2020)simulationmodelof

COVID-19’sspreadandmortalityimpactsintheUnitedStates,weprojectthat3-4monthsof

moderatedistancingbeginninginlateMarch2020wouldsave1.7millionlivesbyOctober1.Of

thelivessaved,630,000areduetoavoidedoverwhelmingofhospitalintensivecareunits.

Usingtheprojectedage-specificreductionsindeathandage-varyingestimatesoftheUnited

StatesGovernment’svalueofastatisticallife,wefindthatthemortalitybenefitsofsocial

distancingareabout$8trillionor$60,000perUShousehold.Roughly90%ofthemonetized

benefitsareprojectedtoaccruetopeopleage50orolder.Overall,theanalysissuggeststhat

socialdistancinginitiativesandpoliciesinresponsetotheCOVID-19epidemichavesubstantial

economicbenefits.

1

Greenstone(mgreenst@uchicago.edu,correspondingauthor*)andNigam

(vnigam@uchicago.edu)contributedequallytothiswork.Theauthorsdeclarenocompeting

interests.WethankClaireFan,IanPitman,CatherineChe,andespeciallyAliceSchmitzfor

excellentresearchassistance;andOrleyAshenfelter,MagneMogstad,IshanNath,Jonathan

Cohen,ChinmayLohaniandAtakanBaltaciforseveralvaluableconversations.Allerrorsareour

own.

Preprint:https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3561244

Codeanddata:https://www.michaelgreenstone.com/paperscategories#vsl

2

Introduction

Thenovelcoronavirus(COVID-19)pandemicisconsideredthegreatestpublichealththreatsince

the1918InfluenzaPandemicthatinfectedone-thirdoftheworld’spopulationandkilledatleast50

millionpeople.COVID-19casesandfatalitiesaregrowingexponentiallyandthereismuchuncertainty

aboutitsultimateimpactsglobally.Perhapsasunsettlingastheseestimatesistheuncertaintyaround

thehealthimpactsthatarewrackingsocietieswithfear.

Intheabsenceofvaccines,countriesaroundtheworldareimplementingvariousformsof“social

distancing”asapolicytoslowthevirus’spread.Thissocialdistancingtakesmanyformsbut,atitscore,

itsaimistokeeppeopleapartfromeachotherbyconfiningthemtotheirhomesinordertoreduce

contactrates.TheimpactsofsocialdistancingareevidentinthedatafromChina,especiallywhen

comparedwithItalywhichimplementedsocialdistancingpoliciesmoreslowlyandsporadically.Atthe

sametime,theeconomicscostsareclearintheChineseandItaliandata,andintheUSGoldmanSachsis

projectingquarteronquarterannualizedgrowthratesof-6%inQ1and-24%inQ2(Hatziusetal.2020).

Further,historicallyunprecedentedUSunemploymentclaimshavebeguntoarriveandthenearterm

outlookforthejobmarketisgrim(Hatziusetal.2020).ThedemonstratedbenefitsinChina(aswellas

SouthKoreaandSingapore)andthesharpandlargeeconomiccostsnaturallyraisecriticalquestions

aboutwhethersocialdistancingisworthit(HilsenrathandArmour2020;BenderandBallhaus2020;

Thunstrometal.2020).

Thispaperdevelopsandimplementsamethodtoestimatetheeconomicbenefitsofsocialdistancing.

Ourbaselinefindingisthatamoderateformofsocialdistancingisprojectedtoreducefatalitiesby1.76

millioninthenext6monthsandthatwouldproduceeconomicbenefitsworth$7.9trillion.These

benefitsareoverone-thirdofUSGDPandlargerthantheentireannualfederalbudget.Distributed

amongUShouseholds,theyareroughlyequaltocurrentmedianhouseholdincomeof$60,000.

Further,thesebenefitsarelikelyalowerbound.Thisisbecausetheydonotaccountforsocial

distancing’simpactonreducinguncertaintyaboutmortalityimpacts,thepotentialforreducing

morbidityrates,andimprovingqualityofmedicalcarefornon-COVID-19medicalproblems.Itisalso

worthunderscoringthattheestimatesdependonassumptionsaboutthevalueofastatisticallife(VSL)

3

andestimatedbenefitsremainsubstantialwhenotherplausibleassumptionsaremade.Finally,wefind

thatthebenefitsfromsocialdistancingalsoremainsubstantialinlessaggressiveCOVID-19scenarios;

forexample,thebenefitsofsocialdistancingare$3.6trillioneveninascenariowherethepeakofdaily

deathratesis60%lowerthanintheImperialCollegemodel(Fergusonetal.2020)ofCOVID-19spread

thatwerelyoninthispaper.

Themethodhastwomainsteps.First,wecomparetwoscenariosfromtheprominentFergusonetal.

(2020)COVID-19study:amitigationscenario,whichtheydefineas“combininghomeisolationof

suspectcases,homequarantineofthoselivinginthesamehouseholdassuspectcases,andsocial

distancingoftheelderlyandothersatmostriskofseveredisease”thatlastsfor3-4months,anda“no

policy”scenario.ThemitigationscenarioisprojectedtoreducethenumberofCOVID-19caused

fatalitiesbyatotalof1.76millionovera6-monthperiod,relativetothenopolicyscenario.This

reductioninfatalitiesiscomposedof1.13millionfewerdeathsofCOVID-19patientstreatedin

hospitals,particularlyinintensivecareunits(ICUs);and0.63millionfewerdeathsofCOVID-19patients

thatareunabletoreceiveICUcarebecauseofpandemic-relatedovercrowding.

Second,thereductioninfatalitiesfromthemitigationscenarioisdividedinto9agecategoriesandthen

monetizedusingtheUnitedStatesGovernment’sVSLthatweadjustforage(ThalerandRosen1976;

AshenfelterandGreenstone2004;MurphyandTopel2006;OMB2003;USEPA2015).Intotal,the

benefitsfromthemitigationscenarioequal$7.9trillion.Deathsavoidedandmonetizedbenefitsare

unequal:cohortsunderage50comprise11%ofmonetarybenefits(3%oftotaldeathsavoided);ages

50-69comprise52%ofmonetarybenefits(28%ofavoideddeaths),andthose70andoldercomprise

37%ofmonetarybenefits(69%ofavoideddeaths).Thedifferencesinmonetarybenefitsacrossage

groupsreflectthatCOVID-19mortalityratesareincreasinginagewhiletheVSLisgenerallydecreasing

inage.

Finally,wenotethattheparticularbenefitsestimatesareonlyasreliableasFergusonetal.’sprojections

onCOVID-19’sspreadandhealthrisks.Themethodcanbeusedwithanysetofprojections,soasmore

informationarrivesandresearchadvances,thisapproachcanbeappliedtootherprojectionsandto

inferthebenefitsofalternativepolicyresponses.

Theremainderofthepaperisorganizedasfollows.SectionIdescribesourmethodstoprojectthedirect

4

and“overflow”COVID-19causeddeaths,basedonFergusonetal.(2020).SectionIIdescribesour

approachtomonetizingtheavoideddeathsinordertodevelopanestimateofthebenefitsofthe

mitigationsocialdistancingscenario.Finally,SectionIIIinterpretstheresults,discussessomecaveats,

andconcludes.

I. MortalityImpactsofSocialDistancing

ThissectiondevelopsestimatesoftheprojectedmortalityimpactsofCOVID-19,exclusivelyrelyingon

Fergusonetal.’s(2020)“individual-basedsimulationmodel”thatwasdevelopedtosupportpandemic

influenzaplanning.Thepaper,whichhasbeenhighlyinfluentialinthepolicyarena,combinesdataon

earlyoutbreaksofCOVID-19withdemographicandhospitalavailabilitydatafromtheUnitedStatesto

projecttheinfectionrates,hospitalizationrates,demandforcriticalcare,andmortalityrates.It

attemptstodisciplinetheseprojectionswithdataonCOVID-19experiencesinChina,Italy,GreatBritain,

andtheUnitedStates(Fergusonetal.2020).

OuremphasisisonFergusonetal.’s“nopolicy”andmitigationsocialdistancingscenarios.Intheno

policyscenario,thereisuncontrolledgrowthofthecoronaviruspandemicthatleadstoan81%infection

rateintheUnitedStatesbyOctober1and2.2milliondeaths.Asabasisofcomparison,inlateFebruary

theCDCprojecteda48-65%infectionrateanddeathsof0.16million(witha0.25%infectionfatality

rate)to1.7million(1%fatalityrate)overayearstartingMarch2020(Fink2020).Importantly,other

empiricalstudiesnowpointtoacasefatalityratecloseto1%(Verityetal.2020,MizumotoandChowell

2020),andotherexpertestimatessuggesta30-70%US-wideinfectionrate(Axelrod2020,Ramsey

2020).TheFergusonetal.estimates,whileslightlymorepessimistic,arethusbroadlyconsistentwith

otherprojectionsofCOVID-19transmission.

ThemitigationscenarioemphasizedbyFergusonetal.isamoderateformofsocialdistancingthat

consistsof7-dayisolationforanyoneshowingcoronavirussymptoms,a14-dayvoluntaryquarantinefor

theirentirehousehold,anddramaticallyreducedsocialcontactforthoseover70yearsofage.

2

All

measuresbegininlateMarch.Theisolationandhouseholdquarantinemeasuresareassumedtobein

2

Fergusonetal.alsomodelothersubsetsofmitigation,suchasschoolanduniversityclosures,butthesehave

limitedimpactandthemortalityimpactsarenotemphasized.

5

placeforthreemonthsandreducedcontactforpeopleover70lastsfourmonths.Fergusonetal.

projectthatthemitigationscenariowillreducepeakhospitaldemandbytwo-thirdsandtotaldeathsto

1.1million.

WefocusonthemitigationscenariobecauseitapproximateswhattheUnitedStatesisimplementing,

albeitunevenlyacrossthecountry.WithperhapstheexceptionofCalifornia,WashingtonandNewYork,

mostUSstateshavenotpushedChina-styleshutdownsofthelevelnecessarytosuppressCOVID

transmission(Glanzetal.2020).Inotherwords,theUSmay“flattenthecurve”ofinfectionbutnotstop

itentirely.Fergusonetal.alsomakeprojectionsabouta“suppression”scenariothatincludes

dramaticallyreducedcontactfortheentirepopulation,andinvolveseitherareboundepidemic(that

stronglyresemblesourmitigationscenario)orrepeatedimpositionofsocialdistancingfortwoyears.

WeviewthelatterasfarfromanythingbeingimplementedintheUnitedStates.Onethingtonoteis

thatboththenopolicyandmitigationscenariosonlyextendthroughOctober1,soitisreasonableto

assumethatavaccinewillnotbedevelopedinthistimeframe.

AnovelfeatureofouranalysisisthatweimproveuponFergusonetal.’sestimatedmortalityprojections

byaccountingforthepotentialshortagesinthesupplyofhospitalintensivecareservices,forexample

ICUbeds,respirators,andtrainedstaff.Specifically,Fergusonetal.’sheadlinedeathprojectionsassume

thatallCOVID-19patientsreceivetheappropriatemedicalcare,sotheirprojectionsdonotaccountfor

potentialshortagesinICUbedsorrespirators.Indeed,itispreciselythepossibilityoftheseshortages

thataccountforthepolicypushto“flattenthecurve”andavoidtheirrepercussions.Ourapproachisto

labeltheFergusonetal.projectionsofdeathsas“directdeaths”anddevelopprojectionsof“overflow

deaths”whicharethosethatresultfromhospitalICUsreachingcapacityandbeingunabletoservesome

COVID-19patients.Aswedetail,weprojectthatsocialdistancingwouldreduceoverflowdeathsbyan

additional630,000fatalities.

Insummary,weprojectthatsocialdistancingreducesCOVID-19causeddeathsby1.76milliondeaths.

Thisiscomposedofreductionsof1.13milliondirectdeathsand630,000overflowdeaths.The

remainderofthissectiondescribeshowwedeveloptheseprojectionsofthereductionsindirectand

overflowdeathsduetosocialdistancingandtheirdistributionacross9agecategories.

6

Fig1.ModelingofDirectDeathsfromCOVID-19

Notes:Figureshowshowweconstructdailydirectdeathsundervarioussocialdistancingpolicies.TheoriginaldistributionofUSdeathswithnopolicyfromFergusonetal.(2020)isgiveninPanelA.PanelBshowsournormal

approximationofthisdistribution,andasimilarpolicyundermitigationsocialdistancing.Totaldirectdeaths(areas

underthecurves)are2.2millionwithnopolicyand1.1millionwithmitigationsocialdistancing,exactlymatching

reporteddeathsinFergusonetal.

A.DirectDeaths

WebeginbyreproducingtheFergusonetal.estimatesofdirectdeathsintheUS:2.2millionwithno

policyand1.1millionwith“mitigation”socialdistancing.Todoso,wedevelopamethodthat,under

simpleassumptionsabouttheprogressionofcoronavirus,allowsustoconstructthefulldaily

distributionofdeaths.Thisstepisnecessarybecauseitwasinfeasibletoacquirethefulldataset

underlyingtheFergusonetal.analysis,undoubtedlyduetothegreatdemandsplacedontheauthorsas

theymodeltheprogressionofCOVID-19andreplayupdatedfindingstopolicymakers.

OurapproachassumesthatdailyCOVID-19cases,deaths,andICUbeddemandfollowanormal

distribution.Normaldistributionsroughlyapproximateepidemicgrowthcurves,whichareslightlyright-

skewedsincetheygrowexponentiallyuntilreachingherdimmunity.Normalityisalsoconvenient

becausegiventhecenter(dateofpeak),heightatpeak,andwidth(distancefromstarttopeak),itis

possibletorecoverthefulldistribution(i.e.,dailyfatalitycounts).

7

Foranexampleofourstrategy,considerFigure1.PanelAreproducesFergusonetal.’sdistributionof

dailydeaths,whichweextractedfromtheirpaper.

3

ThecenterofthedistributionisaroundJune1and

thestandarddeviationvisuallyappearstobeabout16days,sowecanplotanormaldistribution.Lastly,

about55,000deathsperdayhappenatthepeak.Wethenscaletheentiredistributiontopeakatthat

valueandsumdeathsacrossalldaystoobtaintotaldeathsfromMarch1toOctober1,2020.So

althoughwedon’thavetheunderlyingdata,weareabletoreproducethisdistributionwiththeredline

inPanelB;ourreconstructedversionaddsuptothesame2.2milliondirectdeathsthatFergusonetal.

projectfortheirnopolicyscenariobyconstruction.

4

ThebluedistributioninPanelBfordailydeaths

underthemitigationscenarioisrecoveredwiththesameapproachand,againbyconstruction,produces

exactlythe1.1milliondeathsthatFergusonetal.project.

5

ThebottomlinefromthisanalysisisthatsocialdistancingisprojectedtoreducethenumberofCOVID-

19deathsby1.1millionbetweenMarch1andOctober1.Thisissimplythedifferenceinthenumberof

directdeathsinthenopolicyandmitigationscenarios.

B.OverflowDeaths

WenextestimateICUoverflowdeathsunderthenopolicyandmitigationscenarios,aswellastheir

differencewhichisthenumberoffatalitiesavertedthroughCOVID-relatedsocialdistancing.Webelieve

thatthesearethefirstprojectionsofoverflowdeathsor,putmoreplainly,themortalitycostsoffailing

to“flattenthecurve”.Previouswork(e.g.,Fergusonetal.2020,Jhaetal.2020)projecthospitalbedand

ventilatorneedsinexcessofcapacity,butdonotprojecttheimpactoftheseshortagesontotal

fatalities.

6

3

PanelAcorrespondstotheUScurveinFigure1aofFergusonetal.(2020),whichisexpressedindeathsper

100,000people;wemultiplythroughbytheUSpopulationtoobtaintotalUSdeaths.

4

Forsomedistributions,wehaveevenlessinformation.TheonlyFergusonetal.(2020)plotshowingcurveswith

andwithoutmoderatedistancingisforcriticalcarecasesinGreatBritain,notdeathsintheUSA.However,that

plotstillletsusinferthattheepidemicpeakisone-thirdashighandtakes40%moretimetooccurrelativetoApril

1,andhasa40%largerstandarddeviation,comparedtonopolicy.Thesepointsaresufficienttoconstructdirect

deathswithmitigationintheUnitedStates.

5

Weaddameanzeroerrortoourreconstructednormaldistributions,suchasinPanelB.

6

Thechallengeinestimatingoverflowdeathsisthatthedeathratechangesasafunctionofthenumberof

patients,soastandardSIRmodelthattakesCOVID-19deathratesataninputwillnotdirectlycapturethis

phenomenon.Incontrast,empiricalcomparisonsbetweenoverwhelmedandcalmerhospitalsystems(ex:Wuhan

vs.restofChina)arechallengingbecausedistancingpoliciesaremostseverelyimplementedinoverwhelmed

areas,confoundingcomparisons.

8

AlittlebackgroundonICUservicesishelpfultounderstandthiscalculation.PatientsintheICUreceive

specializedbeds,ventilators,andcarefromdoctorsandnurseswithspecializedtraining.TheUnited

Stateshas85,000bedsinintensivecareunits(Tsaietal.2020).Ofthose,32,000(37%)areunoccupied

andimmediatelyavailabletotreatCOVID-19patients.ThetotalnumberofbedsthatCOVID-19patients

couldfill,knownas“surge”capacity,liesbetweenthetwo.Intimesofemergency,somespacecanbe

madebycancelingelectivesurgeries,butcancerpatientsandotherswithongoingtreatmentmuststay

put.WefollowFergusonetal.inassumingICU“surge”capacityof45,000beds(=32,000unoccupiedICU

bedsplus13,000ICUbedsmadeavailablebycancelingelectivesurgeries).

7

IncreasingICUcapacityany

furtherrequiresnewphysicalbedsandequipment,aswellasproportionalincreasesinthenumberof

ICUdoctorsandnurses.

ThefirststepinprojectingoverflowdeathsisthentoprojectthenumberofICUbedsavailableeachday

forCOVID-19patientsandthedailynumberofnewpatientsinneedofICUcare.WefollowFergusonet

al.andassumethateachICUpatientoccupiesabedforexactly10days.Giventhesurgecapacityof

45,000ICUbeds

8

,thismeansthatatotalof4,500ICUbedsbecomeavailableeachdayforCOVID-19

patients.Fergusonetal.projectsthenumberofnewCOVID-19patientsthatneedICUserviceseachday

forbothscenarios.

9

Figure2reportstheresultsfromthisexercise.ThedashedblacklineisthenumberofICUbedsthat

becomeavailableeachdayforCOVID-19patientsinneedofICU-levelcare.Theredandblue

distributionsarethenumberofnewCOVID-19patientsthatrequireICUserviceseachdayundertheno

policyandmitigationsocialdistancingscenarios,respectively.Thepatientsunderneaththedashedblack

linereceiveICUservices,whilethoseaboveitareprojectedtobedeniedthem.

Undersocialdistancing,1.57millionfewerCOVID-19patientsthatmeritICUservicesaredeniedthem.

Specifically,thenopolicynumberofCOVID-19patientsinneedofICUservicesthataredeniedthemis

equaltothesumoftheleft(1.92million)andcenter(0.60million)shadedregions.Inthemitigation

socialdistancingscenario,thisisequaltosumofthecenter(0.60million)andright(0.35million)

7

TheauthorsassumetheUShas14ICUbedsper100,000people,whichis45,000overall.Thisisslightlylower

thantheTsaietal.(2020)estimateof58,000potentiallyavailableICUbeds.

8

Fergusonetal.(2020)reportthatUSICUsurgecapacityis14bedsper100,000people;wemultiplybyUS

populationanddivideby10days/ICUpatienttoobtaintheICUsurgecapacityshowninFigure2.

9

PlotsinFergusonetal.(2020)areofprojectedICUbedsoccupiedbyday,whichwedivideby10daysperICU

patienttoobtainthenumberofnewpatientsperday,asshowninFigure2.

9

Fig2.PredictedICUPatientFlows

Notes:FigureillustratesourcomputationofoverflowdeathsfrompatientsunabletoreceiveICUcare.Dailyflows

ofpatientsrequiringICUcareareconstructedfromFergusonetal.(2020)projectionsofbeddemand.Patients

aboveUSsurgecapacity(blackline)aredeniedICUtreatment:theredandorangeareaswithnopolicyandthe

orangeandyellowareaswith“mitigation”socialdistancing.Thedifferenceof1.6millionrepresentsCOVID-19

patientsdeniedICUtreatment,eachofwhichhasa50%chanceofsurvivalwithICUtreatment(Fergusonetal.

2020)anda10%chanceofsurvivalofdeniedcare.

regions.Therefore,thebenefitofsocialdistancing(i.e.,thedifferenceinthesetwonumbers)isthe

differencebetweenthesetwonumbersor1.57million.

Theprospectsforthese1.57millionICUindicated,butdenied,patientsarepoorandweprojectthatan

additional630,000ofthemwoulddie.Thiscalculationrequiresanestimateofthedifferencein

mortalityratesforICU-indicatedCOVID-19patientswhocanandcannotgetICUservices.Werelyon

Fergusonetal.’sassumptionthatthesurvivalrateforICU-levelCOVID-19patientsinICUsis50%andour

readoftheliteraturethatsuggeststhatthesurvivalratefallsto10%orbelowiftheyaredeniedICU

services(Emanueletal.2020,Longetal.2015).Insummary,1.57millioncoronavirusICUpatientsfacea

10

40%higherdeathrateinthenopolicyscenario,relativetothemitigationsocialdistancingscenario.Put

anotherway,socialdistancingreducestheprojectednumberofoverflowdeathsby630,000inthe

UnitedStatesbetweenMarch1andOctober1,2020,providingaquantitativerationaleforeffortsto

“flattenthecurve”.

C.AgeDistributionofCOVID-19Deaths

ThenextstepintheanalysisistoassignprojectedCOVID-19causeddeaths–whichwehavecomputed

fortheentireUSpopulation–toagegroups.Fergusonetal.(2020)reportthedistributionoftotal

deathsfromthenopolicyscenarioacross9agegroups(i.e.,0-9,10-19,…,70-79,and80+).

10

Weapply

thissamedistributionoftotaldeathstothemitigationscenario.Thisisnotaninnocuousassumption,

becausethemarginaldeathsinthisscenariomayhaveadifferentagedistribution,butalternative

informationisunavailable.

11

II. TheMonetaryValueofSocialDistancing

Thissectiondescribesourapproachtomonetizingreductionsinfatalitiesandthenusesittodevelopan

estimateofthebenefitsofthemitigationsocialdistancingscenario,relativetothenopolicyscenario.

A.TheValueofaStatisticalLifeandtheMonetaryBenefitsofChangesinMortalityRates

Itisnaturaltoconsidersocialdistancinglikeanyofhundredsofpoliciesthataimtoreducetherisksthat

peopleface.Asjustoneexampleofsuchpolicies,governmentspayforguardrailsonthesideofroads,

becausetheyincreasesurvivalratesincaraccidents.Apolicylikesocialdistancingsimilarlyincreases

survivalrates.

Toconvertthemainbenefitofsocialdistancing–reducingthemortalityimpactofCOVID-19–into

dollarterms,weturntothevalueofastatisticallife(VSL).TheVSLisatoolfromeconomictheorywhich

isnowastandardingredientinthecost-benefitanalysesthatundergirddecision-makingbytheUnited

StatesGovernment,andscoresofforeign,state,andlocalgovernments(OMB2003).Inprinciple,the

VSLmeasureshowmuchtheaverageUScitizeniswillingtopayforareductionintheprobabilityof

10

Fergusonetal.reporttheinfectionfatalityrateandprobabilityofrequiringICUcarebyagegroup.Wemultiply

eachby2017age-grouppopulationfromtheUSCensustoobtaintheage-wisedistributionofdirectand

overflowdeaths,respectively.

11

Inanextremecase,supposedistancingpurelyinhibitscoronavirusfromreachingnursinghomes;ifso,our

approachwillprojectdeathstoelderlypopulationswheninrealitynonehavedied.

11

death.

12

Itisonestatisticallife,whichisareductioninmortalityratesequivalenttosavingonelifeon

average.Forinstance,supposetheaverageAmericaniswillingtopay$10,000toavoida0.1%chanceof

death,thentheVSLisequalto$10,000/0.001livessavedor$10millionperstatisticallifesaved.So,a

policythatisexpectedtosave1lifehas$10millioninsocialbenefits.

Therearetworeasons,onetheoreticalandonepractical,tousetheVSLtocapturethebenefitsofsocial

distancingpolicies.First,theVSLcapturesthefullbenefitsanindividualexpectstoderivefromherown

life,includingfromleisure,timewithfriendsandfamily,andconsumptionofgoodsandservices.The

legalsystemoftenreliesonindividual’sremaininglifetimeearnings,butsuchameasurefailstocapture

manyfeaturesofwhatpeoplevalueabouttheirlife,includingtheirconsumptionofnon-marketgoods

likeleisuretimespentwithfamilymembers(MurphyandTopel2006).

Second,ourapproachisastandardone:USfederalagenciessuchastheEPAandDepartmentof-

TransportationhaveusedtheVSLformanydecadestoevaluatealonglistofpoliciesinavarietyof

domains(transportationandenvironmentaretwocommonareas).Thesepolicies,likesocialdistancing,

havebenefitsmeasuredinlowermortalitybutcostsmeasuredindollars;theVSLallowstheUS

governmenttocomparethetwo,ratherthanneglectingthatwhichcannotbevalued.

Inpractice,wecomputethesocialbenefitsofreducingCOVID-19mortalityratesas:

!"#"$%&' = *+,- ∗ (0-123456 ∗ 789- + 0-;<43=>;? ∗ 789-)

-

wherejistheagegroup.0-123456isthereductioninthedirectdeathratefromimplementationofthe

moderatesocialdistancingscenario,relativetothenopolicyscenario,thatwasoutlinedinSectionIA.

0-;<43=>;?

istheanalogforICUoverflowdeathsratethatwasdescribedinSectionIB.Finally,789- isthe2017USpopulationforthejagegroupand*+,-isthevalueofastatisticallifethatisallowedtovarywithage.TheVSLisallowedtovarywithagefollowingMurphyandTopel(2006),butwerequire

theaverageforpeople18andovertoequal$11.5million

13

whichmatchestheEPA’sVSLforadults(US

EPA2015).

12

ItisimportanttounderscorethattheVSLisnottheamountofmoneythatapersonwouldbewillingtotradefor

certainlossoflife(presumablyalloftheirwealth)butratherforasmallchangeintheprobabilityofdeath.

13

TheUSEPAemploysa2020VSLof$9.9millionin2011dollarsaspartoftheCleanPowerPlanFinalRule

RegulatoryImpactAnalysis.Thisestimateaccountsforincomegrowthto2020;adjustingforinflation,theVSLis

$11.5millionin2020dollars.

12

B.EmpiricalEstimatesoftheMonetaryBenefitsofSocialDistancing

Table1summarizesthepaper’skeyresults.Therowsreportoneachofthe10agecategoriesandtheUS

total.Column(1)reportsthetotalUSpopulation.Columns(2d)detailstheprojectedreductionindirect

deaths due to social distancing,with columns (2a) – (2c) reporting the ingredients in this calculation.

Columns(3a)–(3d)repeatthisexerciseforoverflowdeaths.Thetotalreductionindeathsduetosocial

distancing(i.e.,thesumof(2d)and(3d))isreportedin(4a).(4b)liststheage-specificVSL,whichreflects

thefactthatincomeandremaininglifeexpectancyvaryacrossagesandmanyinfluencewillingness-to-

pay for reductions in mortality risk. To obtain column (4b) We obtain estimates of the VSL-age

distributionfromtheauthorsofMurphyandTopel(2006)andrescalesothatthepopulation-weighted

average for US adults (18+) equals the US EPA VSL of $11.5million. Finally, column (4c) reports the

monetizedvalueoftheprojectedreductioninfatalitiesduetosocialdistancing.

The topline result is that social distancing is projected to reduce COVID-19 caused fatalities by 1.76

millionbyOctober1andthatthisisworth$7.9trillion.Thisprojectedreductioninfatalitiesiscomposed

of1.13millionfewerdeathsofCOVID-19patientsreceivingappropriatetreatment(i.e.,directdeaths)

and 0.63 million fewer deaths of COVID-19 patients that are unable to receive ICU care because of

pandemicrelatedovercrowding(i.e.,overflowdeaths).

Figure3 illustrates that the impacts are strikinglyheterogeneous across age categories. Peopleunder

theageof50have$0.85trillion(11%)oftotalbenefits,reflectingtheirlowchanceofdeathfromCOVID-

19.Peopleaged50-69have$4.14 trillion (52%)of totalbenefits, almostdouble their shareofdeaths

avoidedthroughsocialdistancing; incontrast,people70andolderget$2.95trillion (37%)ofbenefits

despite comprising over two-thirds of deaths avoided. Cohorts aged 50-69 have larger total benefits

than the 70+ group because the former have a higher VSL, reflecting the greater remaining life

expectancies and expected future incomes of younger cohorts. More generally, it is apparent that

COVID-19’s risks and the benefits of social distancing are disproportionately concentrated among the

olderagegroups.

13

Table1.SocialDistancing’sProjectedMortalityBenefitsandtheirValuationintheUnitedStates

Notes:TableexplainshowprojecteddeathsavertedthroughsocialdistancingareconvertedtotheirvaluetoAmericans.Mitigation-typesocialdistancingreducestheaverageperson’schanceofdyingdirectlyfromCOVID-19bytherateincolumn(2c)(e.g.,3.1percentforpeople80+),andadditionallyreducestheprobabilityofdeathfromhospitalovercrowdingby(3c).Wescalebytotalpopulationtocomputestatisticallivessaved(2d)and(3d).Lastly,wesumlivessavedandmultiplybytheVSLtocomputetotalbenefits;VSLsarelowerforolderpopulationsbecauseoflowerincomesandlifeexpectancies.Thebenefitsin(4c)thereforerepresentthetotalvaluetoallAmericansofthereductionsinmortalityriskin(2c)and(2d),notthevalueofsavinganyparticularlifewithcertainty.

Table 1: Social Distancing Benefits Americans By Lowering Chance of Death

Population Direct Deaths Overflow Deaths All

No Mitigation No MitigationPolicy Distancing Di�erence Policy Distancing Di�erence

(1) (2a) (2b) (2c) (2d) (3a) (3b) (3c) (3d) (4a) (4b) (4c)Age US pop in Pct Pct Pct Death Pct Pct Pct Death Death VSL in Benefits in

group millions of pop of pop of pop count of pop of pop of pop count count million USD trillion USD

0-9 39.8 0.001 0.001 0.001 265 0.001 0.000 0.000 177 442 14.7 0.0110-19 41.4 0.004 0.002 0.002 827 0.002 0.001 0.001 554 1,381 15.3 0.0220-29 45.0 0.020 0.010 0.010 4,487 0.009 0.003 0.005 2,405 6,892 16.1 0.1130-39 42.7 0.052 0.026 0.027 11,364 0.023 0.009 0.014 6,091 17,455 15.8 0.2840-49 40.2 0.098 0.048 0.050 20,032 0.045 0.017 0.028 11,048 31,080 13.8 0.4350-59 42.9 0.391 0.192 0.200 85,635 0.179 0.069 0.111 47,598 133,234 10.3 1.3860-69 36.4 1.435 0.704 0.732 266,364 0.656 0.250 0.405 147,585 413,949 6.7 2.7670-79 21.3 3.327 1.631 1.696 362,001 1.514 0.578 0.936 199,692 561,694 3.7 2.0680+ 12.4 6.067 2.974 3.093 382,484 2.791 1.066 1.725 213,339 595,824 1.5 0.89

US Total 1,133,460 628,491 1,761,951 7.94

1

14

Fig3.MonetaryBenefitsofProjectedMortalityReductionsfromSocialDistancing

Notes:Figureshowstotalbenefits(willingness-to-pay)forreducedCOVID-19mortalitythroughsocialdistancing.

Totalbenefitsof7.94trilliondollarsequalthesumacrossagegroups,whereeachagegroup’sbenefitsarethe

changeinexpectedmortalitytimestheage-specificvalueofastatisticallife.Despitefacinglowermortalityrisk

thanabove-70cohorts,50-59and60-69yearoldsseelargebenefitsbecausetheyhavemoreyearslefttoliveand

thereforehigherVSLs.

C.RobustnesstoAlternativeAssumptions

Thecredibilityoftheestimated$8trillioninbenefitsreliesdirectlyonparametersintheImperial

Collegemodel.Thissubsectionexamineshowthemonetizedbenefitsofthemitigationsocialdistancing

scenariochangeunderalternativeassumptionsaboutthevirulenceofthenopolicyscenarioandsurge

ICUcapacity,aswellasthechoiceofanalternativeVSL.

Table2reportsonthisexercise.Row(1)repeatsthefindingsfromthispaper’sbaselineanalysis.We

considerwhathappensifthepeakdailymortalityrateisreduced,throughanyofavarietyof

mechanismsincludinglowerinfectionratesandlowermortalityratesconditionaloninfection.A

reductioninthepeakdailymortalityrateby30%reducesthebenefitsofsocialdistancingto$6.5trillion

(row(2a)),whilea60%reductiondecreasesitto$3.6trillion(row(2b)).Row(3)revealsthatalthough

doublingICUcapacitywouldmeaningfullyreducethecostsofCOVID-19itwouldhavelittleimpacton

15

Table2.MonetaryBenefitsofProjectedMortalityReductionsfromSocialDistancingwithAlternative

Assumptions

Notes:Tableshowsthatthatthetotalbenefitsofmortalityreductionsduetosocialdistancingaresimilarundera

seriesofalternativeassumptions.(1)isthemainestimate.In(2),weassumethepeakoftheepidemic,intermsof

casesanddeathsperday,wassomefractionlowerthaninFergusonetal.(2020).In(3)wedoubleUSsurgeICU

bedcapacityandfindasimilarestimateofbenefits,sinceICUcapacityincreasesleadtofewerdeathsbothwith

andwithoutdistancing.In(4a)weapplytheUSEPA2020VSLof$11.5milliontoalldeathsaverted,without

accountingforpatientage,andshowthatunderUSregulatorypracticetheestimatedbenefitswouldbeover$20

trillion.(4a)isanalogousto(1)exceptthatitusesaVSLof$3.5million,obtainedfromAshenfelterandGreenstone

(2004)andadjustedforinflationandincomegrowthto2020.(4c)isanalogousto(4a)butusestheupdated

AshenfelterandGreenstone(2004)VSL.

thebenefitsofsocialdistancing.Thismayseemsurprising,butitisbecausethebenefitsofadditional

ICUcapacityareroughlyequalinboththenopolicyandmitigationsocialdistancingscenarios.

Lastlyrows(4a)–(4c),reportthesocialbenefitswhenalternativeassumptionsabouttheVSLare

implemented.Row(4a)appliesanage-invariantversionoftheUSGovernment’sVSLof$11.5million,

ratherthanallowingittovarywithageasisdonethroughouttherestofthepaper(USEPA2015).In

thiscase,thetotalsocialbenefitsareabout$20trillion,morethan2.5timeslargerthanthebaseline

estimates.Thisfindingisnotsurprisinginlightofthehighproportionofsavedlivesthatoccuramong

peopleolderthan60,whohaverelativelylowVSLsinTable1becauseoftheirlowerremaininglife

expectancy.Whiletheage-invariantVSLhasalegalbasisinthatitisUSGovernmentpolicy,itis

challengingtojustifyfromeconomicfirstprinciplesofindividualbehavior.

16

Rows(4b)and(4c)useanupdatedversionofAshenfelterandGreenstone’s(2004)estimateoftheVSL,

whichequals$3.5millionwhenweadjustupwards14forincomegrowthto2020andconvertinto

currentdollars.ThislowerVSLnaturallyproducessmallerestimatesofthebenefitsofdistancing.With

ageadjustment,thetotalsocialbenefitsare$2.4trillion,andwithoutageadjustmenttheyare$6.2

trillion.ItisevidentthatassumptionsabouttheVSLplayanimportantroleinourexercise,butevenat

thelowerendsocialdistancingstillproducesbenefitsofseveraltrilliondollars.

III. InterpretationandConclusions

Inthispaper,wemonetizeonebenefitofsocialdistancingpolicies:alowerchanceofdyingfromCOVID-

19.BuildingonFergusonetal.,weshowthatamoderatesocialdistancingscenario,implemented

nationwide,isprojectedtosave1.76millionlivesintheUnitedStates,including0.63millionpurelyfrom

shortagesofhospitalICUbeds.ApplyingestimatesoftheVSLbasedoneconomictheoryandpeggedto

theUSgovernmentVSL,thepaperfindsthatAmericanswouldbewillingtopayapproximately$8trillion

forthisreductioninmortalityrisk.Putanotherway,theestimatedbenefitsofthismitigationsocial

distancingscenarioareroughly$8trillion.

Itisworthtakingamomenttocontextualizethisfinding.$8trillionisoverone-thirdofUSGDPand

largerthantheentireannualfederalbudget.Putanotherway,thebenefitsofsocialdistancingare

roughlyequaltocurrentmedianhouseholdincomeof$60,000.Whetherinregulartimesorduringa

pandemic,itisdifficulttothinkofanyinterventionwithsuchlargepotentialbenefitstoAmerican

citizens.Importantly,whilewemeasurebenefitsofdistancingindollars,theyreflectthehighvalue

Americansplaceonsmallreductionsintheirchanceofdeath–includingconsumption,leisure,timewith

family,andotheraspectsoflifenoteasilymonetized.

Itislikelythatthe$8trillionfigureisanunderestimateofsocialdistancing’sbenefitsbecauseitmisses

severalotherchannels.Forexample,theanalysisdoesnotaccountforthereductioninuncertainty

aroundthemortalityimpactsofCOVID-19,andvaluingitinwaysthatreflectmeasuredriskaversion

wouldcertainlyincreasethebenefits.Thereisalsothepotentialforsocialdistancingtoreducetherates

ofnon-fatalsicknessexperiencedbythepopulation,althoughthisultimatelydependsontheimpactson

14

Consistentwithexistingliterature(e.g.,Carletonetal.2019),weuseanelasticityoftheVSLwithrespectto

incomeofunitytoadjusttheAshenfelterandGreenstone(2020)VSLtothepresent.

17

longruninfectionrates(Yangetal.2020).Almond(2006)isanimportantdatapoint,becauseit

documentssubstantiallong-rundamagesfrominuteroexposuretothe1918influenzapandemic.

Further,itseemsreasonabletopresumethatsocialdistancingwillincreasethequalityofcarefornon-

COVID-19medicalproblemsbyreducingthestrainonmedicalproviders,facilities,andsupplies.Finally,

itseemsplausiblethatthechangesinmortalityratesbeingconsideredhereare“non-marginal”;the

availableevidencesuggeststhattheVSLisincreasingfornon-marginalchangesinfatalityrisk,meaning

thattheanalysisshouldusealargerVSL(Greenbergetal.2020).

Whileitistemptingtoundertakeafullcost-benefitanalysisofsocialdistancing,thiswouldrequire

reliableestimatesofitssubstantialcosts.Weareunawareofcomprehensiveestimatesofthesecosts

andtheirdevelopmentisbeyondthescopeofouranalysis,sothepapercannotgofurtherthan

developinganestimateofthegrossbenefitsofsocialdistancing.

Finally,weareundoubtedlyintheearlydaysoflearningaboutCOVID-19andthepotentialpolicyand

societalresponses.Thispaper’sbroadestfindingisthatithasdevelopedamethodtoestimatethe

monetarybenefitsofsocialdistancingandotherpolicyresponsestoCOVID-19astheyemerge.

18

References

1. Almond,D.2006.Isthe1918InfluenzaPandemicOver?Long-TermEffectsofInUteroInfluenza

ExposureinthePost-1940U.S.Population.JournalofPoliticalEconomy,114(4),672-

712.

2. Ashenfelter,O.andGreenstone,M.,2004.UsingMandatedSpeedLimitstoMeasuretheValue

ofaStatisticalLife.JournalofPoliticalEconomy,112(S1),S226-S267.

3. Axelrod,Jim.March2,2020.“Coronavirusmayinfectupto70%ofworld’spopulation,expert

warns,”CBSNews.

4. Axelrod,Carleton,T.,Delgado,M.,Greenstone,M.,Houser,T.,Hsiang,S.,Hultgren,A.,Jina,A.,

Kopp,R.E.,McCusker,K.,Nath,I.andRising,J.,2018.Valuingtheglobalmortality

consequencesofclimatechangeaccountingforadaptationcostsandbenefits.

5. Ferguson,NeilM.,etal.March16,2020."Impactofnon-pharmaceuticalinterventions(NPIs)to

reduceCOVID-19mortalityandhealthcaredemand."London:ImperialCollegeCOVID-

19ResponseTeam.

6. Fink,Sheri.March13,2020.“Worst-CaseEstimatesforU.S.CoronavirusDeaths,”TheNew

YorkTimes.

7. Glanz,James.March20,2020.“CoronavirusCouldOverwhelmUSWithoutUrgentAction,

EstimatesSay,”TheNewYorkTimes.

8. Greenberg,Kyle,MichaelGreenstone,StephenP.Ryan,andMichaelYankovich.2020.

“TheValueofStatisticalLife:EvidencefromMilitaryRetentionIncentivesand

Occupation-SpecificMortality.”Mimeograph.

9. Hatzius,Jan,etal.March20,2020.“USDaily:ASuddenStopfortheUSEconomy,”Goldman

Sachs.

10. Hilsenrath,Jon,andArmour,Stephanie.March23,2020.“AsEconomicTollMounts,Nation

PondersTrade-Offs,”TheWallStreetJournal.

11. Mizumoto,Kenji,andChowell,Gerardo.2020.“EstimatingRiskforDeathfrom2019Novel

CoronavirusDisease,China,January-February2020,”Emerginginfectious

diseases,26(6).

12. Murphy,K.M.,andTopel,R.H.2006.“Thevalueofhealthandlongevity,”JournalofPolitical

Economy,114(5),871-904.

13. OfficeofManagementandBudget.2003.“CircularA-4.”

14. Pancevski,Bojan.March22,2020.“Covid-19DeathsinGermanyFarBelowRatesinOther

Countries,”TheWallStreetJournal.

15. Ramsey,Lydia.March6,2020.“OneslideinaleakedpresentationforUShospitalsrevealsthat

19

they'repreparingformillionsofhospitalizationsastheoutbreakunfolds,”Business

Insider.

16. Sanger-Katz,Margot,Kliff,Sarah,andParlapiano,Alicia.March17,2020.“ThesePlacesCould

RunOutofHospitalBedsasCoronavirusSpreads,”TheNewYorkTimes.

17. Thaler,R.andRosen,S.,1976.Thevalueofsavingalife:evidencefromthelabormarket.

InHouseholdProductionandConsumption(pp.265-302).NBER.

18. Tsai,Thomas,Jacobson,Benjamin,andJha,Ashish.March17,2020.“AmericanHospital

CapacityandProjectedNeedforCOVID-19PatientCare,”HealthAffairs.

19. U.S.CentersforDiseaseControlandPrevention.March18,2020.“SevereOutcomes

AmongPatientswithCoronavirusDisease2019(COVID-19)—UnitedStates,February

12–March16,2020,”MorbidityandMortalityWeeklyReport,69.

20. U.S.EnvironmentalProtectionAgency.2015.“RegulatoryImpactAnalysisfortheClean

PowerPlanFinalRule.”

21. Thunstrom,Linda,Newbold,StephenC.,Finnoff,David,Ashworth,Madison,andShogren,Jason

F.2020.“TheBenefitsandCostsofFlatteningtheCurveforCOVID-19.”

22. Verity,Robert,etal.2020."EstimatesoftheseverityofCOVID-19disease,"medRxiv.

23. Viscusi,W.K.,andAldy,J.E.2003.“Thevalueofastatisticallife:acriticalreviewofmarket

estimatesthroughouttheworld,”Journalofriskanduncertainty,27(1),5-76.

24. Yang,Xiaobo,etal.2020.“ClinicalcourseandoutcomesofcriticallyillpatientswithSARS-

CoV-2pneumoniainWuhan,China:asingle-centered,retrospective,observational

study,”TheLancetRespiratoryMedicine.