Thread by @jasonfurman

If we are not taking *some* steps (at the margin) to curb the virus that also hurt the economy then we are not doing enough to curb the virus.

It is also possible that our efforts to curb the virus help the economy (in total or on average).

(Possibly educational thread.)

In this case, as in many others where we have multiple objectives (think climate change and inequality, for example), we should do absolutely everything we can that is win-win. More masks and more testing might reduce the virus and help economic activity.

Many win-win policies.

In addition to everything that is win-win, we should also evaluate everything with a tradeoff and adopt those that save lives at an acceptable cost for the economy (e.g., closing indoor dining) and reject those that save lives at an unacceptable cost (e.g., halting construction).

This means the *marginal* intervention, the very last one we choose to do, *should* hurt the economy just as much as it helps save lives. We can evaluate these sorts of tradeoffs using a value of a statistical life.

This may sound hard-hearted but would you support lowering the speed limit to 10 MPH to eliminate traffic deaths? Do you buy a new Volvo every year to reduce your chance of death in an accident, even if it means dramatically cutting other spending and getting a second/third job?

Note the *marginal* intervention should hurt the economy. But if we do all the win-win ones and some win-lose ones the *total* (or average) effect may well be positive in both curbing the virus and also in increasing economic growth.

This does not just apply to the virus but also to any issue where you have multiple objectives. If you care about climate change and inequality (or poverty) then you should be willing to pay a cost for dealing with them.

Some advocates only speak in win-win terms as if everything that is good for whatever issue they care about is also good for the economy.

Sometimes this framing may be correct (see the marginal vs. total distinction). Sometimes is harmless or even a good way to motivate action.

But I have two worries about overemphasizing win-win thinking:

1. It could lead us to do too little if we limit ourselves to policy that don't have tradeoffs.

2. If we pretend there are no tradeoffs we may end up hurting people.

Climate change is a case in point. If we think all curbing carbon is good for the economy then we might not take the harder steps (carbon taxes, clean energy standards) to do large-scale emissions reductions.

Or we might do a climate regulation but delude ourselves into thinking it is win-win and makes everyone better off. But such a policy would raise electricity costs for lower-income households, important to understand, admit and compensate. Can be done but not with denial.

I don't mean to minimize win-win policies. I think there are a lot for inequality and the virus, likely many fewer for climate change.

Moreover total tradeoff is not inevitable.

But we should seek out, carefully analyze and potentially embrace policies with tradeoffs too.

FIN