In the midst of an exponentially rising global coronavirus pandemic, the Trump administration—after first denying the severity of the crisis and then reacting too slowly and haphazardly—remains eager to relax measures that have belatedly been put in place to limit its effects.
The rationale for the administration’s stance is purported to be purely economic, based on a claim that the economic consequences of social distancing and other life-saving measures are just too high. But like so many of the claims this administration makes, it is false. Evidence overwhelmingly suggests that our economy would be much better off if we take strong measures to limit spread of the virus.
COVID-19 has the potential to harm many people. The virus is highly contagious and has a significant mortality rate. A surge in the numbers of those seriously affected is already overloading hospitals in hard-hit areas, leading to preventable deaths and making it difficult for the U.S. health system to provide care for non-COVID-19 patients.
Even though there is currently no effective treatment or vaccine, nonpharmaceutical interventions (NPIs) can reduce the effects of the pandemic. Prompt adoption and continued maintenance of NPIs—such as social distancing, isolating cases, and requiring the use of protective gear—can slow transmission, limit mortality, and buy time to shore up the hospital system and find a vaccine. As a nation, we clearly must pursue these actions.
The pandemic will bring economic disruptions whether or not NPIs are put in place, and the administration’s failure to prepare and aggressively respond to the crisis means those disruptions will be vast. While the virus circulates without a remedy, some work will be too dangerous to perform. There will be decreased demand for travel, leisure, and other activities that increase person-to-person exposure. In other words, the economy will slow because of decreases in both supply and demand.
But there is currently a claim that the administration and its allies are advancing that argues the economic cost of keeping NPIs in place is too great. They claim that too much income will be lost to justify the measures that will save lives. They say that it is time to significantly relax or remove the NPIs that have only recently been put in place but haven’t yet slowed the spread of the virus enough to warrant relaxation of these measures.
These claims are factually wrong and threaten both our physical and economic health. Evidence from the 1918-1920 influenza pandemic in the United States shows that those cities that put NPIs in place more swiftly and for longer periods both lowered mortality and did better economically in the intermediate term.
Looking at the economic effects of NPIs at the city level, a recent statistical analysis concludes that:
Our analysis yields two main insights. First, we find that areas that were more severely affected by the 1918 Flu Pandemic see a sharp and persistent decline in real economic activity. Second, we find that early and extensive NPIs have no adverse effect on local economic outcomes. On the contrary, cities that intervened earlier and more aggressively experience a relative increase in real economic activity after the pandemic. Altogether, our findings suggest that pandemics can have substantial economic costs, and NPIs can have economic merits, beyond lowering mortality.
That is, careful analysis of available data show that the presumed tradeoff between swift and effective NPIs and economic growth doesn’t exist. In fact, economic outcomes are better when NPIs that reduce mortality are used quickly and not abandoned prematurely.
Many prominent economists have reached similar conclusions. When a panel of economists were asked as part of a University of Chicago survey to evaluate the statement “[a]bandoning severe lockdowns at a time when the likelihood of a resurgence in infections remains high will lead to greater total economic damage than sustaining the lockdowns to eliminate the resurgence risk,” 57 percent of the panel strongly agreed, 32 percent agreed, 11 percent were uncertain, and none disagreed.
Moreover, if we abandon NPIs too quickly, we can expect additional waves of infection from this highly contagious virus. This will inflict needless human suffering, prolong the epidemic, and generate needless economic loss. Beyond the mounting human toll, many people will likely panic because of hoarding, price gouging, and unpredictable drops in economic activity. Self-preserving reductions in work and consumption will inevitably follow.
The administration has advanced another justification for rapid relaxation of preventative measures: asserting that declining economic activity will in itself increase mortality. Again, the statistical evidence does not support that claim. Mortality seems to actually fall during severe economic downturns. Moreover, any economic cost associated with a massive downturn occurs over longer periods of time and depends on the size of the economic downturn. Using the power of the purse, Congress and the administration can mitigate the economic and human costs from the interventions that are needed to address the much more acute threat of the coronavirus.
In short, the administration’s claims about the costs of NPIs are wrong, and the human cost of not controlling this epidemic is potentially large. There is no rational reason to cease measures that will help control the spread of this disease.
Marc Jarsulic is a senior fellow and the chief economist at the Center for American Progress. Michael Madowitz is an economist at the Center. Christian Weller is a professor of public policy at the University of Massachusetts Boston and senior fellow at the Center.
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