HOW MUCH COVID RISK SHOULD WE COVER?
Governments are restricting peoples’ activities and paying to mitigate the effects of Covid 19. Suppose that these measures halve the infection rate, so that admittance to ICU and dying there is reduced from 0.02 % of the population to 0.01%. These numbers are guesstimates. At this stage of the analysis the aim is present a framework for comparison.
In the restricted situation, individuals could be quarantined at a personal cost of $10,000.
Unrestricted, there could be voluntary quarantine with no additional cost.
Loss of earnings would be the same in both situations, with double the frequency unrestricted.
ICU treatment cost until death of $100,000 would incur double the frequency unrestricted.
The government role under restriction would be much more active and expensive. Keeping the population from workplaces and amenities would be expensive, especially when the total cost is divided by the low number of ICU cases.
These numbers show that a strategy of restrictions imposes a much higher cost to government, while withholding restrictions probably increases the risk to individuals, here shown as doubling their hospital ICU admittances. The expected value of costs to individuals could be somewhat higher without restrictions, but the community would benefit greatly by relinquishing pandemic relief restrictions. Individuals could volunteer to be unrestricted with higher earnings (not shown here).
Financial outcomes should be considered for these and other strategy alternatives. Including economic outcomes is essential when the amounts are large and government debt will have to be paid off. An accusation of callousness in making economic estimates of life or death is easily rebutted: it is more callous to make not estimates.
Ayn Rand, a philosopher, said:
Run for your life from any man who tells you that money is evil. That sentence is the leper’s bell of an approaching looter.
Cynically, restriction is an expensive strategy that provides employment and welfare benefits to many people, far exceeding the cost of unrestriction.
It is time to count the cost of restriction.
My other writing on Covid-19 is at https://martinknox.com
|COSTS OF COVID RESTRICTION STRATEGIES||RESTRICTED||UNRESTRICTED|
|Hospital ICU admittance probability death||0.010||0.020|
|Victim discomfort loss of amenity, quarantine||$10,000 x 0.01||Nil|
|Victim loss of earnings, assuming death||$500,000 x 0.01||$500,000 x 0.02|
|ICU treatment cost||$100,000 x 0.01||$100,000 x 0.02|
|Pandemic regulatory scheme admin and police per ICU case||$50,000 x 1.00||Nil|
|Loss of community earnings and amenity, plus earnings support, per ICU case.||$200,000 x 1.00||Nil|
|Expected value of costs (Subtotal X probability)||$256,100||$12,000|
Posted on January 27, 2021, in COVID-19, Government and tagged Alternatives, Costs, Economic outcomes, Expected values, Restrictions, Risks, Strategies. Bookmark the permalink. Comments Off on HOW MUCH COVID RISK SHOULD WE COVER?.