“We Have Nothing to Fear But Fear Itself”

By Steve Hellebusch | April 5, 2020

WAS FDR CORRECT?
“Fear itself†is pretty scary!  It can shut down a nation.  Fortunately, many Americans will fight back.  The current Covid-19 crisis led me to think about fear and over-reacting out of “an abundance of caution.† I realized a long time ago that we as a nation are willing to tolerate massive disruption in order to remove minuscule risks – the TSA and current airport screening levels make that obvious. So, it should come as no surprise that the current Covid-19 threat paralyzes the nation, but the cost is so great, and so obvious – much greater than the billion or so spent on the TSA, and much more painful – that it is a little surprising. 

ARE WE FOOLISH?
Are we over-reacting or are we being wise and appropriately cautious?  No one knows (including me).  If there are 1,000 people and 100 get the virus, that’s 10%.  So, 90% are fine (or, as fine as they were before).  If 15 of the 100 get seriously ill, that’s huge!  15%.  But it is also 15/1,000, 1.5%.  Suppose 2 die.  That also can be seen as huge – 2/15 (13%) or 2/100 (2%)!  But it can also be seen as very small – 2/1,000 (0.2%).  From one perspective, we are shutting down due to a very high relative risk of 13%, 2%.  From another, it is due to a negligible risk (0.2%).

THE VALUE OF HUMAN LIFE?
No one has an answer.  One might suspect that, at the least, it varies.  If it is the life of a 90 year-old who is incapacitated is it the same value as the life of a 1 year-old who is normal and healthy?  But something rebels at even thinking like that – life is precious, and to the 90 year-old it may be every bit as worthwhile as it is to the 1 year-old. Insurance companies, rightly or wrongly, have had to answer that question for a long time.  In the 1990 movie ‘Crazy People’ one of the funny ads was “Sure you loved him.  But if he dies, we’ll give you a new Mercedes and a house on the beach.  Wouldn’t that be nice too?†

FIVE MILLION JOBS!
According to a March 20 Wall Street Journal article, “Coronavirus-Triggered Downturn Could Cost Five Million U.S. Jobs†the cost of shutting down may be about $1.5 trillion – $1,500,000,000,000 – not considering the $2T+ aid package that just became law.  So, if, as a high end estimate, 50,000 would have died but only 25,000 do, the “cost†of each life saved is $60 million dollars.  If 100,000 would have died and we save 70,000, each life is “only†worth about $21 million dollars.

IS IT WORTH IT? 
Honestly, I don’t know.

A plate of food with some meat and vegetables on it

Posted in DM Blog, Guest Bloggers

About Steve Hellebusch

Dr. Steve is President of HellRC, a research and consulting company that specializes in the design and analysis of projects and consulting, primarily on data-related issues. Dr. Hellebusch founded Hellebusch, Inc. in 1992 and continues to consult in retirement. Dr. Steve has handled a wide variety of projects, including large, logistically complex marketing research and clinically-oriented studies for pharmaceutical companies that were used in submissions to the Food and Drug Administration (FDA). He has published often, in both peer-reviewed and informal journals. He recently authored The Art of Marketing Research. Dr. Steve began his research career at Burke Marketing Research, Inc. He went to Merrell Dow Pharmaceuticals, Inc. where he was in charge of all marketing research on nonprescription products, potential switch products, and several prescription products.