Exiting lockdown means facing up to how we value lives
LIFE is extremely valuable but are some lives more valuable than others? Should life be saved at “all costs”? Value is a concept that has many dimensions: financial but also emotional.
Assigning a financial value to a life appears cynical, yet it is justified by the fact that public funds are normally not unlimited. Hence, if a government spends €100m now to save lives, that money will not be available to finance another project that could also save other lives. So, for governments, it is morally imperative to compare the number of lives saved in both scenarios to maximise the use of public spending. More simply put, governments need to benchmark their investments based on the value of a life.
Yet those calculations do not appear to have been made in the case of Covid-19.
How do economists calculate the financial value of a life?
To determine the price of life, two methods are traditionally used. The first is to estimate the loss to society from the death of an individual. Once dead, an individual no longer works and therefore no longer creates wealth for society.
The method is quite crude and cynical. In the case of the Covid-19 crisis, it is not really applicable as 90pc of the people likely to die of Covid are older than 65, which corresponds to the retirement age.
Using this method may lead us to conclude that their lives were valueless. This would be factually and emotionally incorrect as nobody actually believes that a retired person’s life is worthless.
The second option is more common and more palatable from an ethical standpoint. It starts from the amount that citizens are ready to pay to reduce their risk of death. It is known as the “value of statistical life” and serves as the basis for high-stakes decisions that involve trade-offs between public safety and economic cost.
That figure varies greatly. It is around $10m in the USA, about €3m in some European countries. But is losing life at 20 or at 90 the same? Emotionally, it is probably more horrible to lose a twenty-year-old son than a ninetyyear-old grandmother.
Similarly, to adjust for the number of years an individual could live, economists calculate the Value of Life Years (VOLY). For Europe, estimates vary greatly but a reasonable estimate would be around €120,000.
The value of a Covid-19 life
In order to know the value of a saved Covid-19 life, we would need a few figures.
First we need the cost of the “investment”. In this case, this equates to the cost of confinement. According to the ESRI, Ireland will experience a real GDP loss of 12.4pc for 2020 – equating to around €45bn.
However, can this loss of GDP be fully attributed to the lockdown? In truth, there are too many variables to come up with an agreed estimate. All we know is that the cost will be gigantic.
Second, we need to estimate the number of lives saved or, to be exact, the number of years of life lost (YLL) if the lockdown had not been implemented. For Ireland, there is no estimate of the overall number of lives saved. All we may guess is that the years of life lost due to Covid may be relatively small at an individual level, as the average age of the people dying of Covid-19 is equal to the current life expectancy in Ireland – 82 years old.
So to summarise, given the huge costs implied by the confinement and the relatively low number of years of life gained per saved individual, the ultimate cost per Covid life saved should be considerably higher than the €120,000 per year traditionally used.
In addition to those direct financial costs considered so far in the estimation, confinement comprises other additional costs for society such as the education deficit for our children and restriction to freedom of movement.
The lockdown also threatens lives in the Third World and food insecurity is on course to affect 300 million people.
Finally, there is possibly a very dangerous domino effect of the lockdown. Economic crisis leads to malnutrition consequences, immigration effects, “populist” reactions, and eventually some geopolitical effects. There may be some indirect benefits of the confinement – a reduction in pollution or increased quality of life for some – but the net costs and risks associated with the lockdown are colossal. Why are Covid lives so valuable? Why so many sacrifices to save lives?
This cost-benefit analysis never took place and we could assume that even if it had, the public opinion may have still asked for lives to be saved now at “all costs”. Why?
First of all, there is a timing issue. Lives saved through the lockdown were saved today when the true financial cost and the economic devastation triggered by the lockdown will be felt tomorrow. As this will become clearer in the next few months, the support for further lockdown measures may diminish.
Second, as stated earlier, value has a financial but also emotional dimension. There is also actual value and perceived value. In this case, the emotional and perceived value of a Covid life has been hyper-inflated.
In Ireland, about 32,000 people die every year. The deceased have approximately the same age profile as the Covid victims. They die of cancer, the flu, heart attacks, car accidents, old age etc. They die with the complete indifference of the media.
Contrast this with the daily coverage of the 1,700 Covid deaths over the last three months – daily counts, reports on TV, radio, newspapers with sometimes a dedicated section such as “Lives lost to Covid”, and ministerial condolences.
Marketers understand that perceived value affects willingness to pay and they spend millions in advertising to influence our perception of their brand. Similarly, our perceived value of Covid life has been influenced by the fact that Covid-19 has been the single most important news item for the last four months.
Time will tell whether the actions taken in the emergency of the pandemic were wise. Personally, I am concerned that the billions lost to confinement will not be available to tackle the existential threats to the future of our children such as wealth inequality and climate change. Young lives matter as well.