WELLBYs and QALYs: can the costs of a lockdown be measured?
Economists have used the concepts of quality-adjusted life years (QALYs) and wellbeing-adjusted life years (WELLBYs) to measure the societal impact of Covid-19 lockdowns beyond the lives that may have been saved. Recent analyses presented before the parliament of Victoria show that the welfare costs of the Australian lockdown were either overlooked or calculated wrongly.
An early critic of lockdown policies was professor Gigi Foster of the University of New South Wales in Sydney. Writing in an Australian context, she claims that the welfare costs of the economic policy responses were either overlooked entirely or calculated in a way that was not in accordance with international best practices. “It’s a lot less work to count bodies and point to scary body-count projections”, according to Foster, “than to think hard about the many and various costs”.
Foster’s cost-benefit analysis for the Victorian parliament in mid-August produced some shocking results. She uses the concepts of quality-adjusted life years (QALYs), which refers to healthy life years, and wellbeing-adjusted life years (WELLBYs). Six WELLBYs equal one QALY.
Measured for all of Australia, the minimum costs of a month’s worth of lockdown is estimated at 110,495 QALYs. This mainly concerns reduced quality of life in the immediate term (83,333 QALYs), but also lost wellbeing due to restrictions in economic activity (25,812 QALYs), increased suicides (600 QALYs) and foregone wages of children suffering from disrupted schooling (750 QALYs), among others.
The shocking aspect consists in the conclusion that “for all of Australia, the estimated benefit of locking down ‘ad infinitum’ (not only per month) is 50,000 QALYs. Hence the minimum cost per six weeks of wholesale lockdown is at least three times greater than the benefit in terms of Covid-related welfare that could potentially be saved in total by wholesale lockdown”.
Another aspect is the loss of WELLBYs, estimated by Foster at 12,500,000 per year of lockdown in Australia. This therefore equals slightly over 2 million QALYs sacrificed per year of lockdown. As a full life is assumed to be 80 years of average healthy life, this leads to 26,000 full lives lost per year of lockdown, or 2,170 per month.
The benefits, calculated by Foster in a way that is biased in favour of lockdowns, seem to be limited: only 50,000 QALYs or 300,000 WELLBYs are saved directly by a wholesale lockdown. In other words, the saving of 50,000 QALYs is already cancelled within two weeks, as the minimum costs of a month’s worth of lockdown was estimated at 110,495 QALYs.
Finally, the Reserve Bank of Australia calculated that each month of lockdown leads to a GDP loss of 0,5% ($7 billion) and therefore a sobering of government services. Using the conservative estimate of $100,000 as the value for a statistical life year, Foster ends her analysis by pointing out that the reduction in future government services alone will imply a loss of approximately 25,812 QALYs per month of lockdown.
With similar analyses conducted in Europe already early in the pandemic, the question is whether and when the focus of policy makers will shift from the short to the long term by taking into consideration the many indirect costs of lockdowns.