The costs of the shutdown are overestimated – they’re outweighed by its $1 trillion benefit

Abstract

As Australia begins to relax its COVID-19 restrictions there is understandable debate about how quickly that should proceed, and whether lockdowns even made sense in Australia in the first place. The sceptics arguing for more rapid relaxation of containment measures point to the economic costs of lockdowns and appeal to the cold calculus of cost-benefit analysis to conclude that the lives saved by lockdowns don’t justify the economic costs incurred to do so. Their numbers don’t stack up. To be able to weigh the value of a life against the economic costs of forgone output from lost jobs and business closures, requires placing a dollar value on one person’s life. This number is called the v..