This is Kato Daily Podcast for Friday, April 24th, 2020.

I'm Caleb Brown.

Arriving of the correct policy response to the coronavirus is vexing elected officials and driving a variety

of responses.

David Henderson is a senior fellow at the American Institute for Economic Research.

He argues that there are a number of good reasons to protect those who are vulnerable,

but otherwise open things back up sooner than later.

We spoke last week.

In any conventional setting where you have some number of human deaths that are very likely, if not known, absolutely, and a government is trying to make a decision about what economic damage is acceptable to avoid those deaths.

How do economists think about that? Is it different than the way say

actuaries would think about it? Yeah actuaries typically will look at

earnings losses. Econom economists look at how people value their own lives,

and so the typical thing people have used, and I actually questioned this in a blog post recently

because of a contradiction it led to is people use

something called, or economists use something called VSL value of a statistical life and

here's what they do to get that. They look at people in a risky occupation, and a risky occupation might be one where there's an extra 1 in 10,000 probability of dying in a year.

And then they see how much workers insist on being paid as a premium to take that job versus

other jobs that are equal in other respects.

And let's say they come up with $500 as the annual pay needed.

Then they say, okay, if you had 10,000 workers

each taking a one in 10,000 risk,

that would be an expected number of deaths, expected in a statistical sense of one.

...