Ep. 123 Faulty Economic Justifications for the Coronavirus Lockdowns
Bob explains some of the basic–but crucial–errors in the cost/benefit analyses that have been offered by economists to justify the political lockdowns issued in light of the coronavirus. Specifically, economists have conflated voluntary physical distancing with coerced lockdowns, and they are also misusing the concept of a Value of a Statistical Life (VSL).
Mentioned in the Episode and Other Links of Interest:
- Some papers/articles on the Value of a Statistical Life (VSL) concept: one, two, and three. Paul Krugman’s column using VSL to justify lockdowns.
- David R. Henderson’s critique of Zingales.
- Help support the Bob Murphy Show.
The audio production for this episode was provided by Podsworth Media.
About the author, Robert
Christian and economist, Chief Economist at infineo, and Senior Fellow with the Mises Institute.
A pigou tax?! Bob are you out of your mind? What an awfully primitive way of solving the problem. Isn’t it obvious that we should instead sell a limited supply of “get out the house” cards and let the market allocate them to the most valuable use? We could even make use of the proceeds for whatever.
Hahaha, very funny xD You got me for a moment there
Good episode, Bob, thank you. I’m interested to hear more about these subtle nuances.
A lot of my liberal friends will say things like “but people were socially distancing anyway, so what difference does the government lockdown make.” Some point to Sweden, which apparently still had a lot of economic slowdown compared to countries that had a government lockdown. Of course Sweden exports to other countries in normal circumstances, so maybe their buyers were cut off, too.
It seems that, like so often, many people don’t care/distinguish if something was achieved voluntarily or by government decree – kind of like thinking that being against minimum wage means you think workers should earn less.
I’m interested to hear more on this with respect to corona virus as you learn more and more studies/economic data come out. E.g. how much worse was the lockdown vs. all the voluntary measures, are there good states/metro areas to compare here, and so on.
Something that would also be cool for you as an economist (I’m just somebody who reads a lot in my spare time) to address: how come the “natural” reproduction rate of the virus is so different for various areas of the world, and even the country? Sure, Manhattan is by far the densest place in the US. But Tokyo, Taipei, and Seoul sure are as dense, aren’t they? And northern Italy isn’t exactly a densely packed public-transport hotbed. I think they only have a single big city, Milan. The metro area has 3 million people – so nothing compared to e.g. the Houston or Dallas metro areas.
I’ve seen tons of factors people come up with that explain a handful of data points, but nothing that seems like it stands up to even medium-level scrutiny. I’ve heard things about tuberculosis vaccinations, temperature, public transport, population density, time to spread, mask culture, blood types (surprising variations between countries!), smoking habits, air pollution, and many more. But no single one fits even the top 10 data points we have in the world. Is it just different strains of the virus? Or is there some kind of statistical effect where certain areas just got lucky/unlucky, e.g. 1 guy goes to a huge concert and infects 1000 people, whereas the equivalent guy in another area is a nerd and stays at home, infecting 0 people? Such an event would be equivalent to years of secret infection at normal reproduction rates.
Also interested in your take as to how you think the economy will change long-term in the future. Lots of companies are now announcing that they will continue supporting remote/telecommute work for as many people as possible going forward. This might have big impacts on urban real estate, the relationship between urban city centers and suburbia/the countryside, and much more.