A "Ballpark" Assessment of Social Distancing Efficiency in the Early Stages of the COVID-19 Pandemic

This paper presents an efficiency assessment of social distancing as an internationally adopted measure to tackle the COVID-19 pandemic in 2020. The simple framework adopted for the assessment accounts for two kinds of costs that a society may bear in a pandemic. The first is welfare loss due to infection and its consequences, and the second is welfare loss resulting from a slowdown in economic transactions. We call the first infection costs, and the second economic costs, for convenience in the paper. Efficient social distancing should minimize the sum of these costs. Infection costs are likely to decrease with social distancing at a decreasing rate as intensified social distancing eases pressure on scarce resources for intensive care. Economic costs on the other hand are likely to increase at an increasing rate as extreme slowdown in economic life may entail job losses and business failures. The resulting U-shaped total costs curve implies parity between infection costs and economic costs as a necessary condition for efficiency. In a simplified implementation of the framework, we approximate infection costs by the value of (statistical) lives lost, and economic costs by the gap between the actual gross domestic product (GDP) in 2020 and the potential GDP as predicted by the within-country growth trend during the preceding decade. The results for 158 countries suggest that the global community perhaps reacted with overly strict social distancing measures. The results for the subgroup of high-income countries, however, suggest that these countries were more successful in maintaining the parity between infection and economic costs.