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Smart Shutdowns Save Lives And Minimize Economic Pain, Fed Researcher Says


New research suggests that smart mitigation policies, including targeted shutdowns, could slow COVID-19 infections while limiting economic pain.

Fabrizio Perri, an economics researcher at the Minneapolis Federal Reserve, says the policies could even work in hotspots such as South Dakota.

It’s important to adopt such policies now, Perri said, because promising vaccines could be deployed to the general public by this spring. During the winter months between now and then, he said, smart policies could save lives.

Otherwise, Perri said, “The human costs that you’ll have to bear are going to be huge.”

South Dakota’s COVID-19 deaths have already quadrupled so far this autumn, from 202 on Sept. 22 (the first official day of fall) to 819 on Nov. 23.

Perri said those numbers illustrate a hard reality: Governments need more tools than personal responsibility to fight the pandemic.

“A lot of people do not take into consideration the effect that their actions have on others,” Perri said. “That’s just the reality of things.”

He said governments should continue telling people to wash their hands, socially distance and wear masks.

“But that’s not enough,” Perri said. “You need to do a little bit more in order to prevent these dire outcomes, and the question now is, what do you want to do? And this is the hardest thing.”

So Perri and his colleagues dove into economic data. They had a question to answer.

“Can you actually try to stop economic activity with the minimum possible cost and the highest possible payoff, in terms of saving lives and reducing the number of infections?”

Their research shows that most workers and workplaces can be classified as high- or low-contact.

Low-contact workers interact mostly with the same people every day. Many factory workers fall into this category. So do office workers, some of whom can work remotely.

In low-contact settings, a virus tends to stay within the group and die out.

On the other hand, high-contact workers are in places like gyms, theaters, salons, restaurants, bars and retail businesses. They usually cannot work from home, and they interact with new people every day.

“And that,” Perri said, “works to spread the virus super-fast and super-efficient.”

Perri said governments should identify high-contact workplaces with the lowest economic output. He said government should pay those business owners and workers to close or restrict their activities temporarily.

“You could cut the numbers a ton,” Perri said, “and so it’s unfortunate that is not being done.”

Perri and his colleagues ran a simulation of their ideas on the greater New York City area. They estimated that from early March to May, smart mitigation policies would have prevented 300,000 COVID-19 cases, while economic output would have increased by 1 percent.

-Contact SDPB reporter Seth Tupper by email.