Key takeaways

• Containment policies save lives but restrict economic activity. Standard approaches to accounting for the value of human lives lend support to these policies despite their high short-term economic costs.
• Integrated epidemic-macroeconomic models provide a coherent framework for quantifying the costs and benefits of containment policies. Part of the benefit comes from limiting externalities that would otherwise arise if social distancing were purely voluntary.
• Standard epidemiological and economic parameters suggest that several months of strict containment policies that lead to as much as a 30% decline in GDP for the period of the lockdown could be preferable to alternatives with more casualties and a less severe recession.

Online appendix