Our Liberties Have Value Too

Ryan BourneWhen thinking through the wisdom of COVID-19 lockdowns and orders, commentators often compare the value of lives saved against some loss of economic output (GDP) to determine whether the measure was cost ‐​effective. But this is an apples vs. oranges comparison.The value of a statistical life is some calculation of what the average U.S. citizen is willing to pay for a reduction in their probability of dying. Suppose I ’m willing to pay $20,000 to avoid a 0.2 percent chance of death. The value of a statistical life for me is thus $20,000/0.2 percent = $10 million per statistical life saved. If this number were applied across the population, then a measure that prevented 500,000 deaths would create $5 trillion in value.But note carefully what this represents: it ’s not about output or spending. The value we place on our lives through our choices represents our expectation of the pleasure we’d get from a full spectrum of things we ’d miss if we died. Not just the consumption we’d forego, in other words, but the value we place on time with friends and family, travel experiences, enjoying all the new non‐​market leisure activities we can engage in, and more. The value of a statistical life used to calculate a dollar measure of the value of lives saved in a lockdown is therefore aneconomic welfaremeasure, not a GDP measure.So the correct comparison when weighing up the wisdom of a lockdown...
Source: Cato-at-liberty - Category: American Health Authors: Source Type: blogs