SoundOut consumer survey – 8 May 2020
3,500+ US and UK consumer survey measures whether the cure is worse than the disease.
As the world is ravaged by Covid 19, arguments swirl around whether the cure is worse than the disease. In our most recent survey this week (results below) we asked over 3,500 ordinary citizens across the US and UK to put a price on life. This was not out of morbid interest but rather to examine whether US policy to save the economy is economically aligned with, or at odds with, consumer opinion.
While unpalatable, a pandemic requires the conversation to be had, as it has a direct impact on the credibility of government policy, public opinion and the economic direction of the world for the foreseeable future.
Yesterday it was announced that a further 3.2 million Americans filed for unemployment benefits – taking the total to 33.2 million – or over 20% of the entire US labor force (164.6m people) - up from just 3.4% just 4 months ago. The economic impact is unprecedented.
The US government appears to have now concluded that the cure is indeed worse than the disease. The ultimate ‘live and let die’ decision. With over 50% of states now exiting lockdown with the enthusiastic support of Trump’s White House, mortality prospects for the next few months look increasingly stomach-turning.
This decision is compounded when we look at US mortality data with New York stripped out (courtesy of the New York Times):
With US lockdown all but abandoned this week, the virus is now on a fast upward trajectory across the rest of America and it seems inevitable we’ll see 3,000+ US mortalities a day by the end of May – a run rate of over 1 million/year. Most consciously sacrificed for the sake of the economy.
SoundOut ran a consumer survey across their 3m strong consumer panel from 2nd -7th May 2020 and the results provide sobering reading.
We asked the same question in 3 different ways:
How much do you think someone else’s life is worth?
How much should your government be willing to spend to save one person from dying from Covid 19?
How much should the government be willing to spend to save your life (or a loved one)?
Before we turn to the results it is worth framing the context. In this analysis we are talking about the average value of reducing one death (old or young, economically productive or not).
There are various third party sources that suggest how life is currently valued in different contexts:
While the FDA uses $10m per life to calculate cost/benefit analysis when considering the economic value of introducing new regulations, the courts consider a value 80% lower ($2m) as fair compensation. The latter is broadly in line with a graduate’s average lifetime earnings of $2.4m but significantly in excess of the average person’s tax contribution over a lifetime ($0.8m). Before the Covid black swan arrived, the number of at fault deaths was at a level where setting the value at $2m or $10m would not be sufficiently significant to unbalance an economy. But Covid 19 has changed everything. The cost of preventing 2.5m US deaths (assuming for example a 1% Covid 19 mortality rate) has the potential to crash the US economy. If we take FDA’s $10m as the value of a life then the total justifiable cost would be $10m X $3 million = $30 trillion – a staggering 150% of US annual GDP. When you bear in mind that to date just $2 trillion has been made available (and even that had economists reeling) the idea of taking a $30 trillion hit is almost unimaginable (it works out at over $90,000 for every single US citizen). It may be that this valuation is in fact too high and it’s just that the FDA would not get anything approved without an extreme valuation of human life. Estimates vary wildly but at present the best current estimate is that Covid 19 will cost the US economy $7 trillion (assuming a 2 year pandemic) – this implies a price per life saved at $2.3 million - neatly in line with lifetime earnings and broadly similar to what a family might expect in an at fault court settlement (as an aside, just wait for the tsunami of Covid related class action lawsuits against the US government). Survey results 3,596 UK and US consumers were surveyed in the first week of May 2020. Looking first at those who believe that you cannot put a price on human life, it is interesting to see how the framing of the question impacts the response:
While only 21% feel you can put a price on human life, twice as many (42%) believe a government can/should:
Now if we exclude all those who believe every human life is priceless here are the weighted average results to the first question:
It is worth noting that while we did not ask the question in terms of tax contribution the average value placed on what a government should spend is extremely close to the actual average lifetime (graduate) tax contribution of 800,000.
When we ask the question in the context of a governmental coronavirus response, the figures fall by over 40%:
Finally we asked the question: “How much should the government spend to save your life (or the life of a loved one?”:
Clearly the personalisation of the question brings it closer to home with the required government intervention rising by over 20%. Conclusions From the above, the average value of a human life (based on the consensus view of US citizens that were prepared to put a price on a human life across all 3 questions) comes to $562,000. We also ran a smaller survey of 600 people where all options for the value of a life were doubled – this actually resulted in a reduction (20%) in the average value of a human life – but validated that the presentation of different $ amounts to choose from did not significantly detract from the overall results. So what does this all mean… If we take a Coronavirus mortality rate of 1% and an 80% infection rate for the US we are looking at a potential death toll of 2.6 million people. If we assume that if lockdown was maintained (ignoring for now that that horse has already bolted) and that on the current trajectory just 100,000 Americans would die, then this suggests there is the potential to save 2.5 million American lives. If the public do currently value a life at $562,000 (excluding those who believe every life is priceless) this would suggest the total economic amount to be deployed should be: $562,000 X $2.5 million = $1.4 trillion But the US government has already committed (and almost spent) $2 trillion suggesting that, from a consumer based perspective, the price of saving more lives may no longer be economically viable. The implications of this are both profound and deeply unpalatable. While this is simply a survey based perspective, time will tell what the government will do if the number of mortalities continues to rise – as they surely must. Will the US government continue to prioritize the economy over the individual? Is there a daily death figure that triggers a return to lockdown? If the day does come when lockdown is reintroduced then the argument will necessarily swing onto the side of those that maintain that every life is priceless - and that the economy should be sacrificed, not the people. A view that suggests that we may be human after all.