Calculating the benefits of lockdowns

Lockdowns need to be guided by trade-offs between harsh and mild policies

July 19, 2021 12:15 am | Updated 12:22 am IST

NEW DELHI , 01/07/2021: Migrant workers with family arrives at ISBT Delhi from Jhansi on way to Panipat in search of work , in New Delhi on Thursday Photo: SUSHIL KUMAR VERMA / The Hindu

NEW DELHI , 01/07/2021: Migrant workers with family arrives at ISBT Delhi from Jhansi on way to Panipat in search of work , in New Delhi on Thursday Photo: SUSHIL KUMAR VERMA / The Hindu

Data show that as of now 26.2% of the world population has received at least one dose of a COVID-19 vaccine. Of them, only 1% live in low-income countries. By contrast, the richer nations, such as the U.S., Canada, Germany and Britain, registered above 50% vaccination by July 17. For India, the percentage of the adult population that has received at least one dose stands at 34.1% as of July 18. How long it will take to eliminate the inequality in the administration of vaccines is shrouded in mystery. Till that happens, long or short lockdowns from time to time will remain the only defence against the virus. Several researchers have studied the effectiveness of the lockdowns in economic terms. It is important, therefore, to take stock of the issues that have materialised in this context.

A trilemma

TheEconomist has come up with a paradox of sorts in an article concerning the trade-off between lives and livelihoods. The article is rooted in the COVID-19 disaster and questions the practicability or even desirability of simultaneously protecting lives and livelihoods with the aid of lockdowns. The discipline of economics, or its dominant school at least, is intimately linked to trade-offs and its fundamental teaching is that one cannot have one’s cake and eat it too. During pandemic-driven lockdowns, this boils down not to a dilemma but a trilemma perhaps. Draconian lockdowns help you to keep on living, but they prevent you from earning a living. With incomes drying up, essential expenditures such as those on food, health and education cannot be sustained, implying that life cannot be lived. Extreme lockdown policies imply that you cannot quite have your life and live it too — at least not meaningfully.


The vicious trilemma needs to be torn down if humanity is to be preserved. This calls for a careful assessment of the severity of lockdowns, their costs, and the resulting gains they hopefully lead to in terms of lives saved. If the expected benefit of a policy falls short of cost, economists will reject it and suggest the adoption of alternative policies, involving an excess of benefits over costs. In other words, one needs to understand the nature of the trade-off. Is the suffering caused by a lockdown sufficiently compensated for in terms of lives saved?

The question is probably less simple than it appears to be at first sight. The New York Governor, Andrew Cuomo, said, “To me, I say the cost of a human life is priceless.” In technical economic language, this amounts to asserting that the (monetary) price of a human life is infinitely high. If this be so, saving a life calls for endless sacrifice. If such sacrifice assumes the form of extreme lockdowns, then the line of argument precipitates the trilemma all over again. It is counterproductive to start off with infinity. Clearly, the Governor had failed to come up with a meaningful definition of the value of a human life.

Let us push aside this question for now and estimate instead the cost of a lockdown. Some researchers believe this can be measured by the value of lost GDP. The Economist quotes the case of two European countries — France and Italy. Both imposed heavy lockdowns and suffered 3% shrinkage in GDP. Not that people did not die, but the 3% shrinkage cost of keeping a number of people alive was not insignificant. Similarly, Finland, which experienced a negligible rise in the mortality rate, experienced a 1% fall in per capita GDP. On the other hand, Lithuania performed miserably on its death rate front, but its GDP per person is expected to rise by 2%. The Economist points out yet another horrifying estimate of the cost of saving COVID-19-infected lives. Research, it says, has established that for every infected person cured in poorer countries, 1.76 children die on account of a fall in the quality of life, which is not enviably high even in the absence of lockdowns. This is worse than the trilemma scenario outlined earlier.


There are other costs too that should not be overlooked. The horrors faced by migrant labourers in India will continue to jolt our collective memory. One wonders also if life expectancy itself has not been adversely affected in poor as well as emerging economies. Children are held back from school. One cannot rule out the emergence of child labour either. If and when the pandemic takes leave, researchers will surely address the child labour question in India caught in the iron grip of COVID-19.

The benefits of a lockdown, seen in isolation, do not appear to be all that clear. Lockdowns — severe or mild — prevent the spread of the disease so long as they last. Mortality falls perhaps, only to resurface once the lockdown is lifted. For the U.S., a researcher has come up with the disappointing conclusion that there is no lifesaving impact of lockdowns at all.

How, then, should the benefit of a lockdown be computed? However absurd this may sound, the question takes us back to the value of a human life, which the New York Governor had calculated more emotionally than he should have only to end up in a paradox. Interestingly enough, a good deal of theoretical and empirical research has been done by economists on this issue for the past 50 years at least. The pandemic has merely generated new interest in the subject.

The value of a human life

There are many different ways in which the value of a human life may be calculated. A straightforward method is to study the life insurance premiums people are willing to pay to ensure proper treatment if afflicted by fatal diseases. In rich societies, large amounts will be paid. This could well be used to compute the social benefits of lockdowns, which will probably have higher values in rich societies than in poor societies where few are covered by life insurance. Further, all lives cannot command the same value. It is not criminal to ask if an aged person’s life has the same value as that of a younger person. This means that a person’s own valuation of his life may well differ from the way policymakers are likely to value it. Consequently, the social benefit of lockdowns continues to be a puzzle.

Also read | Localised lockdowns already hitting economic activities: Report

This is not to suggest that lockdowns ought to be avoided. Quite clearly, they are unavoidable for now, but they need to be carefully designed, guided by trade-offs between harsh and mild policies. Or else, the damaged economies of the world will not revive too soon.

Dipankar Dasgupta is former professor of Economics, Indian Statistical Institute

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