Good Job Minnesota!
The value of the lives saved by Minnesotans complying with Governor Walz’ #StayHomeMN order is an estimated $105 billion over the life of the pandemic.
In other words, Minnesotans contributed $105 billion towards the war on Covid by staying at home and social distancing for the past several weeks. This contribution is much larger than any aid Minnesotans have received to date from any source.
To derive this estimate we first start with an estimate of the “value of life.” The Gold Standard referred to in many studies is the estimate of the “value of statistical life” of the United States, Environmental Protection Agency,
The current EPA estimate, of that core value of statistical life, is around $9.6 million. It is based on estimates of how much a typical individual would value their life as they make decisions on purchasing risk insurance, for example, life insurance. The EPA uses this value of statistical life as they make decisions on environmental projects.
To estimate Minnesota values we first start with the latest Minnesota model estimates of lives lost due to various scenarios. In the Minnesota context, the latest model shows the various Covid-19 death scenarios range from 57,035 in the absence of Stay At Home Orders (SAH), to 22,589 (SAH) till May 31, 2020 with the best testing. These are estimates based on the full duration of the pandemic and not just May 18 or 31. In other words, because of social distancing and SAH measures Minnesota would save “x” lives during the full life of the pandemic (see model below)
Now we adjust this data by age specific death rates in Minnesota as documented by the CDC May 9, 2020. Out of a total of 388 deaths, the death rates in the 55-64 years was 9 %; for the 65-74 years was 16 %; for the 75-84 years was 28 % and for the 85 + years was 47 %. Note there are some difference in the number of deaths reported in the CDC data and so the percentages above are estimates based on available data.
These percentages are applied to the four sets of data coming out of the Minnesota model – unmitigated, SAH ending May 18, SAH ending May 31, and SAH ending May 31 with the best testing done.
These numbers are also adjusted for age specific “value of life” estimates based on a study by economists at the University of Chicago, $10.3 million for the age group 50-59 years; $6.7 million for the age group 60-69 years; $3.7 million for the age group 70-79 years and $1.5 million for the age group 80+ years. Note – we have not used the average EPA estimate of $9.6 million but use age specific value of life estimates.
The table below shows that the cost of an unmitigated no SAH scenario in
Minnesota is an estimated $213 billion
This amount was dramatically reduced to $108 billion with all Minnesotans
cooperating with the SAH till May 18.
So in other words the people of Minnesota, through complying with Governor Walz’ #StayAtHomeMN order and social distancing efforts, contributed $105 billion (the difference in value between the unmitigated and the May 18 estimate of lives saved) to the Covid War in Minnesota, over the lifetime of the pandemic.
Ending the SAH order May 18 rather than May 31 – means the human cost to Minnesota is $2.9 billion over the lifetime of the pandemic.
An estimate for better testing – Using the SAH May 18 and May 31 data we estimate it to be $21 billion through the lifetime of the pandemic. In other words we should do all we can to get the best testing possible available to Minnesotans as we open up the economy.
This above estimates are not rocket science but a policy gauge. We can never estimate the value of the life of a loved one lost, but we can start somewhere and hopefully will help us make better decisions.
Good job Minnesotans – for saving lives and investing in Minnesota’s future.
Bruce P. Corrie, PhD, is Professor of Economics, at Concordia University – St. Paul, Minnesota