The cost of prematurely reopening the economy

Yahoo Finance's Rick Newman joins Jen Rogers, Andy Sewer, and Akiko Fujita to discuss the tradeoffs governors and mayors face as they decide whether to let businesses reopen and risk a resurgence of the coronavirus that has shut down much of the world economy.

Video Transcript

JEN ROGERS: What we are seeing this week-- and it looks to be continuing really for this month is this patchwork of opening up across the country. Different cities, different states, different industries dealing with this in their own way.

Rick Newman has been looking at the debate that's really raging between opening the economy and risking a second wave of infections and how exactly to look at this from an economic standpoint. Of course, Rick, we all know there's human tragedy in this, but as people try to evaluate it, they're trying to put numbers around it. What have you found? Hey, Rick, you're muted.

ANDY SERWER: Senator.

RICK NEWMAN: My bad. I got caught. I was due.

Yeah, and we're getting better tools for doing this, Jen. So today Rand, the research organization, published an online tool. Anybody can find it. I linked to it in my story. You can-- for every state, it allows you to apply one of six levels of restrictions on business closures and reopenings and people moving around and then find out the results. So it tells you what the actual situation is in that state. And then you can say, well, what if you want to loosen the restrictions? What happens? How many more deaths, infections do you get, and how does it affect the economy?

So I played around with some of the states, and I'll just tell you some of the really interesting things I found. So if New York relaxed its restrictions a little bit, we would probably go from 34,000 deaths from COVID-19 by June 6 to 39,000, so an increase of 5,000 deaths, but we would have a little more economic activity. We'd have a couple billion of additional statewide income. If you look at Texas, Texas actually has a moderate level of restrictions in place, and that is going to lead to 13,000 more deaths than if they had severe restrictions in place like we have here in New |

So there's this really agonizing trade-off between life and death on one hand and economic activity on the other end, and there is no magic optimal point where you can say this is the amount of economic activity we should restrict. I mean, governors are just making this up as they go along. There's no playbook. And we're just at the beginning of this, which is kind of an experiment in states like Texas and Georgia that are being more relaxed with their restrictions. It's possible they're going to-- they're going to see infections and deaths going up and they're going to have to change some of those policies.

JEN ROGERS: Rick, I mean, nobody wants to put a price on life, but people are trying to do this math there, and it's an interesting work to look at.

RICK NEWMAN: I mean, these-- by making, you know, policies that especially if you're relaxing where should you are in effect putting a price on life and I just did the numbers I mean this is number one is saying this is the value of human life but the amount of economic activity you're gaining in exchange for the lives you're losing place the value of a COVID-19 life or death at somewhere between about $200,000 and $700,000. So that's saying we're willing to lose a life in order to have, let's say, $500,000 of increased economic activity.

I mean, obviously an uncomfortable topic. Governors are not framing it this way, but this is the reality.

JEN ROGERS: And you can go-- and it's interesting to go look at the Rand study online. Anybody can go check it out. It's on Rand--

RICK NEWMAN: That'll mean your state, for sure.

JEN ROGERS: --good read out there.