On the Caplan cost-benefit test of lockdown

Marginal Revolution linked to an interesting paper today.

These two lines in the abstract was particularly interesting:

Using a cost/benefit method proposed by Professor Bryan Caplan, and using two extreme assumptions of lockdown effectiveness, the cost/benefit ratio of lockdowns in Canada, in terms of life-years saved, is between 3.6–282. That is, it is possible that lockdown will go down as one of the greatest peacetime policy failures in Canada’s history.

So the Caplan ‘test’ is described in this blog post.

Taking quality of life into account, how many life-years has the reaction to COVID destroyed?  To see what I’m getting at, ask yourself: “Suppose you could either live a year of life in the COVID era, or X months under normal conditions.  What’s the value of X?”  Given the enormous social disruption and dire social isolation that most people have endured, X=10 months seems like a conservative estimate.

With a little multiplication Caplan estimates that the cost of Covid prevention was about 15 times great than the benefits.

Douglas Allen replicates that analysis for Canada.

As of March 2021 the pandemic has lasted one year. That means that the average Canadian has lost two months of normal life. The population of Canada is about 37.7 million people, which means that 6.3 million years of life have been lost due to lockdown.

The average age of reported Covid-19 deaths in Canada is about 80.47 In Canada an average 80 year old has a life expectancy of 9.79 years. This means that the 6.3 million years of lost life is equivalent to the deaths of 643,513 80 year olds. As of March 22, 2021 Canada has had a total of 22,716 deaths due to Covid-19. That amounts to 222,389 lost years of life.

The question is, however, how many lost years of life would have resulted from Covid-19 deaths if there had been no lockdown? Consider two extremes:

a. Assume that the number of Covid-19 deaths would have been 10% higher had there been no lockdown. Then Canada would have experienced an additional 2,271 deaths, which means there would have been additional 22,333 years of lost life due to Covid-19 deaths. The benefit of lockdown, therefore, was the avoidance of this extra 22,333 years of lost life. However, the cost of lockdown, as noted, was 6,300,000 years of lost life. The cost/benefit ratio of lockdown is 282 = 6,300,000/22,333.

b. Assume that the initial ICL model forecasts were correct and without a lockdown Canada would have experienced 200,000 deaths. This would mean that Canada’s lockdown policies prevented 177,281 (200, 000 – 22,716) deaths. Under the same age and life expectancy assumptions lockdown prevented the loss of 1,735,580 life years. The cost/benefit ratio of lockdown is 3.6 = 6,300,000/1,735,580.

So let’s plug some Australian numbers into that calculation.

Let’s assume X = 10. The population of Australia = 25,693,059. The median age of Covid deaths in Australia is 86. Life expectancy for Australians in 2017 – 2019 was 81.31 for males, 85.27 for females, and 83.28 on average. Life expectancy for Australians aged 80 in 2020 was 9.87 years. Finally 910 Australians have died from Covid. (Of those, 820 deaths occurred in Victoria). Unfortunately, I’m going to have to use the life expectancy of an 80 year old instead of an 86 year old in the calculations. This is will bias the costs upwards. The age distribution of death is here – to the extent that people have died under the median age this under-estimates the costs.

So quickly calculating:

4,282,177 years of life have been lost – equivalent to the loss of 433,858 80-year old people. As of today, Australia has lost 910 people to Covid – that is 8,981.7 of actual years lost.

So we can do the plus 10% analysis – assume 1,000 people would have died from Covid. The cost-benefit ratio is in the thousands (4,821). Similarly if we assume a number based on the Imperial College London analysis (I don’t recall them producing an Australian number but I guestimate their equivalent figure for Australia would be about 130,000 people dying from Covid). That would produce a ratio cost-benefit ratio of 3.26.

But we can do a bit more than that. We can turn the analysis around. I estimate the cost-benefit analysis breaks even at 43,957 people dying. That figure is much smaller than the Imperial College London equivalent number. But that figure was a worst case scenario – and to be fair to them, it was advertised as such in their paper. It is, however, within the range of estimated deaths in a paper produced by  Warwick McKibbin and Roshen Fernando. In their scenario analysis they estimated deaths between 21,000 and 96,000 for Australia.

So, if Australian policy makers were following McKibbin and Fernando’s figures in March of 2020 then their policy ex ante is not unreasonable given the Caplan definition of costs (and the caveats to that definition that I haven’t yet spelled out).

The break-even point is 434,760 deaths in total and 433,858 deaths avoided.

But … and this is a huge ‘but’ …

One could argue that the Covid-19 lockdown policy was only wrong ex post. Hindsight is 20/20, and looking back is unfair. In March of 2020, faced with an unknown virus and expert advice that millions of people would die without lockdown and isolation, politicians and public health officials made the correct decision at the time.
Such an argument is reasonable for March of 2020, and even possibly for April 2020. However, as noted in the literature review, by late April it was already known that i) the empirical predictions of the SIRS based models were wrong, ii) that the models made a number of questionable assumptions, iii) that the deaths were highly skewed to the elderly, and iv) that the costs were large.

There was a lot of radical uncertainty in March and April of 2020. By May, however, that radical uncertainty had reduced substantially. I have been making this argument for a while – most recently here.

Now for the caveats.

This analysis only considers the number of years of lost life. A proper cost/benefit analysis would consider the value of these lost years. As noted above, the value of life is not constant across age. Since the life years lost to Covid-19 deaths were mostly among those older than 60, and since the years of lost life because of lockdown have mostly been among the young, adjusting the the above cost/benefit ratios for the value of life will make lockdown an even worse policy.

After all that – what is the bottom line?

The review of the literature suggests that Case (a) is closer to reality. If lock-down only had a marginal effect on deaths, then by cost/benefit standards, lockdown has been a public policy disaster.

I suspect the policy responses to Covid will be debated for decades. I have little doubt that the lockdown policy will come to be seen as having been an over-reaction. What happened in my view was that policy makers did not update their policy information and/or preferences after March and April of 2020. Why that is the case is an open question.  Perhaps they are just stupid (unlikely), too scared (perhaps), locked into some path dependency (perhaps), [insert hypotheses here].

Update: It turns out that the Imperial College London team did produce numbers for Australia (and most other countries too).

Depending upon the assumptions in the scenarios, they estimated a range from 6,882 through to 194,953 people dying from Covid. Let’s look at the worst case scenario – 194,953 would have died with an unmitigated response (i.e. not mandatory social distancing and no voluntary social distancing either). The cost-benefit ratio is then 2.24. Even in the very worst case the Australian lockdown cost twice as much as the benefits.

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43 Responses to On the Caplan cost-benefit test of lockdown

  1. Winston says:

    Lockdown has been a fabulous exercise in power. Governments love wielding power. The giddiness of government employees being able to feel they can successfully manage your life better than you can is intoxicating.

  2. Russell Rieck says:

    Imagine having a policy based on scientific analysis, and including the scientific approach of updating the analysis as new information is available.

    I suggest the policy was maintained due to arrogance, that policy could not be seen to be wrong, and elitism, they did not believe that the general population would understand the basis of the new decision. Both of which are still in place hence we continue to be threatened with more lockdowns if a single case is observed.

    Thanks for posting Sync. Hopefully this garner some coverage

  3. rickw says:

    Profoundly stupid people doing profoundly stupid things.

    The fact that it hadn’t been attempted before might be a clue that it’s a really shit idea.

    Only top of that the most similar approach previously taken was the deadly 1918 flue. Replete with masks and Doctors completely out of their depth (fatal dose of Aspirin anyone?).

  4. Dr Faustus says:

    What happened in my view was that policy makers did not update their policy information and/or preferences after March and April of 2020. Why that is the case is an open question.
    [insert hypotheses here].

    By April 2020 political responsibility for Australian policy making had been substantially handed to Chief Medical Officers.

    Hindsight tells us they pursued an ‘elimination’ strategy based on a public health toolkit, rather than an ‘overall benefit’ strategy based on cost-benefit analysis.

  5. Shane says:

    As Mark Twain said “its easier to fool people than convince them that they have been fooled”
    It was always about the vaccines rather than the virus.
    & we are still in the very initial stages of a monumental experimental genetic human trial….with total unknown consequences to most of us…. lots of talk about future immunological consequences dealing not just with blood clottingand placentas being targeted & even loads of internal production of prion like spike protein
    Recently saw a report where Fauci refused to be tested as he has no symptoms , & he takes about 3 to 4 times the average dose of vitD daily & well was he not supposedly vaccinated in public..maybe he just got the saline version?
    Just now the head of Pfizer has come out to say any immunity from his vax shot will only be temporary & will need to be redone on an annual basis.

  6. Baa Humbug says:

    Recall Sir Humphrey often saying “That’s a very courageous decision minister” to deter his minister from taking a particular decision.
    Once that wanker from Royal College came out with his overblown models (must have been carbon based), politicians were never going to have the courage to take control.
    This also explains why opposition parties didn’t take advantage of the situation.

    So my response to [insert hypotheses here] is COWARDICE.

  7. Frank says:

    Since the life years lost to Covid-19 deaths were mostly among those older than 60, and since the years of lost life because of lockdown have mostly been among the young, adjusting the the above cost/benefit ratios for the value of life will make lockdown an even worse policy.

    I can’t work this bit out. Does it mean that losing a year to lockdowns when you are 70 means that as a percentage of what you have left the loss is greater than for a young person, or does it somehow mean the opposite?

  8. Fair Shake says:

    What you fail to see in a that these decisions were made by public servants. They are a miserable lot and see no joy in their lives and assume everyone else must be the same. Hence they place zero value on their lives and others. Safety is the most important thing. ‘If we save just one life …blah blah ‘ life is priceless but it really has no value.
    Like Malcolm Turnbull appear in front of a media senate inquiry.

  9. Perfidious Albino says:

    If we keep going down the uniparty path of socialism there will be no forums to debate the efficacy or otherwise of Covid lockdowns – they will be declared wholly successful as ‘at least 1 life was saved’, any opinion to the contrary deemed ‘hate speech’, promulgated by ‘pandemic deniers’ of the far right. Do you really doubt this?

  10. Procrustes says:

    Good post Sinc.

    Of course the other policy response is to just abolish cost benefit analysis, which Biden has effectively done.

  11. egg_ says:

    Tards like Pyrmonter need to recalibrate their spreadsheets.

    Two words: Risk Management

    But Italy!!!11!

  12. egg_ says:

    Recall Sir Humphrey often saying “That’s a very courageous decision minister” to deter his minister from taking a particular decision.
    Once that wanker from Royal College came out with his overblown models (must have been carbon based), politicians were never going to have the courage to take control.
    This also explains why opposition parties didn’t take advantage of the situation.

    So my response to [insert hypotheses here] is COWARDICE.

    Whilst they had hard data from the Diamond Princess petri dish available.

  13. egg_ says:

    Lockdown has been a fabulous exercise in power. Governments love wielding power. The giddiness of government employees being able to feel they can successfully manage your life better than you can is intoxicating.

    NSW CHO Kerry Chant’s insane “Zigzag” approach to lockdowns, viz quarantine, was barking mad.

  14. C.L. says:

    Epic post.

    What happened in my view was that policy makers did not update their policy information and/or preferences after March and April of 2020. Why that is the case is an open question. Perhaps they are just stupid (unlikely), too scared (perhaps), locked into some path dependency (perhaps), [insert hypotheses here].

    Modelling can’t factor is such things as pride and politics, unfortunately. The hypothesis I would insert is that once governments trashed the economy they were all in. They couldn’t very well say oops a month later.

    The role of the media is also crucial. Pro-statist hysteria from the ABC, PBS and BBC was to be expected, of course. Likewise, from Big Tech. But even more potent was the daily obsession with melodrama, statistical bullshit and fear-mongering from supposedly ‘conservative’ press organs like The Australian and News Corp generally – plus all of the private networks. Throw in poll highs for all governments that were Doing Something – in addition to the global association of anti-lockdown with Donald Trump – and this Titanic wasn’t even going to be steered clear of the iceberg.

    But could it have been, political damage sustained notwithstanding?

    My view is yes, it could have been – post April 2020. It would have required political and communication skills of a high order but it was do-able. The politicians on the scene in the Hawke/Howard era could have done it. I’m not saying they too wouldn’t have been tempted by those Newspoll lollies but – if they were of a mind to – a Keating or a Costello could have stared down the crazy.

  15. bradd says:

    The more apt Sir Humphrey quote would be “Something must be done. This is something; therefore we must do it.”

    Two fundamental Morrison errors:
    – On day one, saying that he would follow the medical advice to the letter, thus ducking all responsibility as an elected leader.
    – Forming that unconstitutional ‘National Cabinet’, a group over which he had no power or authority.

  16. C.L. says:

    Needles to say, Morrison has none of the aforesaid political and communication skills – and no bedrock commitment to rationality or principle. He’s not a parliamentary island in that respect.

  17. Faye says:

    The COVID lockdowns, masks, ‘safe’ distancing and assembly bans were as planned.
    Joebama, Forty Four, and the world power brokers are proceeding as planned. It will get a lot worse when they control finance and get rid of borders. The brainwashed young will be ripe to take their place in the New World Order-Build Back Better-New World Order dystopia.

  18. Snoopy says:

    Remember when the Liberal Party was excited by ‘captive nations’?

  19. David Brewer says:

    But Sinc, you callled it yourself, correctly, right back on 2 March 2020:

    If you are elderly, and if you are immuno-compromised, there is need for (some) concern.

    The risks of Covid were already known to be orders of magnitude higher for old, sick people. It was obvious that the correct public policy response was to protect those people as well as possible while letting the other 90-95% of the population get on with their lives.

    I don’t buy the “radical uncertainty” argument. What happened was that the media pressed the fear button, and governments panicked, introducing extreme measures that did far more harm than good, as you and I and others could see would be the case at the time.

    Dunno why you are so modest…

  20. egg_ says:

    if they were of a mind to – a Keating or a Costello could have stared down the crazy.

    Fear is one of the most evil emotions.

    Humans naturally tend to overestimate the likelihood of dire hazards to the detriment of medium threats.
    The military probably have similar anecdotes.

  21. vlad says:

    Perhaps they are just stupid (unlikely)

    You don’t think ScoMo and DanAn are at bottom stupid?

    Maybe they have book smarts of a low-grade sort and/or rat cunning, but the common sense of someone who has run a successful small-to-medium business? No.

  22. Figures says:

    There was no uncertainty back in March last year.

    I knew with 100 per cent certainty that COVID was a hoax.

  23. Ozman says:

    egg_ says:
    April 22, 2021 at 7:08 pm

    Whilst they had hard data from the Diamond Princess petri dish available.

    Egg cracks it, like the diamond he is.
    Hard data’s too much for the soft-wattle roosters in Govt. They don’t crow. They cackle.

  24. Faye says:

    CORRECTION: The Great Reset/Build Back Better/New World Order

  25. Tel says:

    Obligatory link to a well known Australian economist saying much the same thing a year ago.

    I must admit I also had mentally formed an association between Professor Gigi Foster and the ABC equating one with the other and in retrospect that was very unfair.

    Well done of Professor Bryan Caplan to be willing to stand up to the same lynch mob which inevitably must come for him now … although probably more brave (or foolhardy) to do the same calculation in 2020.

  26. Tel says:

    The hypothesis I would insert is that once governments trashed the economy they were all in. They couldn’t very well say oops a month later.

    I disagree … trashing the economy for one month would have been reasonably easy to forgive, and quickly reversible.

    They have now been hanging on for about 14 months and of course at this point they know there’s no turning back. Thing is the voters in several states have loved it, and what kind of signal does that put forth?

  27. Crossie says:

    What happened in my view was that policy makers did not update their policy information and/or preferences after March and April of 2020. Why that is the case is an open question. Perhaps they are just stupid (unlikely), too scared (perhaps), locked into some path dependency (perhaps), [insert hypotheses here].

    Politicians discovered that they could be utter idiots and hide that idiocy behind their CMOs’ skirts. The CMOs are not that bright to start with or they would be in private practice so their main objective is butt covering which by a happy coincidence is also the objective of most politicians. The third leg of this stool, pardon the pun, is the media who are even less principled and smart than the first two. Reporting on the pandemic was over the top hysterical and erroneous, almost all “the sky is falling” with no facts or science to inform a proper debate. Taking these three things into account the economy didn’t have a chance.

  28. Forester says:

    We’re not counting the decades of extra taxes on people not born yet and their children.

    Traded off by public servants whose pay rises were delayed a year and missed out on their annual Tuscan holiday for a couple of years.

    I like to think people who got JobKeeper just got a big tax cut, we don’t know what proportion was squandered on drugs and booze and how much extra tax they’ll pay in the future.

    I’m looking forward to hearing Mr Chalmers “the eighty surpluses I announce tonight…

  29. Andre S says:

    This colossal COVID f**k *p, I mean the lockdowns plus, is a symptom of the fundamental delusion of the belief in a just world, that everything can be managed (by government) and predicted by technocrats (eg. epidemiologists). These managers and modellers (predictors) however have an extreme aversion to taking responsibility, they recognise their incompetence, with few exceptions such as dumb Neil Ferguson, but wallow in the glory of their technocratic and political grandeur, feeding off their exclusive crony troughs. The pernicious precautionary principles inserted into our political, social and legal systems excuses them of any decision making responsibility (even taking cost benefit analysis seriously) and their altruistic delusions of a just world condemn our once enlightened society too and almost certain cultural death in the coming decades. No matter how the algorithm runs, our assets and humanity will be devalued and our multi-cultural differences exorcised. Society will have to learn to live with the naked absurdity of the meaningless life a prospect that would send many into an asylum. It will take some serious intellectual disruption to stop this self imposed meritocratic tyranny.

  30. Spurgeon Monkfish III says:

    I said it last last year and I’ll say it again – the insane anti-democratic measures implemented by these monstrous execution worthy wrong about everything dunderheads would cause damage to society and the economy multiple orders of magnitude worse than anything attributable to the bat flu.

    Death rate predictions: Staggeringly wrong
    National border closure: Implemented too late. Politicians Also have no right to prevent people leaving the country
    National cabinet: A disaster
    State border closures: Unconstitutional
    Braindead lamestream meeja coverage: Hysterical, misleading and utterly wrong
    Hotel quarantine: Monumentally fucked up in Disasterstan and should never have been allowed in city centres
    Masks: Don’t get me started
    Schlockdowns: Fundamentally totalitarian, wrong and implemented on an absurd illogical and ad-hoc basis (and there will be more)
    Deaths arising from non diagnoses and suicides: Will massively outnumber any alleged COVID deaths
    “Vaccines”: Unnecessary, don’t work and haven’t been properly tested
    Mental illness: Rates will massively increase
    Damage to the small business sector: Incalculable
    Government debt: Will shortly hit a trillion and will never be paid off

    There are many other examples that I couldn’t be bothered listing. Even now the braindead lamestream meeja is attempting to beat up a bat flu scare in Sydneystan, which will no doubt lead to more idiocy and ridiculous over reactions from that trio of imbeciles Beryl Gladyschlocklian, Health Hazzard and the braindead bureaucrat bint.

    About the only positive over the last few months has been the (temporary) removal from public life of that grotesque deformed jug eared imbecile in Disasterstan.

    Absolutely bloody inexcusable. We will never get back the rights and freedoms we have lost over the last thirteen months.

  31. dasher says:

    They were captured by there own rhetoric…even when we found out the British modelling was massively inaccurate we pressed ahead as other western countries did. We had set sail and nothing would change our mind. When we found out the vulnerable cohort was well into the 80s and the rest were no more affected than with the flu we pressed on. (over 95% would weather the virus easily) This is a symptom of the modern world..facts don’t matter, the blind leading the blind, media creating a sense of crisis every day. The same applies to climate change.

  32. egg_ says:

    Hard data’s too much for the soft-wattle roosters in Govt. They don’t crow. They cackle.

    The softc0ck Poms baulked at their own recommended strategy as tweeted by PvO a year ago – herd immunity and isolate the vulnerable, which blind Freddy was advocating everywhere, given the Diamond Princess data.

    Go lockdown, go broke.

    Globalist Scummo follows the wrong herd.

    Even the WHO was belatedly advising Govts to come out of lockdown, way too late in the piece.

    Flatten the curve – pancake the Economy.

  33. egg_ says:

    Hotel quarantine: Monumentally fucked up in Disasterstan and should never have been allowed in city centres

    AND the NSW ‘Elf tards screwing up the Ruby Princess – their one chance at doing something practical and they bungle that and try to blame the ship’s crew.

    Keystone Medics and Keystone Cops combined effort.

  34. egg_ says:

    Damage to the small business sector: Incalculable
    Government debt: Will shortly hit a trillion and will never be paid off

    “When America sneezes, the world catches a cold”!

    GFC Mk.II.

  35. Gavin R Putland says:

    CoViD was the perfect excuse to get rid of all the job-destroying features of the tax-transfer system. The decision not to grab that excuse is not amenable to any sort of cost/benefit analysis. It’s all cost.

  36. Spurgeon Monkfish III says:

    Pursuing an elimination strategy after “flattening the curve” was insanity as well. That strategy remains in place and will remain unachievable.

    Feature, not bug (ptp).

  37. Stan says:

    Yes, I agree with what you say, and that paper is excellent. I only disagree with this: “I have little doubt that the lockdown policy will come to be seen as having been an over-reaction.”

    You over-estimate the ability of voters to think for themselves, and under-estimate the ruthlessness of the Left/media/elites/institutions to hold onto power no matter the cost. Just look at the climate scam, BLM, critical race theory, gender theory etc. All clearly insane with no basis in fact/evidence, but they dominate politics with nary a dissenting view heard in the media.

  38. Pyrmonter says:

    @ egg

    Covid has proved rather less lethal than I thought it might in March last year: as the Doomlord rightly notes, that was a time of radical uncertainty, uncertainty that diminished, as it tends to, with time. We should count our blessings.

    Yet the insistence by some here that any government response was an ‘over-reaction’ is as nonsensical as was the “Economists’ Letter” that, on its face, denied the existence of any trade-offs between economic activity and the Covid suppression. There are obvious trade-offs: we would never abandon all economic activity for the sake of suppressing a disease, and despite the inflated claims of some ‘lockdown opponents’, we never did. Moreover there are dynamic (ie, inter-temporal) trade-offs: the price of some economic activity today, with the risk of infection transmission, was the likelihood of more wide-spread infection tomorrow. The point the Economists Letter should have made was that, in the view of its authors, the benefits of continued steps toward effective local suppression – as has been achieved across Australia for the greater part of the last 9 months – were worth the short term costs.

    I’m yet to read the Allen piece and will comment further when I get the time to do so, but in the meantime ask, of those who contend that all the suppression measures were wasted effort: would you freely swap your current conditions in Australia for these results? And, if you believe private actions would have been sufficient to obtain some sort of optimal suppression (as, persuaded by one of Richard Epstein’s pieces from early March 2020, I briefly did), where is the evidence of their efficacy in countries not so different to ours?

    https://www.worldometers.info/coronavirus/country/hungary/

    https://www.worldometers.info/coronavirus/country/czech-republic/

    https://www.worldometers.info/coronavirus/country/belgium/

    Each of those countries has, at times, adopted a more liberal approach to ‘locking down’ than it has now; only to find that, between domestic popular political pressure, the pressure of its neighbours and the political interest of their leaders, they’ve ended up adopting quite onerous restrictions on daily life – the very thing at which most Cats cavil – as well as enduring death tolls 75 to 100 times greater than ours.

  39. Kneel says:

    “The third leg of this stool,…”

    This stool is the sort that doesn’t have legs and stinks.

  40. John A says:

    Another Humphrey Appleby (or was it Sir Arthur)

    “Politicians like to panic: it’s their substitute for achievement”

    Could we have an analysis of all but the PDR of Viktoriastan, please?

    Since that particular disaster skews the national results, it would be instructive to see what the “rest of the country” analysis would look like.

  41. Richard says:

    Excellent and accurate analysis.
    The only thing the coalition sought-for-and-won a mandate was to return the budget to surplus in 2020. That and that alone was it. To lose their nerve so completely in early March of 2020 is something that I will not forgive.

  42. MPH says:

    The other part to consider is that the costs are borne largely by those who receive no benefit which makes it a massive transfer ‘payment’. If you then compound the lost opportunity over a lifetime at some interest rate then the result is even more grossly against lockdown.

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