Cuomo is Reopening Dollars-Per-Life Analysis; Realistic Cost-Benefit Analysis Regarding Coronavirus Deaths In The US Yields Controversial Results
WASHINGTON, D.C. (May 5, 2020) -Today, in his daily report, New York State Governor Andrew Cuomo recognized that any relaxation of restrictions imposed because of the coronavirus will cost lives, and wondered how anyone can balance lives lost verses economic gain.
In a rare interview with Harvard Business School that was published online earlier this month, (it has since been taken down) value investor Seth Klarman spoke at length about his investment process, philosophy and the changes value investors have had to overcome during the past decade. Klarman’s hedge fund, the Boston-based Baupost has one of Read More
The answer is not complicated or philosophical, since any adoption of new regulations, or changes (including relaxation) in existing ones, usually requires by law what is termed cost-benefit analysis, notes public interest law professor John Banzhaf, who teaches it in his classes in Torts and Administrative Law.
Thus, in deciding whether or not to impose or increase a restriction, decision makers are often required by law to make estimates as to the number of lives which would be saved, and compare that figure with the increase in costs it would impose.
Similarly, before eliminating or reducing a restriction, regulators must determine how many additional lives would be lost, and compare that with the economic benefit of relaxing the rule.
Not surprisingly, regulators may choose to place different values or costs on a human life. For example, the Environmental Protection Agency [EPA] valued each human life at about $9.5 million in deciding whether to clean up a toxic wast site.
But virtually all would agree than an individual human life should be valued at least at about $10 million.
Now a new projection cited by the Governor shows that the number of coronavirus deaths in the U.S. is expected to nearly double through August as states continue to ease COVID-related restrictions - from the current 68,934 to 135,000, up from an earlier projection of 72,433 deaths.
Using the latter figure, this estimate suggests that relaxing restrictions will cost over 60,000 American lives in a short period of time. If each life is valued at $10 million, the economic cost of taking those lives would be about $600 billion.
This dollar figure for lives lost can then be balanced against the actual or projected economic gain to see if the relaxations are "worth it," at least in strictly economic terms.
Of course, notes Banzhaf, a better and more complete calculation would look not only at the number and costs of deaths, but also at the increased medical costs, loss of productivity among workers, and other factors among those who survive.
So, says Banzhaf, although the idea of balancing deaths v dollars may be repugnant to many - and we often proclaim that life is precious, and that anything which prevents even one unnecessary death is worth it - bureaucrats perform cost benefit calculations virtually every day; deciding, for example, whether to relax restrictions on safety standards on drugs or airplanes or children's toys in order to save money.
But sometimes cost-ben can be overridden, says Banzhaf, nothing how he and his law students were able to persuade the federal government to adopt safety standards for school buses, even though the costs might exceed the value of the children protected.
The sound of the keypunches on the adding machines have drowned out the anguished cries of the injured children, he argued, and its worked.