William H. McRaven is a retired Navy admiral who oversaw the 2011 Navy SEAL raid in Pakistan that killed Osama bin Laden. He wrote truth in The Washington Post last week (drawn from his wonderful University of Texas commencement address in 2014): “Nothing in our immediate future will be easy. The number of cases will rise. The losses will increase. The markets will stumble. But make no mistake about it, we will prevail, because the only thing more contagious than a virus is hope.”
That is a message we need today, amplified by the incomparable Yo-Yo Ma, who performed a song of comfort and hope specifically for the current crisis.
This week’s TBL focus is the value of a life and how it impacts our responses to the coronavirus crisis. I’m not addressing the markets in this issue even though last week was a remarkable one. I did write a Crisis Market Diary about it, however, and I encourage you to read it: A Decade-Week.
If you like The Better Letter, I hope you will subscribe (it’s free to get every edition of TBL delivered to your in-box) and share it widely.
The Value of a Life
In the 2015 film, The Martian, Matt Damon plays an astronaut accidentally left behind on Mars who needs rescue. The (theoretical, obviously) cost of such a rescue? $200 billion dollars. There are also political and cultural reasons why that amount of money might have been spent to rescue just one person. But Damon’s character is correct: “If a hiker gets lost in the mountains, people will coordinate a search. If a train crashes, people will line up to give blood. If an earthquake levels a city, people all over the world will send emergency supplies. This is so fundamentally human that it’s found in every culture, without exception.”
By that measure, a human life is worth $200 billion. There are other measurements.
If you could harvest all your body parts, you (well, not you) could make a few million bucks. We should be worth more alive than dead.
In California, I can’t sell an hour of my life for less than $12 per hour. Assuming an average work life of 90,000 hours, the value of that working life is at least $1 million or so. If I were still working at a big city law firm, my working life would be worth something like $50 to $90 million to the firm. I hope the third baseman for my hometown San Diego Padres will soon begin the second year of a ten-year contract paying him $300 million. Obviously, however, our lives are more than our commercial value.
A typical 30-second national ad on 60 Minutes costs $117,800 and reaches roughly 10 million viewers. Therefore, a single 30-second viewer is worth $.01178 ($1.41 per hour/ $33.92 per day/ $12,383.14 per year). Over an average life expectancy of 78.6 years, the average life is worth almost a million dollars ($973,314.49) in value to advertisers. We’re more than value to advertisers.
The “death gratuity” paid to families of fallen soldiers is $100,000, but at least it’s tax free. Please God, we’re worth a lot more than that.
The question of how to value a life has come into stark relief during the coronavirus crisis because the public health requirements and restrictions being imposed to fight COVID-19 come are immense in scope and come at great but undetermined cost.
Even a marathon has a finish line. Yet, today, we’re in an economic and market endurance contest with no certain endpoint. It’s totally global and we don’t – can’t – know when it will end. A governmental response plan estimated the pandemic “will last 18 months or longer” and could include “multiple waves.”
One prominent study forecast well over a million deaths from COVID-19 in the U.S. if the disease were largely allowed to run its course. Another study projected up to 2.2 million deaths. Strict suppression and mitigation efforts will significantly reduce that toll, but such measures might have to be in place until a vaccine could be widely distributed — as long as 18 months.
The economic costs of such a policy are enormous, and we’re already seeing them.
The U.S. economy is deteriorating more quickly than was expected just days ago as extraordinary measures designed to curb the coronavirus keep 84 million Americans penned in their homes and cause the near-total shutdown of most businesses. The problem, as economist Larry Summers eloquently put it, is that “economic time has been stopped, but financial time has not been stopped.”
The inevitable recession will almost surely be worse than 2008. Deutsche Bank economists said last week that they foresee a “severe global recession occurring in the first half of 2020,” and pretty much every analyst echoes those dire warnings.
Bridgewater Associates says the coronavirus crisis will cost U.S. companies about $4 trillion, with a global cost of around $12 trillion. This downturn could cost 5 million jobs, according to The Wall Street Journal survey of economists.
U.S. GDP is roughly $20 trillion per year, of which about 70 percent is consumption. If the nation comes to a complete halt and stays that way a while, which is a given at this point, the losses will be staggering. The various stimulus packages (including a “Phase 3” package that is still being debated as I write this epistle) could total $2 trillion or more.
The need is great. Half of all small businesses have a cash buffer of less than a month. The average small business has a cash buffer of 27 days. The average restaurant has 16 days. And in a Fed survey last year, 39 percent of Americans said they would be unable to handle an unexpected $400 expense.
People are losing their jobs — through layoffs, furloughs and cut shifts — at an increasingly rapid pace, showing why the global economic picture is so dire. Treasury Secretary Steven Mnuchin warned that without a strong government response, the jobless rate could eventually soar to 20 percent of the labor force.
“We are looking at something quite grave,” said Janet Yellen, the former Federal Reserve chair. “If businesses suffer such serious losses and are forced to fire workers and have their firms go into bankruptcy, it may not be easy to pull out of that.”
We have no idea, today, how much the various stimulus packages are going to cost, and we won’t for a long time. Similarly, we have no idea, today, the cost and the value of economic losses we will suffer on account of this crisis. That much is a given.
A few people are beginning to question whether the costs (whatever they turn out to be) of an economic shutdown are worth it.
A recent editorial in The Wall Street Journal questioned how much financial devastation is worth the health benefits a prolonged economic stoppage will bring. It called extreme social-distancing policies “necessary,” but warned that they were not “sustainable.” Failed Federal Reserve nominee Stephen Moore asked, “is it worth trillions of dollars in losses?”
The U.S. government actually calculates the value of a human life on a regular basis by way of a value of statistical life (“VSL”), to provide a basis to decide whether life-saving policies, such as pollution controls, are worth their cost. The Office of Management and Budget has endorsed a wide variety of agency VSLs but hasn’t set a single government-wide life value. A typical VSL is generally determined to be around $10 million. Based upon how much more a worker would expect to be paid in the job market to assume a risk, the value of a life today is also about $10 million.
Obviously, the politics and the practicalities of this issue are fraught. The EPA tried to adjust life values downward in 2003 by applying a 37 percent lower life value for people 65 and older, but quickly abandoned the “senior discount.” Every parent would say his child’s life is priceless, but many fail to install car safety seats properly or drive too fast.
In healthcare, QALY is an abbreviation for “quality-adjusted life-year.” It combines mortality and morbidity into a single metric, reflects individual preferences, and can be used as a standard measure of health gains across diverse treatments and settings and is used to determine how to price healthcare fairly. One QUALY is typically deemed to be worth up to about $150,000, suggesting a generally healthy life over a typical lifespan is, again, worth about $10 million.
Using the federal government’s own math, then, if we assume one million more Americans would die without severe social distancing and related policies as well as a $10 million life value, the current COVID-19 policies are “worth it” if the cost doesn’t exceed $20 trillion. Since the cost forecasts, while huge, are still much, much lower than that (at least so far), they’re clearly worth it.
Still, the approach offered in The Martian is much more satisfying – saving a life regardless of cost is “fundamentally human.” That’s the Christian position. As Jesus said, foreshadowing his own future, “Greater love hath no man than this, that a man lay down his life for his friends.”
We also (rightly) value real lives over hypothetical lives.* As we increasingly see friends and neighbors get sick, the crisis becomes personal and thus more real. We can’t know the (unfortunate) future consequences of fighting the virus. Since we know we can make things better in the here-and-now, we should, and we will.
Ben Hunt believes that America’s response to COVID-19 “will be our finest hour.”
What America’s healthcare workers are doing is nothing short of amazing. Many others are pitching in. For example, distilleries are making hand sanitizer and giving it out for free to combat coronavirus, communities are singing together through open windows, and many citizens are profuse in their thanks to hospital workers.
As I reported last week, quarantined Italians broke into song from their balconies and windows as they were stuck at home, making the best of a difficult circumstance. “It’s not like we’re maestros,” one said, but “it’s a moment of joy in this moment of anxiety.”
It’s beautiful, too.
* The narrative fallacy is usually used to explain why, as Kurt Tucholsky recognized, a single death is a tragedy while a thousand deaths is a statistic. But our valuing real over hypothetical lives is part of it, too. Real people have names, faces, families, and yes, stories.
Totally Worth It
Here are some recent stories I found interesting, noteworthy, important, fun, or just plain weird.
Hearing another voice is soothing. During lockdown, don’t text; call. A student created a network of “shopping angels” to help the elderly get groceries during the coronavirus pandemic. Man serenades his longtime girlfriend at assisted living home window. A rafting group entered the Grand Canyon on February 19 for a 25-day trip off the grid, with no phones or internet connection. They returned to a very different world. Wait staff cry tears of joy after diner left $2,500 tip prior to restaurant closure. “Sandy Jenkins was a shy accountant at the Collin Street Bakery, the world’s most famous fruitcake company. Tired of feeling invisible, he started stealing – and got a little carried away.” Dream job. “The idea was to turn America into a nation of hippo ranchers.” What happens to a Florida cafe when customers stay away. The imagery of tombstones: “A viewer cannot forget that all that made them human will one day dissolve and become indistinguishable from dirt.” During his quarantine, Isaac Newton discovered gravity and began to formulate a theory of optics.
As Brazil's iconic Christ the Redeemer statue stood watch over the city of Rio de Janeiro last Wednesday, it was illuminated with the flags of countries affected by the coronavirus. The moving display of solidarity also featured a message in multiple languages: We pray together.
Mixed Media: Two sisters held a porch concert for a self-isolating neighbor (video). An updating list of free online concerts and livestreams (video). Why social distancing is so necessary (graphics; full simulation). How germs (and viruses) spread (video). Bookstores get creative during the crisis. A running list of makeshift “sports” being invented due to social distancing (quarantine tennis video). Fascinating images from the Underwater Photographer of the Year 2020 contest. Penguin field trip (video). Nobody got to fill out NCAA Tournament brackets last week and, obviously, the tourney didn’t start. But you can play a simulated tournament here. Twitter hosts a virtual Senior Night. Glacier cave (video). Temporary online learning will be an adventure. Performances from America’s high school students (thread). Spring has sprung (video). Stuck at home? Visit one of these 2,500 museums virtually. More virtual culture. Razzie award winners. A British woman who violated a hotel's quarantine and staged a protest was plucked out of a pool and dragged away by the police (video). College hoops fans are creating their own “One Shining Moment” videos. A last look at the New York Public Library before its temporary shutdown. Costco line (video). Wellesley College unofficial graduation photo montage. Extreme social distancing: dog-walking by drone (video). Watch this video of “Flash Mob Sonoro.”
This week’s benediction is “Let There Be Light,” by the Scottish singer-songwriter Steph Macleod. The video features dancing by Becky Dawson.
Issue 4 (March 23, 2020)