Strict lockdowns have not exacerbated recessions, but neither have they saved lives.
Strict lockdowns have not exacerbated recessions, but neither have they saved lives.
A ssuming that Joe Biden will be the next president, policies adopted in Democratic states are likely to be pushed nationally. Both Trump and Biden largely favored the policies of governors from their own parties and disagreed over the importance of lockdowns (and specifically their effect on economic activity) in managing the pandemic.
The heterogeneity of the United States compared with smaller countries led the Trump administration to discard a uniform national policy in favor of supporting states’ efforts to develop policies tailored to their own unique circumstances. Differences in COVID-19 mitigation policies emerged, perhaps driven by their governors’ party affiliation. The conventional wisdom is that the lockdowns adopted more widely in Democratic states lowered economic activity and saved more lives.
For the first half of 2020 — the period for which state data are available — we find that Democratic states incurred larger overall losses than their Republican counterparts from COVID-19, both from the disease itself and in terms of reduced economic activity. But the conventional wisdom on lockdowns cannot explain why: Using state GDP data, we find that more-stringent lockdowns did not lead to deeper recessions, and it is unclear whether they saved additional lives. Despite similar economic losses across states, the cost in lost lives was much higher in Democratic states.
A quantitative evaluation of pandemic policy accounts for both the losses due to the disease and the losses stemming from prevention, such as drops in economic activity. Economists have developed the methodology to quantify the two, and we previously applied these metrics to measure the total loss a country has suffered from COVID-19. We found that total COVID-19 losses in the United States have been lower than those in many of the Western democracies held up as international role models. Despite this favorable comparison, many observers hold strong opinions as to why the U.S. may have suffered more or less than other countries.
The figure below shows our calculations of the total COVID-19 losses for U.S. states for the first half of 2020. We calculated the total loss as a percentage of each state’s pre-pandemic GDP from the fourth quarter of 2019, broken up into the loss in health from lives lost and the loss in economic activity. For example, in the first half of 2020, New York experienced an 11 percent drop in GDP while attempting to prevent the spread of COVID-19. According to standard economic methods of valuing increased mortality, the 32,000 lives lost during this timeframe are equivalent to another 41 percent drop in GDP, resulting in a total loss of 52 percent of pre-pandemic GDP.
Democratic states are shown in blue and Republican states are shown in red, with the former having more-stringent lockdown policies, as measured by an index developed by Oxford University.
On average, Democratic states experienced larger total COVID-19 losses than did Republican states (22 percent vs. 16 percent). This difference was driven by Democratic states’ having larger health-related losses (11 percent vs. 5 percent) as opposed to economic losses (11 percent for both groups).
The lack of variation in GDP loss is likely explained by the private sector’s relatively swift mitigation efforts: Put simply, restaurants were largely empty by the time that dining out was banned. Economists have long argued that the impact of public measures may be muted when the disease itself makes the private sector respond more quickly. Research from the University of Chicago has confirmed this assertion for COVID-19. Other factors driving similar economic impacts could be interstate trade (e.g. Hawaii and Nevada were hit hard due to reduced travel) or the regressive nature of shutdowns hitting the poor the hardest.
Even though different approaches to lockdowns lead to similar economic losses, similar levels of prevention generated surprisingly large differences in lives lost. This is not due to population size as our methodology accounts for that, as exemplified by California’s loss being relatively small.
The higher mortality observed in Democratic states could be because they were affected first and did not benefit from subsequent innovations in disease prevention and treatment. For example, efforts to safeguard older Americans, who account for about 85 percent of COVID-19 mortality, may have improved later in the pandemic. For example, many of the recent therapeutics were not used earlier in the pandemic. Democratic states also generally have higher population density, which facilitates disease transmission, although we find density contributes little differences in mortality. The heavier loss of life in Democratic states is particularly surprising given that public-health measures such as distancing and consistent mask use were more heavily enforced in those states.
The limited economic impact of more-stringent lockdowns may not extend to the second half of 2020. If Americans desire to resume economic activity, restrictions preventing them from doing so could reduce economic growth. Although aggregate GDP, released just before the election, beat expectations for the third quarter, state GDP data are not available. However, projecting third-quarter GDP by states based on recent changes in their unemployment levels, we find similar overall results as those shown here. We therefore predict third-quarter data on state GDP levels and mortality to show Democratic states having larger total losses than Republican states.
Since March, we have argued that a better strategy than harsh lockdowns would be to implement policies designed to ensure low mortality but high growth, specifically by protecting high-risk individuals, such as the elderly, while allowing low-risk youth to drive the economic recovery. Members of the public-health community are coming around to this view, as seen in the Great Barrington Declaration. Going forward, a vaccination effort focused on the elderly would be a key component of this strategy.
While the economic hit due to COVID-19 was similar across states in the first half of 2020, overall losses were not. Lockdowns did not amplify GDP losses, but it is unclear whether they saved lives. Armed with this finding, research into why Democratic states have experienced larger losses could save lives.
Tomas J. Philipson, a professor of public policy at the University of Chicago, and Eric Sun, an assistant professor in anesthesiology and health policy at Stanford University, served on the President’s Council of Economic Advisers, Philipson as a member and acting chairman from 2017 to 2020 and Sun as a senior economist from 2019 to 2020.