No Free Lunch

Is ECQ worth it?

Patience is beginning to wear thin, I’m sure, for most of us in areas where enhanced community quarantine (ECQ) is further extended to May 15.

As the economic costs of ECQ promise to add up to astronomical levels on an economy-wide basis as days and weeks pass, one might ask if the benefits of the virtual lockdown have justified the costs.


Intrigued by this question, Dr. Antong Victorio, a long-time economist friend from Davao who established his professional career in the New Zealand academe, recently reached out to me. What benefits does the ECQ bring?

Knowing these could come in different forms, he suggests focusing on the most prominent one that far overshadows the rest, that is, the value of human lives saved.


How does this benefit weigh against the costs of ECQ? For this, we can also focus on the most prominent measurable impact: the loss in economic output and corresponding incomes, both measured by the consequent reduction in the gross domestic product (GDP).

While we won’t know the full GDP impacts of the lockdown until the numbers come in later in the year, estimates vary widely. The Asian Development Bank projects that Philippine GDP growth for 2020 would go down from last year’s 5.9 percent to just 2 percent, a 3.9 percentage point reduction.

The Bangko Sentral ng Pilipinas (BSP) sees a contraction (negative growth) of -0.2 percent at worst. The World Bank sees global GDP falling -3 percent, so ours could be of similar magnitude. I’ve already shared my own rough calculations in this column, telling me it could be -6 percent, or possibly more.

But for purposes of analysis, let’s consider the least pessimistic of these forecasts, the 3.9 percentage point drop in our GDP. Philippine GDP last year in current prices was P18.6 trillion or $365 billion; a 3.9 percent reduction would amount to P725.9 billion or $14.2 billion. We can consider this a conservative estimate of the economic cost of ECQ based on GDP lost in 2020.

But would the benefits from ECQ make it all worthwhile? This is where the research of Dr. Antong (as he prefers to be called) comes in. I know many would argue that human life is priceless, and lives must be saved at whatever cost. But cold and clinical as it may sound, economists have found creative ways to ascribe monetary value to things normally seen to be unmeasurable, including human life itself.

Economic researchers now routinely refer to a measure called value for a statistical life (VSL).

In the context of COVID-19, a VSL could be obtained by asking people how much they would be willing to pay in order to save one life from the virus.


As VSLs are difficult to obtain, few countries (like United States, Sweden, and United Kingdom) have come up with estimates. But Dr. Antong notes that VSL has been found to be strongly correlated with a country’s GDP per capita.

He cites research published in the Journal of Transport Economics and Policy by Ted Miller, who found that a country’s VSL would roughly be equal to 120 times its GDP per capita.

The Philippines’ GDP per capita last year was $3,484. Adjusted to account for differences in cost of living across countries (economists call it “purchasing power parity”), the internationally comparable figure would be $10,094. Applying Miller’s observation, Dr. Antong calculates the Philippine VSL to be around 120 times this, or $1.2 million (P61.8 million); this, then, would be the estimated money value of saving a Filipino life. The GDP cost calculated above would thus be equivalent to 11,833 lives.

The question then is: Would the lives saved by ECQ be at least as much, thus justifying the cost? Four months into the year, we have 6,631 recorded confirmed COVID-19 cases, with 558 deaths and 1,023 recoveries. Could we count the recoveries as the lives saved by ECQ? How many more cases and deaths would we have had without ECQ?

Could we confidently say that we would have saved more than 11,833 lives by locking ourselves down?

Dr. Antong believes it can’t get anywhere near that, given that we can do social distancing and much more to effectively control the spread of the virus, even without lockdowns.

In short, he believes ECQ may have been an overkill. Do you?

[email protected]

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TAGS: Coronavirus, COVID-19, ECQ, enhanced community quarantine, general community quarantine, Quarantine
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