Relaxing with caution

A key challenge is to know the magnitude of the risks and trade-offs involved in maintaining lockdowns

The federal government is currently relaxing lockdowns. Does it make sense to relax nationwide lockdowns? On the one hand is the argument that infection rates of Covid-19 are on the rise, with potentially devastating effects on a health system not prepared to handle increased hospitalisations leading to an exponential increase in expected number of deaths. On the other hand, one could argue that blanket national lockdowns are costly not only in terms of lost income, unemployment and food insecurity, but also in terms of the indirect costs that include physical and mental illnesses and lives lost due to reduced healthcare access and socialisation, excess fertility due to reduced contraceptive availability, expected increase in domestic violence, as well as freedoms to do things that people have good cause to be engaged in and to be what they aspire to.

Furthermore, given the central importance of social determinants of health, the average Pakistani’s ability to pay for medical bills related to the disease may be compromised with income restricted due to lockdowns. In that sense, it may be argued that there is less of a tradeoff between income and lives saved than is typically understood.

A key challenge here is to know the magnitude of the risks and tradeoffs involved so that one can compare the expected benefits and costs of maintaining lockdowns. A recent study by Yale economists estimates that the costs of not doing anything will be as high as fifty to sixty per cent of annual GDP of Pakistan. Strict lockdowns could lower such costs. However, the relative gains of very aggressive policies may be much smaller than that in richer countries such as the US. This is partly because countries like the US have a much older population than Pakistan, but also because richer people have greater ability to withstand lockdowns, not having to worry about basic food and shelter needs.

A recent study by Yale economists estimates that the costs of not doing anything will be as high as fifty to sixty per cent of annual GDP of Pakistan. Strict lockdowns can lower such costs. 

To estimate such benefits and costs, economists typically use the value of a statistical life (VSL) — what individuals would be willing to pay for a small reduction in their own mortality risk that would save one life in a large population. Estimates vary, but a 2017 global study estimated VSL for Pakistan to be around $0.248 million. It is important to understand that the tradeoff measured by VSL is not between saving lives and improving the economy as such — it is the tradeoff between two things that people may themselves value: health and other aspects of their lives, including food insecurity from lost daily work and income for many.

The monetary tag is less important than the fact that VSL provides a way for us to compare across alternate ends valued by people. However, one concern with using VSL estimates from prior work is that it assumes people in Pakistan are able to know the risks involved. In current times with high uncertainties, it’s questionable to what extent individuals are able to make informed judgments about risks involved. Moreover, VSL estimates may be more reflective of the dire poverty faced by Pakistanis making them take high risks in terms of their own lives just to meet other basic needs of food and shelter.

It may be perhaps helpful to give an analogy for Covid-19 and the problem of devising policies to reduce mortality risks induced by externalities with irresponsible driving on roads. One the one hand, if there were no traffic and road regulations at all, so that risky drivers could lead to traffic congestions and high mortality risks, traffic fatalities would burden ICUs in every hospital. One could justify such a policy in the name of economic growth and survival of the economy. At the other extreme we could justify the costs of shutting down all roads and highways in the name of saving lives. The real policy work is on the intermediate solutions that focus on creating infrastructure, educating drivers, training workforce and set of institutions that regulate traffic on roads. No matter how daunting such task may seem it is the least costly solution to the problem.

A critical step to help us devise such institutions for Covid-19 will depend on data collection and real time monitoring and evaluation of what works and what doesn’t so that we can have a better understanding of the risks involved and the effectiveness of alternate policies. The Centre for Economic Research in Pakistan’s (CERP) current recommendation along similar lines are to be welcomed and are a step in the right direction.

There are certain tools we already know that need to be part of the regulatory toolkit to regulate the congestion in our current health system in the absence of blanket lockdowns. These include educating people aggressively about the value of social distancing in their own capacities, investing in our basic healthcare infrastructure, including telemedicine, and mandating PPEs.

Perhaps one of the most important tools is the policy of nationwide testing. No one should be free to socialise unless they have been tested. Those who are suspect or at high risk should be only allowed to re-enter society after serology-based test can show enough presence of protective antibodies against Covid-19. Whereas those who are low-risk need only have an RT-PCR test to confirm healthy status. As proposed in an earlier op-ed, group testing is an efficient solution in this regard and could save on limitations in current testing capacity. At the very least, screening, testing, tracing and quarantining is necessary so that we can isolate the most vulnerable individuals (e.g. the elderly and those with preexisting health conditions) and sub-regions that are at high risk and have targeted lockdowns. Relaxing lockdowns without such protective measures is bound to lead to not only large congestion externalities on our health system and lost lives, but also lost economic output associated with all the lost human capital.

The writer is a global health economist who is currently an Assistant Professor at the Department of Economics at the University of Georgia, USA

Coronavirus: Relaxing lockdown with caution