Economic Crash Could [Will!] Cost More Lives than Coronavirus, Study Warns

The Times (U.K.), 2020/3/24 – If the coronavirus lockdown leads to a fall in GDP of more than 6.4 per cent more years of life will be lost due to recession than will be gained through beating the virus, a study suggests.

Philip Thomas, professor of risk management at Bristol University, said that keeping the economy going in the next year was crucial, otherwise the measures would “do more harm than good”.

“I’m worried that in order to solve one problem we’d create a bigger problem,” he said a day after economists predicted we were on course for the worst recession in modern history.

There is a clear link between GDP and life expectancy, in part due to richer countries being able to spend more on healthcare, safety and environmental regulations. This means it is possible to calculate roughly the effect of increased, or decreased, wealth on the health of a population.

In a paper published before peer review, Professor Thomas has offset that figure against the lives saved through going into lockdown for a year while awaiting a vaccine. According to his modelling, just under a million Britons would die if we let the virus run unchecked. Most of those would be elderly and in terms of years of lives lost would equate to the deaths of 400,000 average age adults, roughly comparable to the toll of the Second World War.

“This is not going to be a three-week or three-month problem,” Professor Thomas said of the virus. Assuming our exit strategy is a vaccine, he said, “we’re talking 12 months, and that looks tight.”

This is why he thinks the economy is crucial — not because of a callous belief that lives can be traded for money, but because money and lives are, at some point, the same thing. “We see this very strong correlation between GDP and life expectancy,” he said. In his paper, published on Jvalue.co.uk, he estimates that if global trends can be extrapolated to the UK economy then the “tipping point”, to offset those 400,000 lives, comes when GDP falls by 6.4 per cent.

“If you reduce GDP per head by so much you start to reduce life expectancy considerably. Then what you are doing is cutting back GDP and at the same time shortening all our lives,” he said. “We are facing something very grave and it’s going to be very grave either way.”

The publication of the paper came as business leaders warned of a deep and lasting recession. IHS Markit, which produces the purchasing managers’ index with the Chartered Institute of Management and Supply, found the economy to be contracting at the fastest rate since the index began in 1998. It estimate that Britain’s economy had shrunk by 1.5-2 per cent this quarter, and predicted that following a total shutdown that figure would soon be “dwarfed” by what lay ahead. Some economists estimate we could expect a 15 per cent drop in the next quarter.

For comparison, at the height of the 2008/9 financial crash, the economy contracted by 2.1 per cent in a single quarter. Chris Williamson, IHS’s chief business economist, said, “a recession of a scale we have not seen in modern history is looking increasingly likely.”

The link between mortality and the economy is clear, but not simple. Some studies have suggested that it may be that greater life expectancy itself leads to economic growth, rather than the other way round. Short term effects are also sometimes in the opposite direction. Although suicides are linked to recessions, they can be offset by a fall in deaths caused by pollution and by accidents at work. The strength of the link between increased GDP and longevity also flattens off the richer a country gets.

The publication of the paper came as business leaders warned of a deep and lasting recession. IHS Markit, which produces the purchasing managers’ index with the Chartered Institute of Management and Supply, found the economy to be contracting at the fastest rate since the index began in 1998. It estimates that Britain’s economy had shrunk by 1.5-2 per cent this quarter, and predicted that following a total shutdown that figure would soon be “dwarfed” by what lay ahead. Some economists estimate we could expect a 15 per cent drop in the next quarter.

For comparison, at the height of the 2008/9 financial crash, the economy contracted by 2.1 per cent in a single quarter. Chris Williamson, IHS’s chief business economist, said, “a recession of a scale we have not seen in modern history is looking increasingly likely.”

The link between mortality and the economy is clear, but not simple. Some studies have suggested that it may be that greater life expectancy itself leads to economic growth, rather than the other way round. Short term effects are also sometimes in the opposite direction. Although suicides are linked to recessions, they can be offset by a fall in deaths caused by pollution and by accidents at work. The strength of the link between increased GDP and longevity also flattens off the richer a country gets.

Mr Thomas said that while the government could well have had no choice but to instigate the current policies, the focus now should be on making the economy work even while much of the country is confined to home.

“It worries me when I hear people saying, ‘Well, vital services can be kept going’. An economist would say that all the services we have are important.

“That’s why people spend money on them.

“The size of the problem is clear. You’ve got to find a way of keeping the whole country working.”

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