Saved lives and monetary benefits of the lockdown in Switzerland

An effective strategy to fight the spread of a pandemic like Covid-19 is to decrease contacts between people through a lockdown. Such a policy is clearly beneficial from a public health standpoint, but it has substantial effects on economic activities without government support, leading to business disruption, job losses and earnings reductions, especially among younger generations. For this reason, lockdowns are often associated with a trade-off between public health and economic activities. However, lockdowns also have economic benefits because they save lives. These are the conclusions drawn by two PhD students at the USI Institute of Economics (IdEP) in an analysis that quantifies the monetary benefits associated to the lives saved by the Swiss lockdown implemented to face the first wave of infections in Spring 2020.

The lockdown may have saved up to 35.000 lives

Using an epidemiological model which allows to predict the potential infections and deaths in absence of government intervention, Nicoḷ Gatti and Beatrice Retali , supervised of Prof. Fabrizio Mazzonna , have calculated that the Swiss lockdown saved at around 30.000 lives. Other 5.000 casualties were avoided by preventing hospitals and intensive care units from reaching their maximum capacity.

"By applying certain actuarial statistical methods, we have inferred that, in monetary terms, the benefits of the Swiss lockdown exceed 100 billion francs, namely 14% of the Swiss GDP in 2019", the two PhD students explain. "Considering that approximately 70 billion francs were allocated by the Swiss government to compensate the losses due to the disruption of business activities, our estimates show that the benefits of the lockdown, in terms of lives saved, were actually higher, a result that may also have relevant implications for future policy decisions", the add.

Monetary benefits relate mainly to the over 65

In their analysis, Gatti and Retali also show that over 65% of the monetary benefits associated with lockdown policies are concentrated among individuals older than 65. This raises the issue of intergenerational inequalities, as the costs of lockdown policies are mainly shouldered by younger generations. Prof. Mazzonna adds, "the concentration of monetary benefits among older individuals in the case of a lockdown calls for new compensation schemes to prevent further increases in intergenerational inequalities at the expense of the young. Undoubtedly, this would also make people more willing to accept restrictions".