Human Well-Being and the Value of Life in a Pandemic
Economists have a happy plan for how to make tough decisions.
Posted Jun 15, 2020
Currently, governments around the world are considering how and when to relax and end COVID-19 lockdowns and restrictions. Unfortunately, making decisions about the pandemic involves some of the trickiest and ugliest kind of accounting that economists and governments have to do. These are the cases where social and psychological and material well-being is traded off with saving human lives. Traditional approaches fall short, but the new economics of happiness offers a viable, and more appropriate, accounting.
Opening up the lockdown sooner means a faster recovery of incomes and an abatement of unemployment. It means a reduction of loneliness, addiction, suicide, domestic violence, household stress, and other mental suffering. It also means children can return to full social interactions and educational investment, and in many cases, it means a bolstering of confidence in the government.
On the other hand, an earlier return to more normal freedoms and work may mean increased time stress of a different kind, as well as increased traffic injuries and death, more time lost to commuting, and more pollution. It also means more people will die of the virus.
Weighing deaths alongside pollution and anxiety may sound difficult, but as much as one would like to find a different way to make decisions, there is really no alternative. If we decided that no one should die from COVID-19, because we have a right to life, then most of us would hole up for 18 months waiting for a vaccine. We would then suffer immeasurably due to the collapse of our social and economic lives, and eventually, our basic provisioning systems, like the supply of food.
If we decided that no one should suffer individual restrictions because we all have the right to leave our homes and to conduct business if we so choose, then the death toll would balloon, and hospitals would become scenes of absolute horror. Like it or not, use numbers to do it or not, we have no choice but to weigh these life and death costs, one against the other. The “right” answer of when to end a pandemic “lockdown” is somewhere in the middle.
But how to weigh them against each other? Maybe one can convert all these costs and benefits into units of lives saved somehow? That idea helps for traffic accidents and pollution and suicide, but not much for unemployment or education. What about expressing everything in terms of dollars and cents? Although that is closer to what is done conventionally, it does not seem much more reasonable. There is, possibly, a money value to having children get educated if you consider their future earnings, but surely that does not capture the full benefit of going to school. And it gets even harder for putting a price on loneliness or death.
Time for the economics of happiness to come to the rescue! The reason we care about jobs, education, freedom, health, safety, economic development, and limiting smog is that those things make our lives better. We now have a good measure of the quality of life, obtained simply by asking people how good their life feels, taking everything into account. A large body of research based on this “life satisfaction” measure allows us to somewhat sensibly translate all the considerations needed for COVID-19 policy into how much they will help or hurt people's life satisfaction, on average.
Well, almost all of the considerations. We now know the average effect on someone's life satisfaction of a decrease in pollution or of becoming unemployed, and so on, but not of dying. How can we express the cost of death itself in terms of a loss of life satisfaction?
Recently, two different groups of researchers, one academic and one think-tank, have laid out a calculus of life satisfaction costs and benefits. To deal with benefits that last over time, and to deal with death, the appropriate accounting unit is life-satisfaction-years. A benefit of one person living a life for one year that is one unit better on the 0-10 satisfaction scale is denoted as one life-satisfaction-year of benefit. A growing body of research evidence allows us to express the value of being employed, the value of having less anxiety, the value of clean air, and many other circumstances, all in units of these "well-being-years."
Now that governments are planning short-, medium-, and long-term post-COVID-19 recovery strategies, some are asking researchers like me how life satisfaction data can help to inform planning. This new approach can give sensible answers that are driven by real human experience and are accountable to science. What we know from life satisfaction research is useful in the short term, but this crisis may be a turning point for governments to start treating all policy this way. In future columns, I'll continue to describe the wonderful potential we have for society to make human lives better in a more effective way, simply by thinking of this straight-forward, human-centered measure of life quality as the end-goal of policy.
Layard, Richard and Clark, Andrew Eric and De Neve, Jan-Emmanuel and Krekel, Christian and Fancourt, Daisy and Hey, Nancy and O'Donnell, Gus, When to Release the Lockdown? A Wellbeing Framework for Analysing Costs and Benefits. IZA Discussion Paper No. 13186. Available at SSRN: https://ssrn.com/abstract=3590884
Happiness Research Institute, "Wellbeing Adjusted Life Years: A universal metric to quantify the happiness return on investment", 2020
Global Council for Happiness and Wellbeing, "Global Happiness and Wellbeing Policy Report 2019", 2019 http://happinesscouncil.org